Going to be stepping on some holy grounds here so please hold the crucifix for now.
One of the things I got to thinking over the past several years was about whether the business model we have seen Buffet and other investors invest in continue to make sense or not. I know this sound crazy but hear me out. We all know the story of Coca Cola, the low price, inelastic, semi-addictive product then converted into large global distribution base and brand portfolio. The story of the company for the past 40 years was about building out this massive global distribution footprint to the point where it was easier to find a bottle of coke in some rural Indian village than a bottle of water. But there are some problems to this model, primarily that A) You can't really find another 1-2 billion consumers now B) It is hard to capture consumer surplus (price segregation is impossible and C) it is hard to capture increasing share of the consumer wallet as living standards improve. (people will cap out on how much product to drink a day).
And I got to think about the problem with mass distribution or infrastructure models, usually the core is highly profitable and end up subsidizing the hinterlands, the last mile country road to a small town is a very unprofitable investment. In my mind, this is also a problems existing CPG companies face, the last customers is hard to reach, expensive to acquire, at some point it is much better to increase wallet share and/or capture the consumer surplus of your core base of customers. This is why targeted ads are changing marketing so much, as it allows companies to price segregate by customers (different tier of a similar product) and big data is so valuable (increasing wallet share).
I wonder if the time for traditional companies that relies on the formula of building out distribution, acquire/develop a bunch of products and push through your channels is over. The rise of third party infrastructure rails like Amazon and facebook for distribution and customer aggregation also has removed the needs for doing that yourself. I feel the economic laws revolving around specialization will push companies to being more product oriented and focused on capturing consumer surpluses through niche products. The obvious play is that the infrastructure rails will capture a large part of the economics, but who knows if big scaled brands even exist 10-20 years down the line?
Just some foods for thoughts, feel free to join in on the conversation.