I have been wondering about this for a long time. Does being a stockholder in companies like PG, PEP, PFE etc affect your purchasing decisions in the grocery store/pharmacy etc?
For example, PG offers products in several categories from toothpaste to soaps to detergents etc. But each product has competitors including store brands. The pricing of products from competitors (sometimes) and store brands (most times) is less than its equivalent products from PG.
Similarly apart from soft drinks, PEP has products in other categories like bottled water, chips, snacks etc. And lot of times, store brands are definitely cheaper for such categories.
Pharmaceuticals are especially vulnerable to this because of huge price differences between the branded medication and generics. Lot of times for OTC medicines, the price difference between the branded medication and its store brand equivalent is huge (in terms of percentage).
The companies listed here are just an example and is applicable for almost any company. For the sake of discussion, let’s assume that the quality of the products are almost similar or identical (like in medicines where the chemical compounds are identical).
So if you are a shareholder of a company, are you tempted to buy the products from that company even if the price is higher or do you make the best decision for your home budget without considering other factors?
I definitely make my decisions based on my home budget and how much I can afford. There are some products in each category that I regularly use that are from specific brands (Tide, Bounty for example), but other than that, I always look for cheaper alternatives like store brands if available (assuming the quality is on par and lot of times they are).
13 thoughts on “Does being a stockholder affect your purchase decisions”
I typically try to buy products manufactured by the companies I own when I can. Now, this depends on price and product. If we’re talking food I’m going with what I enjoy. If it’s a household good I’m a bit more price sensitive there, but I still try to stick with stuff made by PG and CLX. My budget is so small right now that a $1 here and there doesn’t really make a big difference. Again, it all depends, but I do get a sense of satisfaction buying stuff made by the companies I own. Of course, sometimes I buy store brand products knowing that I’m still contributing to the bottom line of my own dividend (like Great Value).
I typically get store brands (Great Value @ Walmart, Meijer etc) since it is cheaper than the brands. OTC Medicines are another set of products that I look for generics or brands like Equate before going for brands. But for some products, I tend to get brands from PG/CL etc because I am used to those and like them.
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That’s a great question. Before I started investing I couldn’t have told you what companies made the products that I use. Now that I’ve been investing for a while I typically stick with store brands or products made by companies that I own. One thing I noticed a few months back is that the bottled Lipton Green Teas distributed in the US go to the bottom line of both Unilever and PepsiCo. That works for me since I own both.
Same here. I wasn’t much interested on who made what a while back. But I have started looking at those just for information and also to know which brands are owned by which companies. Lot of times, I won’t realize that a product/brand is actually owned by KO/PEP/PG etc unless I look at it.
Interesting fact about Lipton Teas? Is it jointly owned by Unilever and Pepsi?
Also, had another question. I see two tickets for Unilever (UN and UL – both ADRs). Any idea whats the difference?
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UL is the British listed company and UN is the Netherlands listed company. Thanks to the tax treaty between US-GB there’s not a dividend tax levied on the shares of UL whereas UN does have one.
If I remember correctly the Lipton brand is owned by UL/UN and PEP bottles/distributes it here in the US.
Yes it influences my purchases but not so much in the grocery store since Ms. DivLife decides those purchases. I own some Home Depot stock so I’d always pick Home Depot over Lowes. I’d always use Exxon or Chevron for buying gas too as I own both stocks though I’ve significantly reduced my spending on gas as I have an electric car now.
Regarding Unilever, it’s the same corporation but different legal entities: UN is the Dutch version and UL is the British version.
Haha… That’s true. My wife gets what she wants when she goes to the grocery store. Sometimes, when I go, I try and pick purchases based on price/stock holdings.
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Great observation. Like others, I didn’t pay attention much until I started invested. But now even my girlfriend can name brands from the companies I own! While we buy a lot items from the dollar store like you, there are certain hygiene products and such that just don’t cut it compared to PG, UL, and CL brands. We also stick to CVX for gas and have a checking account with Wells Fargo for depositing cash. I’ve always liked the idea of investing in companies whose products I personally use. Thanks for the post!
Majority of my grocery purchases are in Walmart and little bit in Meijer. The Great Value brand owned by Walmart offers several products equivalent to the brands and I tend to get those for most categories as the quality is definitely on par.
With respect to banks, I own C even though I don’t have any banking relations with it. I got the stock way back hoping it will rebound, but not as much as I expected. It is not really a dividend stock and want to exit out of it soon.
Very interesting question. I’m definitely aware of it when I shop, but I don’t think I take it into account when I make purchases. But who knows – perhaps subconsciously it is influencing me to some degree.
S.B, Thanks for stopping by and sharing your thoughts. Perhaps like you said, we are influenced to an extent whether we plan or not.
Without question it does. It may sound silly but while shopping I always look to see which company manufactured the product. I almost always go for an item that I am a current shareholder. Granted, I don’t own 1000’s of shares of any company but I still feel connected to the product coming from companies I own. I also smile when I see people at the drive thru at McDonald’s or Taco Bell. Amy I crazy?
Exactly… even though we don’t own 1000’s of shares of these companies, it is still some small chunk. MCD and YUM and couple of brands that I use often, but don’t own any stocks even though I have been looking to initiate positions. MCD is something that I plan to initiate a position in the near future.
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