In today’s dynamic investment landscape, understanding consumer behaviour is more important than ever, especially in emerging markets.
One firm that has carved out a unique approach to tapping into these trends is Trinetra Investment Management. Using ethnographic research to gain a deep understanding of evolving consumer habits. This innovative methodology has allowed them to identify valuable investment opportunities often overlooked by traditional market research.
Below, we explore how Trinetra’s consumer insights drive their investment decisions, with a focus on their success in identifying growth areas in emerging markets.
For context, Trinetra Investment Management is a London-based boutique emerging markets manager led by seasoned investment specialist Tassos Stassopoulos and managing approximately $400 million. The firm stands apart from other managers through its laser focus on domestic consumption and consumer trends, leading it to avoid the large tech exporters that stock markets in emerging market countries. Partners with academic institutions, including Cambridge University, they develop deep insights into changing consumer behaviours which guide their investment decisions.
Ethnographic Research: Understanding Tomorrow's Consumers Today
At the heart of Trinetra's approach is their ethnographic research - a methodology borrowed from anthropology that studies people in their natural environments. Their researchers conduct extensive home visits, examining everything from refrigerator contents to daily routines, to understand how consumption patterns evolve as wealth increases in these emerging countries.
For example, their research in China revealed a sophisticated evolution in coffee consumption habits among young consumers. Rather than simply adopting Western brands, these consumers were investing in elaborate home brewing equipment and developing discerning tastes - a trend that traditional market research might have missed but that has significant implications for both international and domestic coffee brands.
From Consumer Insights to Investment Decisions
Trinetra translates their deep consumer research into investment decisions through a disciplined process that mirrors venture capital methodology. The investment team seeks companies serving "next level" consumption - products and services that become attainable as disposable income rises in emerging markets. This approach requires demonstrating a clear research edge before investing, combining their ethnographic research insights with rigorous valuation analysis focused on strong cash flows and reasonable valuations.
Their process has identified particularly attractive opportunities in the current market environment, with risk-adjusted expected returns at their highest levels in 15 years. A recent example is their early identification of Chinese cosmetics brand Kans which they discovered through their research to be out selling L'Oreal 7 times over on TikTok. Their growing trend is backed up by the company’s fundamentals - delivering over 100% earnings growth while trading at a stock price of just 11x its earnings.
While many investors remain wary of China, due to geopolitical factors and internal instability, Trinetra's on-the-ground research suggests these concerns may be overdone. Rather than seeing widespread consumer pessimism, their ethnographic studies reveal a resilient middle class continuing to pursue lifestyle upgrades, especially through education-related housing decisions. The portfolio's Chinese holdings demonstrate remarkable financial strength with 96% of companies in Trinetra’s fund being debt-free and 97% even conducting share buybacks. Importantly, their domestic consumption focus limits exposure to trade tensions and potential tariffs from new US president Donald Trump.
This article has been prepared by InvestSense Pty Ltd ABN 31 601 876 528 on behalf of Primestock Securities Ltd. The information contained in this report is obtained from various sources deemed to be reliable. No representation or warranty is made concerning the accuracy of any data contained in this document and should not be relied upon as such.
