FidelityConnects: Luxury meets opportunity: Today's consumer story

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Hello, and welcome to Fidelity Connects.

 

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I'm Pamela Ritchie. AI is reshaping consumer behaviour,

 

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changing how people earn, spend, and discover products

 

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even as its full impact is still unfolding.

 

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At the same time our next guest notes a shift in consumer preferences away

 

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from goods, towards experience, wellness, and premium brands,

 

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as consumers become more selective with their spending.

 

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How could these trends redefine, or continue to define,

 

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the overall consumer landscape, and how should advisors and investors think

 

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about positioning portfolios in response?

 

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Joining us here today to break it all down is Aneta Wynimko.

 

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She is portfolio manager of the Fidelity Global Consumer Brands

 

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Fund. A warm welcome to you, Aneta, from London, nice to see you.

 

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Thank you, nice to see you as well.

 

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Delighted to have a chance to speak with you.

 

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Let's begin by opening up the discussion a little bit about consumers,

 

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the preferences that they have had.

 

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We'll talk about how that's going to change, probably, or how you think it

 

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might change. The consumer's been balancing a number

 

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of different things even before we were talking about oil shocks.

 

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What's sort of the state of the consumer, would you say, on a global basis?

 

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The consumer has had a lot of things thrown at

 

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her, at him, over the last few years.

 

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As we entered the

 

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beginning of the year there were some green shoots emerging.

 

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Obviously, our consumer confidence has been depressed for a long time

 

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and I think coming into 2026 people

 

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were starting to feel a bit better.

 

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There were some indicators of a bit

 

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more optimistic approach. Then we get another

 

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crisis, another global geopolitical situation

 

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that is difficult to forecast and difficult to deal with.

 

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I think the mighty consumer is still there but is dealing

 

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with quite a lot.

 

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The sector itself, when you take a look at the shares, the stocks within it,

 

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what makes up the portfolio, I mean, there's some argument that it's

 

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looking like because there were green shoots it's a bit of a

 

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bargain. I mean, is that fair? This might be an interesting time to look at it

 

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because it has had so much thrown at it in the form of

 

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bad news and therefore repricing.

 

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Yes, the consumer sectors, the traditional,

 

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whether it's staples or discretionary, those sectors

 

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are probably the most out of favour sectors when

 

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it comes to investor sentiment.

 

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Obviously, when you have a situation with lots of uncertainty,

 

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with energy prices going the wrong way, consumer

 

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is in the middle of the squeeze.

 

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The investors are very quick to react and they are very quick to sell those

 

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companies because it's, obviously, quite easy to figure out that there is going

 

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to be pressure.

 

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Those stocks react really fast and they become quite cheap fast

 

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with what has happened.

 

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Yes, that is what happened.

 

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In terms of recovery you're looking at global brands, you're looking at a

 

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global consumer. There's been discussion in the form of other

 

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types of asset classes, areas of the world that are more

 

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self-sufficient on an energy front versus others.

 

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Does the discussion for the brands and the companies that you look at become

 

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very regionalized, necessarily, or not.

 

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I think it's quite difficult because, again, the situation is very fluid

 

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and can change really quickly.

 

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Obviously, companies have strategies in place and

 

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I think those that execute well and they use technology

 

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and they have local teams in place, they know how to react

 

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to this environment, especially that they have dealt with a bit of

 

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a similar situation when the invasion of Ukraine started

 

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and that also had an impact on commodities and confidence.

 

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It's hard to pinpoint regions or

 

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segments of the investment

 

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universe that really stand out as beneficiaries

 

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of the current situation.

 

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It's more about how the companies manoeuvre through this

 

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environment and to what extent investors have overreacted

 

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because this is all about near term threats that, hopefully,

 

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will be resolved while their business

 

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opportunities are, hopefully, very much long term in nature.

 

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Then we need to think about long term earnings when trying to value those

 

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companies as opposed to the current quarter estimates which obviously

 

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are quite fluid.

 

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When you go through areas like leisure, where people want to spend in terms

 

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of apparel, experiential I think is what we mentioned when

 

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we were introducing you.

 

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Where is the consumer leaning?

 

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If they were less pressured and they were in a position to just

 

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go with what they're interested in, what a layer of better technology

 

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allows them to buy or sell or get themselves organized for

 

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in terms trips and experiences and so on, where is the consumer leaning?

 

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Where are these trends taking you?

 

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I think the trend towards spending on

 

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travel, entertainment, experiential consumption,

 

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is quite well established.

 

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I think the preference for experiences,

 

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maybe this is one of the things that we got out of COVID

 

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that really is quite a change in peoples' attitudes

 

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to how they live their lives.

 

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So maybe less spent on physical products of which I think everyone

 

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has plenty, and much more preference for this

 

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kind of special time with family, with friends, travel, going out,

 

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but also exercising and doing things for yourself, for your body,

 

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for your health. I don't really see this changing

 

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anytime soon. Obviously, depending on consumer confidence

 

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and what they can afford they might slightly adjust their behaviour but

 

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I think the preference for spending on leisure is

 

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quite well established.

 

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It's interesting, are certain areas of what you're talking about within perhaps

 

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wellness, particularly, more inelastic?

 

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If people are investing on, I don't know, their look on some level,

 

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whether it's their hair or wherever, you know, those are things that you

 

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perhaps wouldn't give up even in sort of a recessionary moment.

 

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I mean, there are areas within what you do that would be more or less

 

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inelastic. You might cut restaurants but you might stick with others.

 

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Can you just talk a little bit within the coverage that you have

 

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which areas are quite inelastic.

 

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Consumers are very clever and with the tools,

 

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the digital devices, they can figure out what best value

 

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they can get, how and where, and they are doing that.

 

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There are situations where it is quite hard to substitute.

 

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For example, one of the companies or trends that

 

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has emerged in the recent years is aesthetic treatments

 

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where men and women move on from

 

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just using facial cream to injectables

 

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because those are much more efficient and

 

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effective.

 

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What we have seen is, obviously, you create patterns

 

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of behaviour where something that might be perceived as

 

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... at the beginning it was very much niche, then it was seen as a luxury

 

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and only the wealthiest people were able to afford it, to now,

 

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for a lot of people, becoming something they have to do because, obviously,

 

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their looks will change if they don't keep doing it.

 

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You have these categories which are emerging, and they are emerging because

 

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on one hand the demographics of the society are

 

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changing, people are getting older, but then also people do

 

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create the images on social media and are very much aware

 

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of their looks, while on the other hand the progress in

 

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science kind of creates new products, new ways

 

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that are maybe safer or maybe much more

 

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fast acting. We see these kind of niches

 

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of consumption that are emerging, and it is happening pretty

 

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fast because people talk about it on social media

 

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and the solutions are adopted quite fast.

 

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Just to sort of round out part of the wellness discussion, the other piece of

 

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that seems ... the obvious piece to me anyways is sort of exercise, everything

 

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to do with that sort of realm, that is easier to

 

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invest? There are big gyms that are public, for instance,

 

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but there are also probably trends in there that we don't know about.

 

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What other ones are there on sort of the exercise side of wellness, I guess?

 

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I was just today talking to a Chinese company and they talked

 

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about a marathon.

 

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I don't remember in which city.

 

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You can invest in marathon?

 

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You can't. Sadly, you can't. What they've told me is that half a

 

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million people signed up but there were only 20,000 spots available.

 

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So even to run a marathon is not so easy but sadly,

 

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there isn't a way to invest in the public market in that.

 

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Obviously, a way to invest in fitness is to

 

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buy some of the companies that provide sporting goods.

 

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Unfortunately, that play, that space has become very crowded.

 

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Nike and Adidas used to dominate this space

 

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but they, a few years back, to an extent

 

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mis-executed and tried to limit that business to

 

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only direct-to-consumer which opened the door of wholesale

 

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to other brands.

 

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Today in that space we see a lot of companies.

 

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Contrary to this injectable aesthetics where you need the regulatory

 

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approvals and lots of R&D, in sportswear, if

 

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you have a good idea, if you come up with a strong product

 

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which can be made in China in the same factory where other companies, the

 

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big companies are making the product, the entry barrier is not that high.

 

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I think it's also very important to think about,

 

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okay, there could be an interesting niche and this is where consumers spend

 

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their time but how difficult it is to

 

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provide products and what's the level of competition.

 

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Let's sort of bring in AI to introduce the discussion of leisure.

 

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AI, obviously, could be applied to, I suppose, any version of any

 

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company doing some of the things you mentioned on the wellness front, you know,

 

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booking gyms, classes, all that kind of things, and also probably booking

 

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appointments if you wanted to have them.

 

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The pharmaceuticals, as I understand it, are one of the hugest beneficiaries in

 

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terms of research from AI.

 

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I might ask you to comment on that in a sec but just to move to leisure,

 

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one of the earliest examples of the agentic AI was

 

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you can book your trip like that because you

 

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just say what you want to do and somehow the airline, the hotel, and everyone

 

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else all talk together and you come out with a trip within minutes.

 

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Just sort of apply that to what it's meant to

 

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the travel leisure industry so far.

 

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Is it accretive at this point? Is this something you look at carefully?

 

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Yes, of course.

 

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Obviously, here the big question that emerged is to what extent

 

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AI creates a threat for OTAs,

 

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the likes of Booking, Expedia.

 

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The way I am looking at AI is it is an

 

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intermediary. It's a very clever, very efficient intermediary

 

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and it's going to displace a lot of intermediaries

 

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that are maybe taking too big a rent in a

 

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space where things can be automated.

 

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Obviously, we have to look at the two sides of the coin.

 

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AI might create more ease and more access in

 

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terms of coming up with ideas where to go and what to do but at

 

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the same time AI can act as an intermediary

 

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and allow consumers to book directly, and maybe at more attractive

 

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prices because that rent that was paid to

 

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the more traditional intermediary will be lower.

 

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There will be still a rent  but it will be lower.

 

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This is happening in a lot of sectors and because

 

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companies take much longer to adopt new solutions because they need to be

 

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sure, there is cybersecurity, there is a lot.

 

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Consumer, it's from one click to another, they change their behaviour to

 

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what's best and most beneficial to them.

 

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From a lot of different industries, speaking about AI, it still comes back to a

 

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quality company in a lot of ways.

 

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I think you and I spoke a little bit about not so much shipping but sort of the

 

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cruise industry.

 

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Although  you could use AI on a number of different levels to make all kinds of

 

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things logistically better you still have to own

 

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a cruise ship, you still have to dock it somewhere.

 

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There's still sort of a hard asset piece.

 

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Does that become quite attractive and have some moats

 

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around it to an extent when we're talking about, again, travel and leisure?

 

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Yes. Actually, I am trying to find

 

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businesses that have those physical moats,

 

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businesses that offer more than just being an intermediary, connecting

 

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to parties and cruises.

 

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Also, hotel companies, it's a good example because

 

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they are very close to the asset or they own the asset

 

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and they maximize the

 

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use of the asset and the yield on the asset.

 

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Obviously, here we have to think about the demand,

 

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the preference of consumers, as well as

 

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the ease of entry of competition.

 

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When you look around the world, tell us a little bit about

 

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whether those trends that you've mentioned, you know, wellness, leisure,

 

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these are all experiential, as I might point out, are they

 

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somewhat the same globally?

 

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Is that what a consumer that has some equal amount of money that's

 

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disposable in Europe, South America, North America, Asia, would

 

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be looking for? Do the trends line up globally?

 

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They do.

 

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The American consumer is the wealthiest consumer so, obviously, they

 

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are the most relevant in terms of the business exposure for a

 

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lot of global companies.

 

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I see the same behaviour, I see it in Europe but here the consumer

 

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is a bit maybe less well off, more under pressure from

 

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the macro point of view.

 

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I see similar preference in China but, again,

 

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the macro situation has been quite challenging for quite a while now

 

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so maybe I see the willingness but maybe not enough

 

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confidence to actually spend ...

 

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the travel to Europe from China has declined

 

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quite dramatically. It's not because consumers can't afford, it's because

 

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they don't have the confidence to spend a big

 

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ticket, long haul journey.

 

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I think the preference is there, the ability is the question.

 

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That's really interesting.

 

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Enter the discussion of how the shift

 

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from apparel, which you mentioned at the beginning, apparel but

 

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other types of goods and things that we wear and perhaps buy for

 

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our gardens, things we bought in the pandemic, for instance.

 

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It does seem like there is a very long hangover, essentially,

 

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from that because we just bought so much at that time.

 

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The inventory story was sort of out of whack, it took a while.

 

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Is it still that way?

 

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I think there's still probably an overhang in terms of what

 

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we have in our houses or our

 

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wardrobes, but it has been quite a long time.

 

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Fashion changes, things break, and there's the

 

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natural replacement cycle that is ongoing.

 

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Companies need to help, they need to come with more exciting

 

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products.

 

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I think coming out of COVID there was an element of maybe

 

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some people bought too much or they had too much kind of

 

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money that was available because the governments became

 

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quite generous.

 

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I think some of the companies, they got a

 

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bit lazy in terms of innovating because maybe business was too easy.

 

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Taking pricing became also acceptable

 

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because everyone has done it.

 

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Only more recently I see a very

 

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real and serious effort to speed up innovation, to speed up

 

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creativity, and actually get the consumer to open

 

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their purses and spend on things that maybe they don't need

 

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but maybe they would like.

 

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Right. That's interesting.

 

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Well, I suppose everyone sort of has that inclination to an extent

 

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but what about the generations?

 

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We often talk to you about demographics and the ideas that stick

 

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with a younger generation that may not have the money to buy it but it

 

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certainly can be an influence ultimately.

 

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What is hot, new, interesting, that perhaps younger

 

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consumers want, can't yet afford, but you

 

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see coming up through the ranks?

 

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The young consumers, there's a bit of a paradox.

 

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I think people call that the Gen Z paradox.

 

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It's the generation 18 to 28

 

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who, actually, when you look at the consumer confidence by cohort

 

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the Gen Z, they have the highest confidence in the situation

 

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improving.

 

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It is a bit surprising and I'm trying to understand why

 

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is that the case.

 

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I think it's a very interesting generation because they came kind of of age

 

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after COVID and they faced inflation and all sorts of things

 

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so it's a very kind of resilient

 

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generation. They are not used to Goldilocks.

 

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They know things are tough and they have this kind of approach they

 

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can make things happen.

 

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I think this is how they approach life.

 

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The volatility, uncertainty, which I think is more difficult,

 

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maybe especially for the millennials which had

 

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a good 10 years out of the financial crisis and then

 

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things started to go wrong, I

 

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think this generation has this approach of kind of finding

 

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solutions.

 

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They are probably going to be, even though the unemployment rate for the

 

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young people is quite high, close to 10% in the US,

 

[00:20:21.019]

it's not easy to find jobs, but I think they are the generation that

 

[00:20:25.224]

is really able to embrace AI and

 

[00:20:29.161]

actually find ways of making money.

 

[00:20:32.764]

I've been looking, for example, at Roblox, which is the gaming

 

[00:20:37.469]

platform.

 

[00:20:39.271]

Obviously, there's a lot of criticism because it does attract a lot of kids and

 

[00:20:44.476]

the scrutiny of what happens on this platform.

 

[00:20:49.514]

Just to show some numbers, last year 3

 

[00:20:53.518]

1/2 million people developed games on this platform, which was a million

 

[00:20:57.522]

more than the year before.

 

[00:21:01.293]

Something like 70% of those developers are solo

 

[00:21:05.430]

developers. To be a developer you need to be more

 

[00:21:09.434]

than 13 years old so there's a lot of young kids actually

 

[00:21:14.172]

developing games and starting to earn thanks

 

[00:21:18.277]

to AI because Roblox give you also the AI

 

[00:21:22.514]

assistant and makes making games easy

 

[00:21:26.685]

for those kids who are creative, they like doodling, they come up with things.

 

[00:21:30.989]

I think maybe that's why the confidence among

 

[00:21:34.993]

this generation, contrary to what we would expect, is

 

[00:21:39.031]

high and they can see the opportunity, while maybe all the

 

[00:21:43.035]

consumers, they see the negatives, they see AI

 

[00:21:47.539]

destroying jobs [indecipherable] and all sorts of headlines

 

[00:21:51.610]

that have been impacting sentiment.

 

[00:21:55.013]

That's so interesting just to hear

 

[00:21:59.084]

that type of confidence with a new technology sort of at their back

 

[00:22:03.021]

pushing them forward, there's a propulsion there.

 

[00:22:05.991]

That's fascinating. Are we still going to watch movies?

 

[00:22:08.994]

They're all AI-generated now, are we still going to watch?

 

[00:22:11.496]

Is Netflix still an interesting ...

 

[00:22:13.465]

do you still go to the streamers? Is that still part of our lives, what we want

 

[00:22:17.369]

to spend money on in terms of subscriptions and so forth?

 

[00:22:21.373]

I think there are some subscriptions that

 

[00:22:25.344]

have become so entrenched in our life.

 

[00:22:29.381]

Netflix is the long form,

 

[00:22:34.186]

is the time on the couch in the evening when one wants to relax

 

[00:22:38.223]

and lean back as opposed to leaning forward and looking for things.

 

[00:22:42.394]

I think the space for Netflix ...

 

[00:22:44.996]

but they need to innovate, they need to keep that position as

 

[00:22:49.234]

the most kind of highest quality content that people want to

 

[00:22:53.305]

watch when they want to relax.

 

[00:22:56.742]

Their biggest competitor today is YouTube with user-generated content.

 

[00:23:01.546]

That's so interesting. And very global, I mean, or at least that's been the

 

[00:23:05.784]

attempt, it looks like. It brings in people from all over the world, sort of

 

[00:23:09.821]

a global experience watching a lot of the things on

 

[00:23:13.892]

some of those platforms. I have to ask about food, beverage.

 

[00:23:16.828]

There have been times when it's been very interesting to you, other times where

 

[00:23:19.831]

it's been just hard to invest.

 

[00:23:23.668]

Just a couple of thoughts on sort of food and beverage.

 

[00:23:28.039]

I think the overall space of food and beverage is

 

[00:23:32.844]

difficult.

 

[00:23:34.813]

The inflation of food but also especially in the space

 

[00:23:38.917]

of spirits has been very high.

 

[00:23:42.053]

Consumer is resisting the price points.

 

[00:23:47.025]

Consumer is also very clever because with Walmart, for example,

 

[00:23:51.830]

providing fast delivery, now the consumer looks

 

[00:23:55.934]

at the price of takeaway and price of food,

 

[00:24:00.472]

the food that you can get from Walmart, the ready meals.

 

[00:24:04.609]

The market here, the competition is obviously ...

 

[00:24:08.713]

technology enables the established entrants to compete with a completely

 

[00:24:12.851]

different segment of the market where they were not operating before.

 

[00:24:18.290]

The food industry is also very fragmented and

 

[00:24:25.096]

as ... especially companies like Nestlé which have very big R&D budgets

 

[00:24:29.167]

and a history of coming up with innovation

 

[00:24:33.905]

which for the last years maybe has been disappointing but there's

 

[00:24:38.076]

new leadership and hopefully they go back to what they've been

 

[00:24:42.581]

known for. I think there's need for innovation.

 

[00:24:45.884]

We all know that even the fresh food, the organic food,

 

[00:24:51.423]

the amount of nutrients that we need and vitamins, it's not there

 

[00:24:55.393]

because maybe there isn't enough of nutrients in

 

[00:24:59.331]

the soil.

 

[00:25:01.266]

I think there's opportunity for innovation but it's not an

 

[00:25:05.270]

easy space, especially if there is inflation again in commodities

 

[00:25:09.207]

that makes things quite challenging.

 

[00:25:13.178]

Food, there's like adjacent categories to

 

[00:25:17.516]

food, whether it's coffee where I think the consumer

 

[00:25:21.686]

very much looks for innovation and

 

[00:25:25.891]

for new products. It works really

 

[00:25:30.061]

well in the way we live our kind of on-the-go lives.

 

[00:25:33.932]

Oh, pet food! I think that's quite an interesting category

 

[00:25:38.303]

and, again, a category that has been impacted

 

[00:25:42.741]

by COVID because through COVID we saw big adoption, especially

 

[00:25:46.711]

of dogs. Unfortunately, many of those dogs have

 

[00:25:51.016]

ended then in shelters.

 

[00:25:53.585]

What continues, maybe not unsurprisingly, is the

 

[00:25:57.589]

adoption of cats.

 

[00:26:00.325]

Partially it is driven by TikTok.

 

[00:26:04.329]

There is this new phenomenon of a cat dad, men

 

[00:26:09.401]

adopting kittens and showing them on TikTok.

 

[00:26:14.472]

Here Nestlé is actually the dominant player in that space.

 

[00:26:18.977]

They have integrated R&D and manufacturing.

 

[00:26:21.746]

The Purina brand is one of the top brands.

 

[00:26:26.117]

So when you look at those global companies you really have to almost dismantle

 

[00:26:31.122]

what exposure do they give you and what is happening in each of the end markets

 

[00:26:35.360]

and is there anything interesting going on that actually might

 

[00:26:39.331]

help them even in a challenging environment.

 

[00:26:42.334]

Netflix needs to come up with a remake of Must Love Dogs, I think.

 

[00:26:48.106]

That's great.

 

[00:26:50.609]

Just as a final thought, we sort of began talking a bit about the state

 

[00:26:54.879]

of the consumer and the idea that this general area could be

 

[00:26:58.850]

a bit of a bargain. Just kind of take us back to the investment case for taking

 

[00:27:02.520]

a look at the global consumer and.

 

[00:27:04.289]

ultimately. the fund.

 

[00:27:09.561]

What I try to identify really is the best-in-class,

 

[00:27:14.332]

well-managed companies with strong balance sheets,

 

[00:27:18.770]

with strong brands, companies that adopt technology and

 

[00:27:23.008]

use it both to innovate but also to manage the costs and procurement.

 

[00:27:29.247]

This is an ongoing effort.

 

[00:27:32.083]

The market today is looking for AI, of

 

[00:27:37.956]

semiconductor supply chains. The focus of the market is

 

[00:27:42.027]

very much somewhere else so those good businesses,

 

[00:27:46.698]

compounders, have been almost put aside and no one is paying any

 

[00:27:50.702]

attention. It really is space out of favour.

 

[00:27:55.473]

It's a space where ...

 

[00:27:57.842]

even looking at the dividend yields, there's a lot of companies that are

 

[00:28:01.913]

paying good dividends, still growing, and they've been around

 

[00:28:06.017]

for sometimes more than 100 years.

 

[00:28:08.286]

AI is not going to displace them.

 

[00:28:12.257]

AI will probably allow them to become even better businesses.

 

[00:28:17.395]

As always, plenty of opportunities but, obviously, the market is a voting

 

[00:28:21.633]

mechanism so there needs to be enough interest for the stocks to go up.

 

[00:28:26.638]

Very interesting in the sectors that you play and research and invest

 

[00:28:30.709]

on behalf of investors.

 

[00:28:33.078]

Aneta Wynimko, thank you so much for sharing your thoughts with us and joining

 

[00:28:36.081]

us here today.

 

[00:28:38.316]

As always, pleasure.

 

[00:28:40.018]

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[00:28:43.955]

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