Just over a month ago, General Electric (NYSE:GE) sold its "GE"-branded home appliance business to a Swedish-based manufacturer, Electrolux, for $3.3 billion. In the world of American manufacturing, it marked the end of an era.
After all, these were the the consumer products that showcased the GE brand -- and even the American lifestyle -- to the world. Particularly during the post-war years, GE became the centerpiece of the Jetson’s-style kitchen of the future, as depicted in a 1963 GE Appliance advertisement:
By 2015, however, GE's century-old line of ovens, stovetops, and refrigerators will belong to the U.S. no more.
But its not the only quintessential American brand to find a new home overseas. In fact, its close competitor Frigidaire (a former General Motors company) has been under the Electrolux umbrella for nearly two decades.
And the list goes on across other industries. A Brazilian firm now controls fast food chain Burger King. The pork purveyor Smithfield Foods went to the Chinese. Below is a list of seven additional classic – and formerly American-owned – brands that you might not realize are controlled by foreigners.
Why are so many marquee American brands being scooped up by wealthy investors abroad? Read on for the answer and why you might want to follow suit.
The big brewers
The first two on this list are the legendary beer labels Budweiser and Miller. Born in the Midwest in the 1800s, these distinctive American brands have come under foreign control in recent years. The Milwaukee-based Miller Brewing became part of London's SABMiller in 2002, and St. Louis's Anheuser-Busch was acquired by the Belgian conglomerate InBev in 2008.
By the time of the InBev merger, Anheuser-Busch and Miller Brewing accounted for an astounding 66% of the U.S. beer market by volume. Foreign investors recognized an opportunity to spread these suds even further around the world, and their timing seems savvy in retrospect. They have been able to emphasize international growth to counter sliding domestic consumption. As a sign of the times, Coors is half-Canadian, and Pabst Brewing was recently sold to a Russian company.
The grocers and goods
Now, if you're wondering why you haven't seen those iconic American beers in a while, it could be because you're shopping at a Trader Joe's. The coastal-themed grocery retailer doesn't carry Bud, Miller, Coors, or Pabst beers. What's more, it's owned by Germans, and it has adopted a German-like efficiency that's striking a blow to the traditional supermarkets we grew up with.
Moving down the aisle, two other familiar household brands Ben & Jerry's and Purina pet foods are owned by British and Swiss companies, respectively.
The havens of the American highway
The last two brands were created in the sunbelt when America was first getting acquainted with the automobile and the open road. Holiday Inn for the overnight pit stop, and 7-Eleven for thirst-quenching Slurpees and Big Gulps. Today, both original American chains are owned by foreign companies.
Should we still "buy American"?
For every one of these brands, there are numerous others held by foreign investors. This list is just the tip of the iceberg.
Now, we can lament the fact that these American icons are falling into the hands of foreigners, or we can learn a thing or two from their investing savvy. The legendary long-term investor Warren Buffett would probably recommend the latter.
I'll never forget when Buffett published an op-ed in the New York Times urging investors to "buy American" as the economy was falling apart before our eyes in 2008. He guided that "fears regarding the long-term prosperity of the nation’s many sound companies make no sense." Sure enough, I revisited the topic of top American brands in an article, "How American Brands Rule the World" four years later, and the 10 most valuable global brands -- almost all of which were American -- were drumming the market's returns.
Buffett, as usual, was prescient. And it's no surprise that he's teamed up with smart overseas investors like Brazil's 3G Capital to buy a stake in classic American companies like Heinz and Burger King in recent years.
Whether backed by foreigners or not, there's something American brands have that Buffett would be hard-pressed to find in many other countries: a resonance with global consumers. The more clout they carry with consumers, the more they're able to raise their prices without losing market share to the competition. That's called pricing power, and it's the "single most important decision in evaluating a business" according to the Oracle of Omaha.
Time-tested American brands tend to have pricing power. That's why Buffett's grown to love companies like Coca-Cola, Dairy Queen, and Heinz during his lucrative career. Sure enough, wealthy foreign investors have followed his lead or teamed up with him along the way.
For you, it might be hard to finagle the same deals Buffett's been able to swing, but you can still get in on the action and "buy American" for your portfolio.
Like I said before, the list above is just the tip of the iceberg. There are plenty of other great American brands -- and stocks -- that are ripe for the picking.
Isaac Pino, CPA owns shares of General Electric Company. The Motley Fool recommends Coca-Cola. The Motley Fool owns shares of General Electric Company and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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