Hidden champions are small to middle-sized companies that operate very successfully in their markets, but tend to not be particularly well known to consumers and even sometimes to their competitors. The goods and services offered by these types of companies, which tend to be somewhat commonplace and generic, are often produced at costs that are very low and generate steady income for the companies. At times, hidden champions will private brand their products for other companies, an approach that allows them to further remain below the radar.
There are several characteristics associated with hidden champions. The companies are often privately owned rather than being publicly traded. It is not unusual for the companies to export a considerable amount of their product to a variety of foreign markets, usually using brand names that are not considered to be major players within the marketplace. Hidden champions sometimes focus on producing goods for other companies that are more well known, ultimately branding those goods with the more prominent brands and using the production standards required by their clients.
For example, a hidden champion may be a family-owned business that produces paper containers for fast food restaurants. Thanks to private branding, the company may produce branded containers for a number of different restaurants in operation around the world, without anyone ever knowing that the small company generates billions of units each year and earns a steady and significant volume of business. In like manner, hidden champions may produce other goods that consumers use every day, either under a contract with a brand name or even some obscure product name that consumers tend to not remember easily.
Hidden champions are found in just about every type of industry. They may produce all sorts of equipment and replacement components, housewares, clothing, and even grocery products. The quality of the goods produced will vary, with some champions focusing more on quality while others target the production of goods and services that are of adequate quality but also produced inexpensively and intended for sale to low- to middle-income customers.
Operating with relatively little public recognition can have the benefit of allowing hidden champions to go about their business without having to deal with issues such as frequent buyout attempts or even hostile takeovers. Since the companies are not particularly well known to the buying public, hidden champions may go unnoticed by corporate raiders or at least be considered less viable, since there is no name recognition to generate publicity that would allow the raider to sell off the champion’s assets at a significant profit.