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See's Candies is Warren Buffett’s ‘dream’ investment
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Re: See's Candies is Warren Buffett’s ‘dream’ investment
#12It's the slow and steady increase in prices that made it so profitable. About 5x over inflation during Buffett ownership.
This has happened to far too many items over the last few decades. Most of the things drugstores sell are cheap to make, but have steadily increased in price in the US over the last few decades. Vitamins used to be priced according to manufacturing cost. Slowly, the low-cost vitamins have been up-priced to match the expensive ones. Vitamin C is about $10/Kg in bulk, but about $100/Kg at a US drugstore.
Re: See's Candies is Warren Buffett’s ‘dream’ investment
#13Next week in Berkshire Hathaway investments: Dexcom
Re: See's Candies is Warren Buffett’s ‘dream’ investment
#14It's the slow and steady increase in prices that made it so profitable. About 5x over inflation during Buffett ownership. This has happened to far too many items over the last few decades. Most of the things drugstores sell are cheap to make, but have steadily increased in price in the US over the last few decades. Vitamins used to be priced according to manufacturing cost. Slowly, the low-cost vitamins have been up-…
So basically they changed it to a premium product?
Re: See's Candies is Warren Buffett’s ‘dream’ investment
#15My late grandmother loved Sees candies, and I frequently gave her a box for Christmas every year. Personally I always thought they were expensive and not as good as some of the artisanal chocolate you can find these days; like a product for older generations with older tastes.
And then I discovered their lollipops and little pops - both chocolate and butterscotch. They're uniquely good as hard candies, and I've never had anything quite like them anywhere else. Now I'm also a Sees candy customer.
Re: See's Candies is Warren Buffett’s ‘dream’ investment
#16Unfortunately the small candy company has a very reasonable business model, and generates stable revenues. Generating stable revenue is the worst thing that can happen to a company, because now your company can (and will!) be priced according to multipliers on fundamentals. A pie-in-the-sky business model with 0 launched products will fetch a much higher price on the markets
it's not the worst at all. it provides good recurring money or a nice exit.
Sure, getting a -10 P/E on a money losing business is great, if you can exit, but that is extremely luck driven and friends driven, which is harder to break into than running a good business.
Re: See's Candies is Warren Buffett’s ‘dream’ investment
#17Unfortunately the small candy company has a very reasonable business model, and generates stable revenues. Generating stable revenue is the worst thing that can happen to a company, because now your company can (and will!) be priced according to multipliers on fundamentals. A pie-in-the-sky business model with 0 launched products will fetch a much higher price on the markets
a concept of "cancer" comes to mind when you describe that, somehow..
Naturally. You may have also noticed that our economy has been growing explosively while providing less and less to most members of society.
We can keep extending the analogy by saying that the Fed has belatedly started some long-overdue chemotherapy by raising interest rates, but the late stage and metastasis make for a grim prognosis.
Re: See's Candies is Warren Buffett’s ‘dream’ investment
#18It's the slow and steady increase in prices that made it so profitable. About 5x over inflation during Buffett ownership. This has happened to far too many items over the last few decades. Most of the things drugstores sell are cheap to make, but have steadily increased in price in the US over the last few decades. Vitamins used to be priced according to manufacturing cost. Slowly, the low-cost vitamins have been up-…
is there branding to this? Because if Vitamin C is 10 bucks in bulk and 100 bucks in drug stores I'm about to open a 50 bucks vitamin C store in the US. Competition generally eliminates these kinds of margins. Quick check here on the German Amazon you can get Vitamin C ranging from 13€/kilogram to 117€/kilogram, they show that ratio explicitly.
If people want to pay 10x for the fancy bottle and name they can but I don't think they lack the alternatives.
Re: See's Candies is Warren Buffett’s ‘dream’ investment
#19Because he likes those candies!
Re: See's Candies is Warren Buffett’s ‘dream’ investment
#20It's the slow and steady increase in prices that made it so profitable. About 5x over inflation during Buffett ownership. This has happened to far too many items over the last few decades. Most of the things drugstores sell are cheap to make, but have steadily increased in price in the US over the last few decades. Vitamins used to be priced according to manufacturing cost. Slowly, the low-cost vitamins have been up-…
hmm you can differentiate your product via brand and placement to gain revenue OR participate in a commodity market, based on price and volume. There is no "law" to make products one way or the other. Price increases for commodity are a serious concern, but price increases for brand and placement, why not? really..
Public perception of scarcity is a cause for panic, and that is a real concern, regardless of origin.