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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

#21

Post by CydeWeys »

ackbar03 wrote: post #14
Animats wrote: post #12

It'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?

It's always been a premium product. Buffet increased the prices to the cost the market would bear for said product. You could argue they were giving it away too cheaply before that.

Re: See's Candies is Warren Buffett’s ‘dream’ investment

#22

Post by Animats »

Barrin92 wrote: post #18
Animats wrote: post #12

It'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 do…

Competition generally eliminates these kinds of margins.

That's last-century thinking, from when manufacturing cost dominated. Today, it's all about building a monopoly and crushing any new entrants. Comcast. Apple. Google. Facebook. CVS. The US is down to four big banks.

Re: See's Candies is Warren Buffett’s ‘dream’ investment

#23

Post by 01100011 »

I'm pretty sure the peanut brittle has crack cocaine in it. Avoid at all costs unless you want to spiral into a never ending addiction.

Sees is able to transform cheap ingredients into a premium product. It has a strong brand and pricing power. These are good things to have in a company.

Still though, it's a luxury good and not something I'd want to own as we head into a recession. Own things people need, not things they want.

Re: See's Candies is Warren Buffett’s ‘dream’ investment

#24

Post by Barrin92 »

Animats wrote: post #22
Barrin92 wrote: post #18

Earlier quoted context omitted.

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 do…

Competition generally eliminates these kinds of margins. That's last-century thinking, from when manufacturing cost dominated. Today, it's all about building a monopoly and crushing any new entrants. Comcast. Apple. Google. Facebook. CVS. The US is down to four big banks.

That's not last century thinking. You can't create any monopoly for generic drugs, by definition. You're not even forced to buy an an expensive Apple or Google phone. You can buy a 200-300 dollar phone with more than decent specs. They reason why people are running around with 1k phones is because it's a status symbol.

It's exactly this century where you can buy anything at manufacturing cost from India or China if you want to, there's an entire political class upset about it.

I mean I'll give you Comcast, ISPs in the US in particular seem bad, but otherwise? Digital and electronic goods in particular have been driven down to the marginal cost of production, that's why 90% of the former are free.

Re: See's Candies is Warren Buffett’s ‘dream’ investment

#25

Post by jjeaff »

Animats wrote: post #22
Barrin92 wrote: post #18

Earlier quoted context omitted.

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 do…

Competition generally eliminates these kinds of margins. That's last-century thinking, from when manufacturing cost dominated. Today, it's all about building a monopoly and crushing any new entrants. Comcast. Apple. Google. Facebook. CVS. The US is down to four big banks.

Four big banks, but I don't see much competitive advantage to having such large banks. In fact, many people choose one of the thousands of smaller, regional banks because customer service or services in general are better.

Re: See's Candies is Warren Buffett’s ‘dream’ investment

#26

Post by user3939382 »

Barrin92 wrote: post #24
Animats wrote: post #22

Earlier quoted context omitted.

Competition generally eliminates these kinds of margins. That's last-century thinking, from when manufacturing cost dominated. Today, it's all about building a monopoly and crushing any new entrants. Comcast. Apple. Google. Facebook. CVS. The US is down to four big banks.

That's not last century thinking. You can't create any monopoly for generic drugs, by definition. You're not even forced to buy an an expensive Apple or Google phone. You can buy a 200-300 dollar phone with more than decent specs. They reason why people are running around with 1k phones is because it's a status symbol. It's exactly this century where you can buy anything at manufacturing cost from India or China if y…

The missing key concept here is "regulatory capture". In many industries, companies get enough money and power that they can afford to rewrite the laws to lock themselves in and put up a big barrier to entry to keep competition out.

Re: See's Candies is Warren Buffett’s ‘dream’ investment

#27

Post by Scoundreller »

jjeaff wrote: post #25
Animats wrote: post #22

Earlier quoted context omitted.

Competition generally eliminates these kinds of margins. That's last-century thinking, from when manufacturing cost dominated. Today, it's all about building a monopoly and crushing any new entrants. Comcast. Apple. Google. Facebook. CVS. The US is down to four big banks.

Four big banks, but I don't see much competitive advantage to having such large banks. In fact, many people choose one of the thousands of smaller, regional banks because customer service or services in general are better.

US has more banks than any other country by a factor of 10. Now, they may not all be retail banks, but still, there’s more choice in the US than elsewhere. Then there’s credit unions too.

https://www.helgilibrary.com/charts/what-country-has-the-mos....

Re: See's Candies is Warren Buffett’s ‘dream’ investment

#28

Post by Animats »

mistrial9 wrote: post #20
Animats wrote: post #12

It'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.

Controlled scarcity increases profits, as companies are now discovering. If there's some place in the distribution channel where the incumbent can block new entrants, prices can be increased enormously without facing market forces.
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