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Warren Buffett and Charlie Munger FAQ

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Re: Warren Buffett and Charlie Munger FAQ

#11

Post by jjeaff »

paganel wrote: post #8
cylinder wrote: post #6

> What are the economic characteristics that make Kraft a good business? WB: Most big food businesses are good businesses in that they earn good returns on tangible assets. If you own important branded assets in this country, and you have good assets, it is not easy to take on those products. Just imagine Coca-Cola. They sell 1.5 billion servings every day. It has been in everyone’s mind since 1886—associated with go…

And I'd imagine not many people associate "happiness and refreshment" with Coca-Cola anymore.

But maybe they do for Odwalla, Smart water, Dasani, Minute Maid, Vitamin Water, Zico Coconut Water, Nestea, Poweraid... The list goes on.

They are wealthy and have unprecedented massive distribution. They can buy up any new upstarts before they even think about becoming a real competitor. And physical drink distribution is much, much more expensive to scale than something like an software competitor. It took Coca Cola 100 years to build their current network.

Re: Warren Buffett and Charlie Munger FAQ

#12

Post by paganel »

jjeaff wrote: post #11
paganel wrote: post #8

Earlier quoted context omitted.

And I'd imagine not many people associate "happiness and refreshment" with Coca-Cola anymore.

But maybe they do for Odwalla, Smart water, Dasani, Minute Maid, Vitamin Water, Zico Coconut Water, Nestea, Poweraid... The list goes on. They are wealthy and have unprecedented massive distribution. They can buy up any new upstarts before they even think about becoming a real competitor. And physical drink distribution is much, much more expensive to scale than something like an software competitor. It took Coca Col…

Originally Buffet was saying that he believes and invests in trusted brands, I was just saying that Coca-Cola the trusted brand is not regarded as highly as 15-20 years ago. And I’ve personally only heard about Nestea from your list of brands (I’m not an American) and as such I have a really bad opinion of the product behind said brand (I see it as sugary water masquerading as “tea”). Otherwise I agree, building a logistics holding company is hard, but Buffet said he invested in companies like Coca-Cola for their brand value not for their logistics know-how.

Re: Warren Buffett and Charlie Munger FAQ

#13

Post by hisnameismanuel »

paganel wrote: post #12
jjeaff wrote: post #11

Earlier quoted context omitted.

But maybe they do for Odwalla, Smart water, Dasani, Minute Maid, Vitamin Water, Zico Coconut Water, Nestea, Poweraid... The list goes on. They are wealthy and have unprecedented massive distribution. They can buy up any new upstarts before they even think about becoming a real competitor. And physical drink distribution is much, much more expensive to scale than something like an software competitor. It took Coca Col…

Originally Buffet was saying that he believes and invests in trusted brands, I was just saying that Coca-Cola the trusted brand is not regarded as highly as 15-20 years ago. And I’ve personally only heard about Nestea from your list of brands (I’m not an American) and as such I have a really bad opinion of the product behind said brand (I see it as sugary water masquerading as “tea”). Otherwise I agree, building a lo…

Yes, you're right - one can dominate the cola industry, but if the cola industry itself goes away, one has serious problems.

To your other point, Buffett doesn't always have the time to elaborate on each answer, so perhaps you missed it in this context. In general, a supreme distribution network is something that he values highly. It's known as having a 'moat' and is one of his most cited investing principles.

Re: Warren Buffett and Charlie Munger FAQ

#15

Post by hopler »

cylinder wrote: post #6

> What are the economic characteristics that make Kraft a good business? WB: Most big food businesses are good businesses in that they earn good returns on tangible assets. If you own important branded assets in this country, and you have good assets, it is not easy to take on those products. Just imagine Coca-Cola. They sell 1.5 billion servings every day. It has been in everyone’s mind since 1886—associated with go…

0. You are cherry picking one stock from a portfolio. That's not how investing works.

1. Buffett said that Kraft may not be the same, in the quote you cited.

2. Kraft today is not the same company as Kraft in 2008. The company split, and strong brands went to en.wikipedia.org/wiki/Mondelez_International which has done quite well.

Re: Warren Buffett and Charlie Munger FAQ

#16

Post by hopler »

paganel wrote: post #12
jjeaff wrote: post #11

Earlier quoted context omitted.

But maybe they do for Odwalla, Smart water, Dasani, Minute Maid, Vitamin Water, Zico Coconut Water, Nestea, Poweraid... The list goes on. They are wealthy and have unprecedented massive distribution. They can buy up any new upstarts before they even think about becoming a real competitor. And physical drink distribution is much, much more expensive to scale than something like an software competitor. It took Coca Col…

Originally Buffet was saying that he believes and invests in trusted brands, I was just saying that Coca-Cola the trusted brand is not regarded as highly as 15-20 years ago. And I’ve personally only heard about Nestea from your list of brands (I’m not an American) and as such I have a really bad opinion of the product behind said brand (I see it as sugary water masquerading as “tea”). Otherwise I agree, building a lo…

European brands: www.ccep.com/pages/brands

And anyway Europe isn't the whole commercial universe.

Re: Warren Buffett and Charlie Munger FAQ

#18

Post by lotsofpulp »

hisnameismanuel wrote: post #13
paganel wrote: post #12

Earlier quoted context omitted.

Originally Buffet was saying that he believes and invests in trusted brands, I was just saying that Coca-Cola the trusted brand is not regarded as highly as 15-20 years ago. And I’ve personally only heard about Nestea from your list of brands (I’m not an American) and as such I have a really bad opinion of the product behind said brand (I see it as sugary water masquerading as “tea”). Otherwise I agree, building a lo…

Yes, you're right - one can dominate the cola industry, but if the cola industry itself goes away, one has serious problems. To your other point, Buffett doesn't always have the time to elaborate on each answer, so perhaps you missed it in this context. In general, a supreme distribution network is something that he values highly. It's known as having a 'moat' and is one of his most cited investing principles.

Who would have serious problems if the cola industry goes away, except for the owners of the cola companies? It would be greatly beneficial to society, at least with a substantial decrease in healthcare costs.

Re: Warren Buffett and Charlie Munger FAQ

#19

Post by jjeaff »

lotsofpulp wrote: post #18
hisnameismanuel wrote: post #13

Earlier quoted context omitted.

Yes, you're right - one can dominate the cola industry, but if the cola industry itself goes away, one has serious problems. To your other point, Buffett doesn't always have the time to elaborate on each answer, so perhaps you missed it in this context. In general, a supreme distribution network is something that he values highly. It's known as having a 'moat' and is one of his most cited investing principles.

Who would have serious problems if the cola industry goes away, except for the owners of the cola companies? It would be greatly beneficial to society, at least with a substantial decrease in healthcare costs.

Not even the cola companies would care. They would probably just sell more juice and bottled water. And the bottled water has much higher margins.

Re: Warren Buffett and Charlie Munger FAQ

#20

Post by hisnameismanuel »

lotsofpulp wrote: post #18
hisnameismanuel wrote: post #13

Earlier quoted context omitted.

Yes, you're right - one can dominate the cola industry, but if the cola industry itself goes away, one has serious problems. To your other point, Buffett doesn't always have the time to elaborate on each answer, so perhaps you missed it in this context. In general, a supreme distribution network is something that he values highly. It's known as having a 'moat' and is one of his most cited investing principles.

Who would have serious problems if the cola industry goes away, except for the owners of the cola companies? It would be greatly beneficial to society, at least with a substantial decrease in healthcare costs.

Sorry - I think there's perhaps a disconnect in how I use English v others.

I was referring to the cola companies having problems.

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