Warren Buffett makes Sees Candies

Warren Buffett often uses Valentine’s Day to explain why See’s Candies is a “special” company.
The billionaire investor says people associate the boxes of chocolates with romance.
Therefore, See’s can raise prices and customers won’t switch to cheaper candy.
“If you go to your wife or your girlfriend on Valentine’s Day — I hope they’re the same person — and say, ‘here’s a box of candy honey, I took the low bid,'” Buffett said in 2017, “It loses a little [impact] as you go through that speech.”
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Warren Buffett loves using Valentine’s Day to explain why See’s Candies is his “dream business.”

The billionaire investor and Berkshire Hathaway CEO says people associate the boxes of chocolates with romance. Therefore, See’s can price them based on their emotional value instead of their production cost.

Berkshire-owned See’s doesn’t have to worry about rivals undercutting and stealing its customers either, as people won’t opt for cheaper candy if their relationships might suffer, Buffett argues.

“If you go to your wife or your girlfriend on Valentine’s Day — I hope they’re the same person — and say, ‘here’s a box of candy honey, I took the low bid,'” Buffett told shareholders in 2017, “It loses a little [impact] as you go through that speech.”

Warm feelings and fierce loyalty have allowed See’s to hike its prices from less than $2 a pound in 1972 — when Buffett bought the company for $25 million — to more than $20 today. Charging more has allowed the confectioner to generate more than $2 billion in pre-tax income for Berkshire over the years.

Buffett called it “the first outstanding business we bought” at Berkshire’s annual shareholder meeting in 2017.

“We made a judgment about See’s Candies that it would be special,” he added. “Fortunately, we were right.”

Buffett has frequently …read more

Source:: Business Insider

      

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