The billionaire investor, who purchased See’s Sweet in 1972, says individuals affiliate the packing containers with romance.
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This story initially appeared on Enterprise Insider
Warren Buffett loves utilizing Valentine’s Day to elucidate why See’s Candies is his “dream enterprise.”
The billionaire investor and Berkshire Hathaway CEO says individuals affiliate the packing containers of sweets with romance. Subsequently, See’s can value them based mostly on their emotional worth as an alternative of their manufacturing price.
Berkshire-owned See’s does not have to fret about rivals undercutting and stealing its prospects both, as individuals will not go for cheaper sweet if their relationships would possibly undergo, Buffett argues.
“Should you go to your spouse or your girlfriend on Valentine’s Day — I hope they’re the identical particular person — and say, ‘this is a field of sweet honey, I took the low bid,'” Buffett instructed shareholders in 2017, “It loses somewhat [impact] as you undergo that speech.”
Heat emotions and fierce loyalty have allowed See’s to hike its costs from lower than $2 a pound in 1972 — when Buffett purchased the corporate for $25 million — to greater than $20 right this moment. Charging extra has allowed the confectioner to generate greater than $2 billion in pre-tax revenue for Berkshire over time.
Buffett referred to as it “the primary excellent enterprise we purchased” at Berkshire’s annual shareholder assembly in 2017.
“We made a judgment about See’s Candies that it could be particular,” he added. “Thankfully, we have been proper.”
Buffett has ceaselessly highlighted the model’s uncommon energy and devoted buyer base.
Individuals had “taken a field on Valentine’s Day to some lady and she or he had kissed him … See’s Candies means getting kissed,” he instructed business-school college students on the College of Florida in 1998. “If we are able to get that within the minds of individuals, we are able to increase costs.”
“Should you give a field of See’s sweets to your girlfriend on a primary date and she or he kisses you … we personal you,” the investor mentioned in “Changing into Warren Buffett,” an HBO documentary.
“We might increase the value of the packing containers tomorrow and you will purchase the identical field,” he added. “You are not going to idiot round with success.”