Now, let me just tell you something else about Mastercard. Buffett invested in Coca-Cola. He bought Coca-Cola stock for the first time. And from 1988 till 2000, it went up like 12 or 14 times. It went up a lot, they put about 1.2 billion, worth like almost 15 billion. Very nice run.
From 2000 onwards, when – so Coke was very cheap and by 2000, it was trading at 40 times earnings. From 2000 to 2018, Coke delivered a return of less than 3% a year okay. Why did it deliver return of 3% a year? It’s still a great company. The Chinese love Coke, do you love Coke? There you go.
Okay, so Coke has a global footprint, it does well everywhere, the bottling business is separated. It makes a lot of money, the return equity is great, just like Mastercard, it’s a great business. But the thing is the starting price that you pay, it matters. In 2000, you are paying more than 40 times earnings for that business and by 2018, it’s trading at 17 times earnings so the multiple went from 40 to 17.
Okay, so Mastercard actually, in my opinion, is not act as good a business as Coke. Why they’re not good as good business? Because it is subject to disruption. You know, in China no Mastercard. You guys use Mastercard in China? No, wiped out, not allowed to come in okay.
And the payment systems in China are way more advanced compared to Mastercard and they’re much cheaper – the fractional cost is much low. Mastercard gets 2% on every transaction. 2%. In 2030, I don't know whether they will get 2% you know what I am saying?
So now if I go to my favourite stock, Moutai. Do we love Moutai? Yes, absolutely, what a company. The ultimate moat – I can't think what another company which has a better moat than Moutai okay? Can Moutai be disrupted? How can Moutai's business collapse? What would cause the business of Moutai to collapse?
So we know – if I compare Mastercard to Moutai;
Mastercard can collapse.
Moutai is very very hard to collapse because 1000-year history and it’s embedded in people’s heads and they have so much inventory and you know the thing is it’s got all the brand cache, China is rising, all of those things, there are lot of tailwinds that keep coming, they can keep raising the price. You know, just keep raising the price.
So the thing is that Moutai – phenomenal moat. So Mastercard one of the issues is that payment system, it may be possible that in 2030, Mastercard is still doing fine. Possible. It’s also possible Mastercard in 2030 is not doing fine. We don't know.
So anyway my way of dealing with this is to play a game okay? Let’s play a game. And I could never get Guy [Spier] to buy even 1 share of Sunteck even after the contest started and everything.
The starting price that you pay, it matters.