AUDIENCE MEMBER 00:00
This is Phil McCaw (PH) from Connecticut.
I wonder — it’s been some time since you’ve commented on Coca-Cola. And now that you’re off the board, I wonder if you feel free to comment on it?
WARREN BUFFETT 00:10
Yeah. Well, I won’t make particularly different comments than from when I was on the board.
But Coca-Cola is a fabulous company. Coca-Cola will sell over 21 billion cases of various products — more Coke than anything else — around the world this year, and it goes up every year.
It’s interesting. The stock in, what, 1997 or ’98, whenever it was, sold over $80 a share when the earnings were — I don’t remember whether they were $1.50 a share, or something like that — and the earnings then were not as good quality as the earnings are now when, you know, they were $2.17 or something like that.
And every year the — you know, they have — they account for a little greater share of the liquids consumed by people in the world.
They make fabulous returns on invested capital. You know, it’s a business that has — exclude the bottling part of it — has 5 or 6 billion of tangible assets and makes a similar amount.
So, there are not lots of big businesses in the world that earn 100 percent pretax on tangible assets.
And it will be a great business, and it’s been a great business.
The stock got to what, in retrospect, clearly was a ridiculous level, but you can’t hold the present management, Neville Isdell, responsible for that.
And he — you know, if the company sells 4 or 5 percent more units this year than last year, and the population of the world goes up 2 percent, it just means that more people are putting that particular source of liquid down their throats than the year before, and that’s been going on ever since 1886.
So it strikes us as a really wonderful business that sold at a very silly price some years back.
And you can definitely fault me for not selling the stock. I always thought it was a wonderful business, but clearly, at 50 times earnings, it was a silly price on the stock.
So we like it. We’ll own it ten years from now, in my view. Charlie?
CHARLIE MUNGER 02:31
WARREN BUFFETT 02:35
This peanut brittle gets caught occasionally, but it’s worth it. It’s worth it, definitely.
CHARLIE MUNGER 02:39
Why don’t you share with me?
WARREN BUFFETT 02:41
What? Oh, you want some, huh? (Laughter) Get your own box next time. (Laughter)
Now, do you want us to go to 14 or not?
STAFF: Yes. OK. Number 14.
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