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Collection: Warren Buffett - #51 | View on Food Businesses



Yes, sir. My name is Tom Conrad (PH) and I’m from McLean, Virginia. And I’m a shareholder. And I asked a question last year, Mr. Buffett, to you. I was struck with what you said, that it takes only three quality companies to be — to invest in to be set for a lifetime. And I asked you the question last year, “Should I wait until the market goes down, or should I get in now?” And you advised to get in now, and the three companies that I chose were Coca-Cola, Gillette and Disney. And because of that advice I was able to afford the ticket to come back this year — (laughter) — to ask you a second question. (Buffett laughs) And my question is this. I’m thinking of — WARREN BUFFETT

You ought to quit while you’re ahead, but go ahead. (Laughter) AUDIENCE MEMBER

I’m thinking of expanding to a fourth company. The fourth company that I’m thinking of is McDonald’s. And — WARREN BUFFETT


— I just wanted to ask you if you feel that McDonald’s has the same ability to dominate the way Coca-Cola and Gillette has. And secondly, do you feel that if the answer is yes, that I should wait until the price comes down a bit, or get in now? And that’s my question. WARREN BUFFETT

Would you like it to the eighth of a point, or shall we round off? (Laughter) In the annual report, we talked about Coca-Cola and Gillette in terms of their base business being what I call “The Inevitables.” But that related, obviously, to the soft drink business in the case of Coca-Cola and the shaving products with Gillette. It doesn’t extend to necessarily everything they do. But fortunately in both those companies those are very important products. I would say that in the food business, you would never get the total certainty of dominance that you would get in products like Coca-Cola and Gillette. People move around in the food business, from where they eat, from — they may favor McDonald’s but they will go to different places at different times. And somebody starts shaving with a Gillette Sensor Plus is very unlikely to go elsewhere, in my view. So they do not — you just — you never would get in the food business, in my judgment, quite the inevitability that you would get in the soft drink business with a Coca-Cola. You’ll never get it again in the soft drink business. I mean, it took a hundred — I guess it’d be 1886, so it’d be about 111 years to get to the point where they are. And the infrastructure’s incredible, and — so I wouldn’t put it quite in the same class, in terms of inevitability. That doesn’t mean — it can be a better stock investment, depending on the price. But you’re not going to get the price from me, and knowing Charlie I doubt if you’ll get the price from him. But we’ll give him a chance. (Laughs) (Laughter) He’s breathing, folks. He’s breathing. (Laughter and applause) CHARLIE MUNGER

We’ve got this down to a routine. (Laughter) No, I have nothing to add, Warren. WARREN BUFFETT

OK. (Laughter) I didn’t have anything to say, either. I just took longer. (Laughter)

How about area 2?


~ Please visit the site above for full video of Berkshire Hathaway Annual Meeting.


[YAPSS Takeaway]

"In the food business, you would never get the total certainty of dominance that you would get in products like Coca-Cola and Gillette." ~Warren Buffett

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