Warren Buffett loves utilizing Valentine’s Day to clarify why See’s Candies is his “dream enterprise.“
The billionaire investor and Berkshire Hathaway CEO says individuals affiliate the containers of goodies with romance. Subsequently, See’s can value them based mostly on their emotional worth as an alternative of their manufacturing value.
Berkshire-owned See’s does not have to fret about rivals undercutting and stealing its clients both, as individuals will not go for cheaper sweet if their relationships would possibly undergo, Buffett argues.
“If you happen to go to your spouse or your girlfriend on Valentine’s Day — I hope they’re the identical particular person — and say, ‘here is a field of sweet honey, I took the low bid,'” Buffett advised 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 in the present day. Charging extra has allowed the confectioner to generate greater than $2 billion in pre-tax earnings for Berkshire over time.
Buffett known 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 advised 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 elevate costs.”
“If you happen to give a field of See’s goodies to your girlfriend on a primary date and she or he kisses you … we personal you,” the investor mentioned in “Turning into Warren Buffett,” an HBO documentary.
“We may elevate the worth of the containers tomorrow and you will purchase the identical field,” he added. “You are not going to idiot round with success.”