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Buffet describes the 'businesses with franchise value' as a company with a large moat - or brand value. That's why he owns large stakes in companies like Coca-
by Bricejm 16y ago
Buffet describes the 'businesses with franchise value' as a company with a large moat - or brand value. That's why he owns large stakes in companies like Coca-Cola. They're not unique, but consumers are willing to pay a premium even though there are competitors that offer a similar product.
- jakarta 16y agoYeah, I mean one of the reasons he purchased Coca-Cola was actually because of what Roberto Goizueta did when he came into the company. At the time Coke was #2 in supermarkets behind Pepsi. Goizueta did a lot of great things. He separated out the bottler business and got them to focus on returns on invested capital with every investment they made. He made a ton of money for shareholders. Buffett has remarked that he held KO stock too long but now I believe he keeps it mainly to collect the dividends, his cost basis is low.
- learner4life 16y agoCoke is now wanting to reacquire the bottling business to keep the costs low. Last year Pepsi re-acquired its entire bottling business and runs it by itself.
- jakarta 16y agoYeah, if you watch his comments on CNBC, he was a bit disappointed by that decision since it will consume more capital in the business. He prefers just owning the concentrate business.