The billionaire investor, who purchased See’s Sweet in 1972, says individuals affiliate the containers with romance.
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This story initially appeared on Business Insider
Warren Buffett loves utilizing Valentine’s Day to clarify why See’s Candies is his “dream business.“
The billionaire investor and Berkshire Hathaway CEO says individuals affiliate the containers of goodies with romance. Due to this fact, See’s can worth them primarily based 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 may endure, Buffett argues.
“When you go to your spouse or your girlfriend on Valentine’s Day — I hope they’re the identical individual — and say, ‘this is a field of sweet honey, I took the low bid,'” Buffett instructed shareholders in 2017, “It loses a bit of [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 at the moment. Charging extra has allowed the confectioner to generate greater than $2 billion in pre-tax revenue for Berkshire over time.
Buffett referred to 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 often highlighted the model’s uncommon energy and devoted buyer base.
Individuals had “taken a field on Valentine’s Day to some lady and he or she had kissed him … See’s Candies means getting kissed,” he instructed business-school college students at the University of Florida in 1998. “If we are able to get that within the minds of individuals, we are able to elevate costs.”
“When you give a field of See’s goodies to your girlfriend on a primary date and he or she kisses you … we personal you,” the investor stated in “Changing 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.”