Warren Buffett and See's Candies: a Sweet Investment Love Story

Calling all shareholders of Berkshire Hathaway! Have you heard about the sweet investment love story between Warren Buffett and See's Candies? This article delves into the rich history of See's, Warren Buffett's personal affection for the brand, and the financial triumphs of this beloved candy maker. Discover how See's has proven to be a sweet investment for Berkshire Hathaway's shareholders, with returns surpassing 8,000%. Join us as we explore the enduring partnership and potential for continued growth and success in this captivating investment tale.

---

Introduction

In the annals of investment history, few stories are as compelling as the enduring partnership between Warren Buffett, the Oracle of Omaha, and the quintessentially American confectioner, See's Candies. This tale began in 1972, when Buffett's Berkshire Hathaway acquired See's for a modest sum. Now, over 50 years later, the investment has blossomed into a testament to the power of brand loyalty, quality products, and shrewd management. For Berkshire Hathaway's shareholders, See's Candies has been nothing short of a sweet investment, with returns surpassing 8,000%. This article delves into the rich history of See's Candies, explores Warren Buffett's personal affection for the brand, and examines the financial triumphs and cultural impact of this beloved candy maker.

The History of See's Candies

Founded in 1921 by Charles See and his family, See's Candies started with the simple premise of selling high-quality candies made from the finest ingredients ↗. The family business, rooted in Mary See's original recipes, quickly established itself as a purveyor of delicious chocolates and candies in Los Angeles, California. Over the years, See's expanded its reach, opening more than 200 stores across the United States and extending its footprint internationally.

The year 1972 marked a pivotal moment in See's history when Berkshire Hathaway, under the leadership of Warren Buffett and Charlie Munger, acquired the company. This acquisition not only transformed See's into a subsidiary of one of the world's most successful investment conglomerates but also set the stage for its exponential growth and profitability. Since then, See's has grown from $30 million in revenue with less than $5 million in pretax income to over $380 million in sales and $80 million in profits, a testament to its enduring appeal and business acumen ¹.

Warren Buffett's Love for See's Candies

Warren Buffett's fondness for See's Candies is well-documented. Not only does he indulge in the company's Peanut Brittle, but he also regards See's as one of his favorite businesses. The acquisition of See's Candies was a strategic move that aligned with Buffett's investment philosophy, which favors companies with a strong brand, loyal customer base, and long-term competitive advantage.

Buffett has often praised the management and employees of See's, attributing much of its success to their dedication and hard work. The incorporation of See's into Berkshire Hathaway's diverse portfolio has been a source of pride for Buffett, who keeps a box of See's peanut brittle at hand during shareholder meetings, a symbolic gesture of his affection for the brand ².

The Financial Success of See's Candies

The financial narrative of See's Candies under Berkshire Hathaway is nothing short of remarkable ↗. With an initial investment of $25 million, Buffett and Munger have seen See's generate over $2 billion in profits, requiring only an additional $40 million in capital investment. This extraordinary return on investment highlights the company's efficient capital allocation and the power of a strong brand to command premium pricing.

The financials of See's Candies provide a clear illustration of the company's success:

• Initial Investment: $25 million (1972)
• Additional Investment: $40 million
• Total Investment: $65 million
• Profits Generated: Over $2 billion
• Revenue Growth: From $30 million to over $380 million
• Profit Growth: From less than $5 million to $80 million in pretax income

These figures underscore the financial acumen behind Berkshire Hathaway's acquisition and the impressive growth trajectory of See's Candies ¹. Note: numbers from 2019, figures are usually not outlined in Berkshire's annual report ↗.

See's Candies' Impact on Berkshire Hathaway

Despite representing less than 0.1% of Berkshire Hathaway's holdings, See's Candies holds a special place in the conglomerate's portfolio ↗. Its contribution extends beyond mere financial metrics; it embodies Buffett's investment philosophy, which prioritizes businesses with durable competitive advantages and a focus on customer satisfaction.

See's Candies has served as a model for other investments within Berkshire Hathaway, demonstrating the value of brand strength and pricing power. The company's consistent performance and ability to generate significant cash flow with minimal capital investment have provided Berkshire with a source of funds to fuel other investments, amplifying the conglomerate's overall success ².

The Legacy of See's Candies

See's Candies celebrated its 100th anniversary in 2021, marking a century of confectionery excellence and tradition. The company's legacy is intertwined with California's history, where it has been a staple for generations. Its commitment to quality, as evidenced by its use of fine ingredients like 'couverture' chocolate from Guittard Chocolate Company, has been a cornerstone of its enduring appeal.

The company's cultural impact is also notable, with appearances in popular media such as "I Love Lucy" and a Kidsongs video, cementing its status as an American icon. Additionally, See's is recognized for its high employee retention rates, with some employees serving for over 40 years, indicative of a positive and stable work environment ³.

The Future of See's Candies

Despite facing challenges like the COVID-19 pandemic, which temporarily halted operations, See's Candies has demonstrated resilience and adaptability. The company has reopened with safety precautions in place and continues to maintain its brand legacy and customer loyalty. With a measured expansion rate of 2% per year, See's focuses on maintaining its high-quality standards and fanatical customer base rather than aggressive growth ⁴.

Looking ahead, See's Candies is poised to continue its tradition of excellence while exploring new initiatives to engage customers and expand its reach. The brand's ability to adapt while upholding its core values will be crucial in navigating the evolving confectionery landscape.

Conclusion: A Sweet Investment for Shareholders of Berkshire Hathaway

For over half a century, See's Candies has proven to be a sweet investment for Berkshire Hathaway's shareholders. The partnership between Buffett and See's is a prime example of the success that can be achieved through investing in companies with strong fundamentals and a loyal customer base. The lessons learned from this investment—patience, brand value, and quality—continue to resonate with investors and business leaders alike.

As Berkshire Hathaway and See's Candies move forward, the potential for continued growth and success remains high. This sweet investment love story is far from over, and shareholders can look forward to more chapters of profitability and delight in the years to come.

References