On Valentines Day Warren Buffet Explains Why See's Candy is His 'Dream Business'
The billionaire investor, who bought See's Candy in 1972, says people associate the boxes with romance.
The billionaire investor and Berkshire Hathaway CEO says people associate the boxes of chocolates with romance. Therefore, See's can price them based on their emotional value instead of their production cost.
Berkshire-owned See's doesn't have to worry about rivals undercutting and stealing its customers either, as people won't opt for cheaper candy if their relationships might suffer, Buffett argues.
"If you go to your wife or your girlfriend on Valentine's Day — I hope they're the same person — and say, 'here's a box of candy honey, I took the low bid,'" Buffett told shareholders in 2017, "It loses a little [impact] as you go through that speech."
Warm feelings and fierce loyalty have allowed See's to hike its prices from less than $2 a pound in 1972 — when Buffett bought the company for $25 million — to more than $20 today. Charging more has allowed the confectioner to generate more than $2 billion in pre-tax income for Berkshire over the years.
Buffett called it "the first outstanding business we bought" at Berkshire's annual shareholder meeting in 2017.
"We made a judgment about See's Candies that it would be special," he added. "Fortunately, we were right."
Buffett has frequently highlighted the brand's rare power and devoted customer base.
People had "taken a box on Valentine's Day to some girl and she had kissed him … See's Candies means getting kissed," he told business-school students at the University of Florida in 1998. "If we can get that in the minds of people, we can raise prices."
"If you give a box of See's chocolates to your girlfriend on a first date and she kisses you ... we own you," the investor said in "Becoming Warren Buffett," an HBO documentary.
"We could raise the price of the boxes tomorrow and you'll buy the same box," he added. "You aren't going to fool around with success."
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