See's Candies
The iconic California confectioner that Buffett bought in 1972 for $25M and has since generated over $2 billion in pre-tax profits, exemplifying the "wonderful business at fair price" thesis.
See's Candies
Founded: 1921 (Los Angeles, California) Acquired by Berkshire: 1972 ($25M) Current Status: Berkshire Hathaway subsidiary Profit Since Acquisition: $2B+ (cumulative)
Overview
See's Candies is an iconic California confectioner, famous for boxed chocolates and the See's Candies "Black and White" centennial commercials. It was Buffett's first major acquisition and remains one of his best.
Why See's Has a Wide Moat
1. Brand Loyalty
See's is synonymous with premium California chocolate. The brand is deeply embedded in California culture.
2. Pricing Power
See's raises prices 5-8% annually with no apparent volume loss. Customers don't negotiate.
3. Gift-Giving Network Effect
Every holiday season, millions of Americans give See's boxes. The brand is the gift.
4. Geographic Moat
The original See's stores were in California, creating regional brand dominance that competitors couldn't easily enter.
The 1972 Acquisition
The Deal
- Purchase price: $25M
- Annual earnings at time of purchase: ~$4M
- Multiple paid: 6x earnings (expensive by Graham standards)
Why Buffett Bought It
Charlie Munger convinced Buffett to pay up for quality. The See's acquisition was the turning point:
"It was the first time we paid a really high price for a really good business. And Munger was right."
The Lesson
This acquisition taught Buffett:
- Wonderful business > mediocre business at cheap price
- Brand loyalty is quantifiable
- Price is what you pay, value is what you get
Performance Since Acquisition
| Metric | 1972 | Today |
|---|---|---|
| Investment | $25M | Worth $2B+ |
| Annual Profit | $4M | $200M+ |
| Years Held | — | 54 years |
| Total Return | — | 80x+ |
Famous Buffett Quote
"See's is a business that can raise prices 10% a year and nobody notices. That's a sign of an extraordinary business." — warren-buffett
Why It Fits the Moat Concept
| Moat Type | See's Evidence |
|---|---|
| Brand | Iconic California chocolate |
| Pricing Power | 50+ years of annual increases |
| Switching Costs | Habit and gift-giving tradition |
| Geographic Moat | California-specific brand |
Related
- warren-buffett — Who bought it for Berkshire
- charlie-munger — Who convinced Buffett to pay up
- moat — The brand moat in action
- compounding — 54 years of compounding
- capital-allocation — Buffett's best acquisition
- berkshire-hathaway — Where it resides