In 1937, a seven-year-old entrepreneur in Omaha, Nebraska had the bright idea to buy six-packs of Coca-Cola from his grandfather’s store for a quarter and sell the bottles to his thirsty neighbors for a nickel apiece.
He couldn’t keep them in stock, especially during the sweltering summer months.
“I had no inventory or receivables… it was the best business I ever had,” said Warren Buffett, now 82. “But I made one mistake. I didn’t put the money I made into Coca-Cola stock.”
He rectified that mistake several years later. Warren Buffett’s company, Berkshire Hathaway, is now the largest Coca-Cola shareowner. He has never sold a share of Coke stock, and says he never will.
During a 20-minute conversation with Coca-Cola chairman and CEO Muhtar Kent today at the company’s annual general meeting in Atlanta, “The Oracle of Omaha” explained why KO will always have a “Buy” rating in his book.
“I’m the kind of guy who likes to bet on sure things,” said Warren Buffett, who served on Coke’s board of directors for 17 years. “No business has ever failed with happy customers… and you’re selling happiness.”
“I like wonderful brands,” he added. “If you take care of a great brand, it’s forever.”
Calling complacency the fatal flaw of many businesses, Warren Buffett credited Coke with resisting temptation to rest on its laurels. “You want a restlessness… a feeling that someone is always after you, but that you’re going to stay ahead of them,” he said. “That restlessness – that tomorrow is more exciting than today – you have to have it permeate the organization.”
Warren Buffett shared his thoughts on why America’s best days are still ahead, calling a baby born in the U.S. today the luckiest person in the world.
“Just think – in 1790, we had 4 million people here, and there were hundreds of millions of people in the world,” he said. “We weren’t smarter and we didn’t even work harder than people elsewhere, necessarily. But we had a system that unleashed human potential. And that system – quality of opportunity, a rule of law, a market system – has produced an abundance. It has improved the standard of living in my lifetime six to one.”
He concluded, “We’ve got the formula. We’ll always have problems… but the world does not belong to the pessimist, believe me.”