These are five highlights of Dean Nitin Nohria’s (Harvard Business School) one hour interview of Warren Buffett and Jorge Paulo Lemann (April 2017).
(2) Coca-Cola travels well (sells well in other countries), but Hershey and Cadbury do not. See’s Candy sells well in California, but not on the East Coast. If someone wants a Snickers bar they will be willing to pay a higher price than for a similar substitute.
(3) Jorge Paulo Lemann: 3G Capital (Brazil) builds companies to run for the long run. Beer is not growing in the U.S. and Europe. But Africa presents a growth opportunity (Anheuser-Busch InBev) with the acquisition of SAB Miller. Africa has a rapidly growing population of young people and has a hot climate — ideal for selling beer. 3G Capital plans to become an expert in marketing and in developing new products. There is not much more to be done in the beer market through acquisitions, but there is a lot to be done in the food area.
(4) A student asked whether the largest companies in the U.S. by market capitalization, technology companies (Apple, Google (Alphabet), Amazon, Facebook), are likely to remain the largest in the future. Buffett noted that these companies have no tangible assets and no receivables and together have a market capitalization of $2 trillion. This is a very different business model from previous decades. (Also, the candy business does not require capital.) But with technology, things change fast.
(5) Buffett mentioned that free trade is extremely important. It is the market system for the world. Those who are hurt by it would be helped through an earned income tax credit.