See's Candies is Warren Buffett’s ‘dream’ investment
thehustle.co
thehustle.co
Funny how that's the complete opposite of another celebrated investor: Jorge Paulo Leman from Brazil's 3G Capital Partners (Heinz, Popeye's, Anheuser-Busch, Tim Horton's, Bugger King, etc).
Their game is to buy brands with very strong customer loyalty and slash costs (and quality). In the long run they'll destroy the brand but until then will make enough profits to more than compensate for the investment.
They are similar to packaged bagels from the supermarket
We don't visit for the quality of the food or coffee. When we RVed around Canada a Tim Hortons was a great opportunity to get online and plan our next steps. It now had a kind of sentimental attachment which reminds us of the trip.
I used to work for Marin Bagels.
Hated the owner, but that's not my point.
Making bagels last more than a day is difficult task.
Real bagels need to be boiled.
These boiled bagels that are only flour, water, and salt. (there's so much yeast in the air of a bagel shop they don't need to add anymore.)
These bagels are only fresh for a few hours, and need to be freezed if you want anything resembling a fresh NY bagel.
My point is bagels are hard to make. That is good bagels. Good bagels need to be made daily.
Bagels in the store are basically white bread.
I still think there's a market for fresh bagels flash frozen. I noticed one company doing it, but the price point was too high.
It might be a good investment, but from my experience See's Candies is only good at packaging their mediocre products made with corn syrup. Before someone cites their FAQ: No, most of their candies do not have "cherry ingredients including glacé whole, glacé halves, and whole dipping cherries" sourced from a 3rd party supplier.
The largest part of their strategy has been cutting central costs (which are, not coincidentally, obscenely large at consumer goods companies). That has been their strategy since the early days.
The cost-cutting that you are seeing across the industry started because 3G exposed the fact that a lot of companies were running with incredible amounts of fat. But during that time, you have also seen massive increases in competition across the sector due to changes in consumer demand that has led to brand-destroying behaviour.
Yep. And it put one of my relatives on the unemployment line.
<anecdote>
He was responsible for importing cheap meat from Australia and New Zealand for Burger King and a bunch of prisons.
In the early 90's there was a brief wave of "made in USA" pride that swept America, and Burger King changed suppliers and advertised "Made with all American beef!"
That cut my relative out of the picture, and his prison clients weren't enough to make up for the loss, so he lost his job.
</anecdote>
I would much prefer a variety of meats that are more sustainably farmed with choices varying by season and availability limited by ecological factors with open-market pricing (with a fairly heavy tax) to naturally introduce a premium on delicacies.
Popeye's was mentioned in two Grammy-nominated songs in 2022, and dozens of other rap songs in the past few years.
Apparently Popeyes reacquired most of the ingredients and dishes in 2014, but they unfortunately didn't bring back the original biscuits.
So, kinda like the petty thrills that the "console wars" had.
Still, I watched with some admiration as MCD navigated the local export restrictions on beef in Argentina, and opened cafes there, served only grass fed local beef... then promoted that guy to open cafes in Europe and watched again as they brought hyperlocal beef producers in so you could buy a Charoux burger in Paris. That was deft.
If you're in Paris and you're willing to pay 15€ for your burger menu, King Marcel is ridiculously good.
It's been my experience that most "American" foods - and Chinese food too - are much better in France. Like, this is embarrassing, but compared to any roadside chain in America, the Buffalo Grill is incredible. It would be the best restaurant in most cities under 50,000 people in the US. It looks like an Applebee's and then they have freakin steak tartare which would be inconceivable in the US. And it's actually edible.
https://finance.yahoo.com/video/warren-buffett-kraft-heinz-p...
He, they, will always be known for this behavior, that will be there legacy. If you are wealthy, why spend the extra effort beyond being comfortable in gaining more wealth at the expense of companies, their customers. Like what relative improvement does 50 extra million mean to someone like that? It's seeking money for money's sake. Why not use the extra time and energy you have to make the world better, be known for something better, leave a positive legacy? Why do people like this choose to trade their dignity, their legacy, for more money that they don't even need?
I have to always correct them and tell them it's not Canadian.
This has happened to far too many items over the last few decades. Most of the things drugstores sell are cheap to make, but have steadily increased in price in the US over the last few decades. Vitamins used to be priced according to manufacturing cost. Slowly, the low-cost vitamins have been up-priced to match the expensive ones. Vitamin C is about $10/Kg in bulk, but about $100/Kg at a US drugstore.
How does one even know if the Vitamin C is Vitamin C? There is no government agency that confirms supplements and vitamins are what they say they are, nor are there penalties. The only thing I have heard of is the USP branding being a signifier of higher likelihood of the supplement/vitamin being what it says it is.
Good question. For the last few years I've subscribed to Consumer Lab. They have a rigorous testing program for vitamins and supplements.
My understanding is that it's voluntary, but the equivalent of the QC that prescription medications undergo.
The FDA should really focus entirely on consumer safety only. (It’s not a safety issue if your olive oil is Moroccan rather than Spanish or whatever.) And the FDA doesn’t have any mission to test if that 18/10 stainless steel sink is actually 18/10 stainless for example.
Trust in the marketplace is a very valuable asset, one that cannot be bought. It has to be cultivated and maintained over many, many years, and having the government do that makes perfect sense as it is a societal benefit.
I think that the 3rd parties have both more at stake to get it right and are less influenced than the gov.
Underwriters Laboratories.
If it were feasible to sue retailers for damages due to fraudulent vitamins, approximately 0% of supplements sold would be fake.
The problem is there isn’t adequate scientific evidence to back the efficacy of any of these supplement which is why they aren’t regulated in the first place.
While I would agree that good evidence is generally lacking on supplements, that’s different than “is the product as advertised”. Just because vitamin C isn’t a miracle drug wouldn’t justify selling sugar pills as vitamin C.
The website suggests random inspections. Just like the US does.
It's no guarantee, but you want a brand that perhaps charges a bit more because of their long track record of quality. The longer and more solid their track record of quality, the more motivation they will have to make sure that reputation stays intact.
That's about the best you can do.
https://www.foodsafetynews.com/2015/02/major-retailers-order...
> Three to four samples of each supplement purchased in different parts of the state were tested. Each sample was tested five times, for a total of 390 tests on 78 samples. Schneiderman said that only 4 percent of Walmart’s supplements (“Spring Valley” brand) actually contained the ingredients listed on the label, while 18 percent did at Walgreens (“Finest Nutrition” brand), 22 percent at GNC (“Herbal Plus” brand), and 41 percent at Target stores (“Up & Up” brand).
Costco may one day fall too but their brand is what they sell in store and they do actually seem to do due diligence (also they have the Kirkland brand)
But anyways - in regards to products & inflation...
"...our research shows that Apple have risen iPhone prices 26% higher than local inflation rates. "
If people want to pay 10x for the fancy bottle and name they can but I don't think they lack the alternatives.
That's last-century thinking, from when manufacturing cost dominated. Today, it's all about building a monopoly and crushing any new entrants. Comcast. Apple. Google. Facebook. CVS. The US is down to four big banks.
It's exactly this century where you can buy anything at manufacturing cost from India or China if you want to, there's an entire political class upset about it.
I mean I'll give you Comcast, ISPs in the US in particular seem bad, but otherwise? Digital and electronic goods in particular have been driven down to the marginal cost of production, that's why 90% of the former are free.
Sure you can. If you're the dominant player, you can pay or buy out new entrants. Happens all the time in generic drugs.[1]
[1] https://www.nytimes.com/2015/09/21/business/a-huge-overnight...
there are example employees I've seen that have this kind of leverage too
I work in the industry. It doesn’t happen all the time.
The prelegeri really is retail capture.
Sorry, I’m having trouble tracking down this term. Could you tell me what it means or what it means in this context?
Possibly connected to https://en.wiktionary.org/wiki/praelego#Latin and the form praelegere to 'read before' in Latin, either the same kind of lecture/lesson sense, or about the parent comment "reading 'regulatory capture' before should really be 'retail capture'"?
I wanted to say "the problem is retail capture", but somehow it filled in a Romanian word instead... Phone keyboards...
Just for completeness, "prelegeri" would be best translated as "lectures" - it made no sense at all in context, it only happened to match a few letters of what I fat-fingered.
It works surprisingly well, but it does sometimes fail pretty spectacularly when you're sloppy and mis-type too many letters. It also can't help much when words are ambiguous (is that an English "in" or a mistyped Romanian "în"?). Still, it's generally a godsend for typing in mixed languages (say, like in Spanglish, where you'll write unas palabras en Ingles, y altras in Spanish). They even include things like names of local politicians or cities or brands.
Windows does seem to have this as well as an option ("Multilingual text suggestions"), but individual apps might not (e.g. I haven't seen it in Outlook).
Two weeks ago I got a "9.5" (looks brand new, battery too) used Pixel 3a for 100$ on eBay. It's a perfectly fine phone with picture/video quality undersold by it's camera pixel count.
The specs are fine, the security isn't, and that's the problem.
https://news.ycombinator.com/item?id=31384732
"Don't say the money is like magnetically charged. It's not the money is attracted to the north. It's the people, an asshole whose idea of invention is coming up with excuses, couldn't come up with shit if he cleaned up after his dog for once. Wants what is rightfully for innovators (creation of wealth that can scale, through thought that can be imprinted many times) and tries to corner a market. It always has a name, it's not an organic thing, there is always a guilty party. Not ISP's, Comcast. Not local banking, Wells Fargo. Not healthcare, Christus. Say it, corner the market. They're trying to corner the market. The markets have been cornered."
https://www.helgilibrary.com/charts/what-country-has-the-mos....
Comcast, Apple, Google, and Facebook are all who they are because they manufacture the thing they're selling for cheaper than anyone else can.
Whether that "thing" is last mile connectivity, iPhones, or segmented advertising eyeballs.
But Vitamin C in general is an extremely cheap compound. The costs are going to be in things like packaging, shipping, warehousing, shelf space, accounting for lost shipments and returns, and similar overhead. For simple products that overhead can be orders of magnitude more than the core product.
Public perception of scarcity is a cause for panic, and that is a real concern, regardless of origin.
And then I discovered their lollipops and little pops - both chocolate and butterscotch. They're uniquely good as hard candies, and I've never had anything quite like them anywhere else. Now I'm also a Sees candy customer.
It feels like so many companies nowadays have forgotten about this and long term branding.
Everybody claims to want to be good, but (to crib from the Sees example in the article) isn't dedicated to being good at the expense of short term revenue and profits.
Their product is very consistent, as well as the branding. There are very few brands that have been so consistent for so long, See's has always kept things relatively simple, clean, and consistent. It is easy to believe their commitment to quality.
The days of going to the butcher shop, the bread shop, having the dairy deliver, are basically over. See's somehow survived supermarkets and mass production. Seems that the See's family had the perfect candy shop model from the start.
Sees is able to transform cheap ingredients into a premium product. It has a strong brand and pricing power. These are good things to have in a company.
Still though, it's a luxury good and not something I'd want to own as we head into a recession. Own things people need, not things they want.
Dextrorotative glucose.
Grape sugar, blood sugar, corn sugar, glucose, dextrose. Dex.
Dextrose monohydrate, powder. It tried the syrup from the commodity seller I bought from, but it was too thick, too glassy and I couldn't mix it. Food production facilities get it in that form, however.
But the powder is great, you can get a little 1 pound bag from a brewer to try it, it looks...well it looks like powdered sugar, but fluffier and uses more volume. I buy them bulk, 25 kilo sacks at commodity prices.
Mix like three tablespoons per liter, it mixes easy and produces a foggy, slightly acidic water that eliminates hunger instantly. Promise.
.
Now be careful, you have to use a homemade mouthwash immediately afterward to clean your teeth, because this is very yum yum yummy for mouth bacteria. Like a petri dish.
Mouthwash ingredients: xylitol, baking soda, to taste. Like a tablespoon each per liter of tap water. I got it from a dentist online, Dr. Frei or Frey, can't find it anymore on my youtube. But it'll go everywhere the dextrose can go, and your teeth feel so so clean. You can add a drop of bleach to whiten your teeth...and definitely get some mint oil, like for massages, that shit, 100% mint oil. I use peppermint oil, Nature's Truth Essential Oil for aromatherapy. It's taken from the plant, so eh. 5 drops per liter.
.
Note that the mouthwash contains no dextrose, you first drink your dextrose, then rinse with the mouthwash and spit the mouthwash out, got that? And use your judgment. Your body will tell you what you're doing right or wrong. It knows what this shit is. You should get instant tangible noticeable effects from both, like immediate dissipation of hunger from dexwater as you drink it, and clean clean mouth with hardened stronger teeth (in 6 seconds) from the mouthwash. Great breath too from the mint.
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Both liquids are highly perishable, so you'll never find them retail. Must be homemade. Like they both last 48 hours. Both rot quickly when in water.
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Hey I could totally use affiliate links. Well I won't, except I will say if you're in Santiago de Chile get your dextrose monohydrate at Venser SA in La Cisterna.
I might post it as a main thread, and link to that post here.
A brief browse of academic literature makes me wonder if you have a specific blend of gut bacteria which leads to suppressed appetite after consuming dextrose.
Generating stable revenue is the worst thing that can happen to a company, because now your company can (and will!) be priced according to multipliers on fundamentals.
A pie-in-the-sky business model with 0 launched products will fetch a much higher price on the markets
We can keep extending the analogy by saying that the Fed has belatedly started some long-overdue chemotherapy by raising interest rates, but the late stage and metastasis make for a grim prognosis.
Interestingly Berkshire has never tried to develop any "synergies" whatsoever between its businesses, other than perhaps Dilly Bars at corporate events.
BRK noticeably avoids debt, prefers all cash deals and keeps a very strong pile of cash laying around just in case.
Fantastic, detailed read and I had zero interest in the man beforehand.
“Warren and I raised the prices of See’s Candies a little faster than others might have. There are actually people out there who don’t price everything as high as the market will easily stand. And once you figure that out, it’s like finding money in the street.”
[...] During the same period, the Retail Clerk’s Union attempted to organize the sales force in the stores. See’s since has triumphed in four attempts to organize by the Retail Clerk’s Union, mainly by paying higher than union-scale wages.
[...] At one time, See’s came under attack by a major candy producer from the Midwest. [...] They duplicated our identity and tried to grab out market. Of course, I informed Charlie and Warren about that fact.” Munger said, “If they are infringing on our trade mark in any way, we can go after them.” Stover’s eventually backed off.
Part of See’s competitive advantage is that it is a leader in its market. “In some businesses, the very nature of things is a sort of cascade toward the overwhelming dominance of one firm,” said Munger.
[...] Thus our first lesson: businesses logically are worth far more than net tangible assets when they can be expected to produce earnings on such assets considerably in excess of market rates of return.
[...] “Jack was a life-time friend of mine and an excellent, but somewhat eccentric, businessman... When we were due to close the purchase at Charlie’s office, Jack was late. Finally arriving, he explained that he had been driving around looking for a parking meter with unexpired time.” Far from being annoyed at the delay, says Buffett, he was delighted: “That was a magic moment for me. I knew then that Jack was going to be my kind of manager.”
That’s a pretty harsh curse for a business :(
:(
IIRC candy is also recession-resistant since people eat more of it for emotional support.
Be that as it may, See's candies are still tasty. And the factory smells amazing if you ever drive past it.
Yum <3
Buffett buys a discretionary, almost a luxury item, store, and jacks up the prices well above the rate of inflation. The owner of LVMH does the same.
This is not the same as a company that is advancing technology or building the same item, but for less money.
I value the guy who runs the sriracha sauce company higher than Buffett: https://theweek.com/articles/753620/sriracha-hot-sauce-guy-a...
"Warren and I raised the prices of See’s Candies a little faster than others might have. There are actually people out there who don’t price everything as high as the market will easily stand. And once you figure that out, it’s like finding money in the street.”
Whether that's a reason to admire Buffet, or dislike him, I'll leave to the reader. The impression I have of Buffet is that's not a romantic; he's out to make money in a sustainable, long-term way, and is unapologetic about it.
Value him in what sense? The sriracha guy made a terrible commercial mistake. The capitalist in me doesn't value a person who does that and I would hesitate investing in a venture he did over, say, Warren Buffet (hypothetically speaking of course).
People "like" Warren Buffett because he's the ultimate capitalist. Also...
If you value the sriracha guy over Buffett in a "altruistic this is better for the consumer" type of way, then sure you could make that case (as the article does), but also remember that Buffett is giving away all (most) of his profits to charity. The utilitarian could argue that Buffett's value is far greater. He's gobbled up all of the profits from various industries (for example luxury goods which provide little benefit to "the little guy") and is reapportioning those profits to charities that may actually save lives (not just dress up your rice). I don't know, I'm not arguing for Buffett personally, but there's more than whats on the surface.
If the sriracha guy is letting people keep their own money, that is decidedly utilitarian also...
"He does not bother going after restaurants and other businesses that use his sauce in their dishes and products, even though he could make millions from them in licensing fees. His company's advertising budget is nothing. He hasn't even bothered to trademark the name "sriracha."