QuestionerIn the annual report a few years back, you described Coca-Cola in Gillette as the two invincibles. With Pepsi as a strong competitor today, do you still continue to view Coca-Cola as the invincible?
WarrenYeah, I think the term I used was inevitables, actually, but it's very close to the same thing. And I think when I made that statement, I said, Coca-Cola and soft drinks or Gillette in blades and razors. I mean, I did not extend them to the entire corporate portfolio, particularly in the case of Gillette, but to the blade and razor business. Gillette now has 71% by value of the blade and razor business in the world. Just think of that. I mean, 71%. Here's a product that everybody knows what it does. They know how to make. You know, they know where it's sold. They know that it's a high-margin business. I mean, it isn't like the world or the capitalist world's unaware of the money that could be made if they could knock off Gillette, but they can't knock off Gillette, and it's 71%. And that's a little higher percentage than what I wrote about it. Actually, Coca-Cola's worldwide market share is a little higher now than it was when I wrote that five years ago. And I would say that five or ten years from now, I would be amazed if Gillette or Coca-Cola have lost market share in their respective fields. Coca-Cola sells half, roughly, of the soft drinks in the world, and soft drink consumption per capita goes up basically every year, and the per capitas go up, I mean, the capitals go up every year also. So you get these gains, maybe they're 3% or 5% in units or 4%. It was 5% in the first quarter, but it was poor than that, I think it was 3% last year. When you have half the world and the world's population is growing at a little under 2%, and you're getting 3% or 4% from something that's as pervasive as soft drinks, you know, you're doing all right. The Coca-Cola business has done fine. People went crazy in terms of valuing some of these businesses a few years back, and I think we had some cautionary language in there generally about the valuations at which the business is sold. But the business is, you know, 71% in blades and razors, that is a, there's some countries where it's 90. In the U.S., it's also about 70%. Those are huge market shares of something people use every day. In this country, you know, it's a little over 8 ounces per day, more like, well, actually more
[2:51]
Warrenlike 9 and 1⁄2 ounces per day, for every man, woman, and child in the United States, out the 64 ounces they drink. Well, you're not going to have galloping percentage increases from that arena, but the companies made basically good progress. People got carried away from the stock, with the stock, and I would argue that they may have gotten encouraged a little bit too much by not only Wall Street, but even by company pronouncements in terms of attainable, possibly attainable gains. There aren't large companies, there may be one someplace. somehow very large now that will grow at 15% or 18% a year, but it just isn't in the cards in the world. And we don't want anybody to think Berkshire could do that either, because we can't do it from a very large base. The world doesn't allow that. But it does allow making reasonable progress, and certainly Coke and Gillette, in those areas where I said they were inevitable, have done very well.