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Transcript and Video of Warren Buffett's Appearance at the Coca-Cola Annual Meeting

April 29, 2013 | About:
Canadian Value

Canadian Value

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Warren Buffett appeared at this year's Coca-Cola (KO) annual meeting and participated in a question and answer session with Coca-Cola CEO Muhtar Kent.

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Below is a transcript and link to video from the session:

Muhtar Kent: Now it’s my great honor to welcome a beloved member of our Coca-Cola family. He is in my opinion, and the opinion of everyone, without question one of the greatest business leaders, investors, and philanthropists of all time. Please join me in giving a refreshing Coca-Cola welcome to Warren Buffett.

Kent: Maybe not everyone in our audience actually knows your story, when you first started.

Buffett: Picture Omaha in 1937. I was seven years old and no air conditioning so the summers were hot and humid. People went out on their lawns at night just to try and cool off and I got the idea that maybe I could sell them what we you would call soft drinks and what we call pop. So I went around to a bunch of gas stations and in those days every gas station had a cooler with varying soft drinks in it and it had a little opener on the side and something to catch all the bottle caps. So I went around and collected all the bottle caps for weeks at these various gas stations. I collected 8,000 of them and then I sorted them all out and I saw that there were Coca-Cola overwhelmed everybody else. So, I decided to hook myself up to them.

Buffett: They were these little silver like ones in those days and my grandfather had a grocery store. So, I went to my grandfather and I said, “How about giving me a deal on Coke so I could sell it around the neighborhood?” and he said sold me at the rate of six bottles for a quarter and I went around and sold them for a nickel each and I sold out every time and I had no inventory. I had no receivables. I had the best business I ever had.

Buffett: But I made one mistake. I didn’t put the money I saved into Coca-Cola stock. But I rectified that mistake some years later.

Kent: What excites you these days in technology, innovation, new businesses?

Buffett: I like this one.

Buffett: I’m the kind of guy that likes to bet on sure things, Muhtar. Since 1886 and Jacob’s Pharmacy you have just seen year after year after year ‘til now you’ve got 1.8 billion 8 ounce servings a day around the world and when I joined the board in 1988, I don’t remember the exact figure, it was a whole lot less and you’ve got fewer shares outstanding now and you’ve got way more per capitas and you’re gaining share around the world so those are the kind of businesses I like. I like wonderful brands. You’ve got to take care of them. But if you take care of a great brand, you know, it’s forever. Those are the businesses I like. We own 400 million shares of Coca-Cola stock as you know. We’ve never sold a share and I wouldn’t think of selling a share. I think well, in my lifetimesince 1930, real GDP per capita in the United States has gone up six for one. Think of that: six for one in one person’s lifetime. We have not lost the secret sauce so that’s the kind of future I see ahead too and if that’s the future you want to own businesses that are going to participate in that future and we’ve done that for decades now at Berkshire Hathaway and we’ll continue to do it.

Kent: Could you say a few words about the United States? About how we’re prepared for meeting the challenges ahead in terms of economic trade policies, trade deficit, tax reform?

Buffett: Yeah, we always have problems. But Muhtar, the luckiest person on a probability basis in my view that’s ever been born in the history of the world is the baby being born in the United States today. I mean this country, just think about it, in 1790 you know, we had 4 million people here and there were hundreds of millions of people in the world and 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, rule of law, a market system has produced an abundance you can’t believe. I mean just look about you, think about what this looked like 200 years ago. There wasn’t anything here basically. And it improved the standard of living in my lifetime six for one. We’ve got the formula and it hasn’t been exhausted remotely. I mean just look at what’s happened in the last 15 or 20 years. We keep turning out people like Steve Jobs and whomever it may be and that’ll continue. So we’ll always have problems. I mean, ever since I got out of school I used to sell stocks. They’d always give you ten reasons why you shouldn’t buy them and you’ve heard them all throughout your life but the world does not belong to the pessimist, believe me. You’re selling happiness and having it at arms length away is a big part of it. You know the distribution system development. It’s the right formula, Muhtar, and it just has to be carried out with, you know, with extreme diligence and enthusiasm every minute of the day.

Kent: What are the things that you believe actually businesses need to do continue to crack that calculus for growth?

Buffett: Well what kills great businesses if you look at, I do believe in looking at history. I like to study failure actually and my partner says, “All I want to know is where I’ll die so I’ll never go there,” and we want to see what has caused businesses to go bad. The biggest thing that kills them is complacency. You want a restlessness a feeling that, you know that somebody’s always after you but you’re going to stay ahead of them. You always want to be on the move. When you’ve got a great business you know like Coca-Cola, there aren’t any like Coca-Cola but you really, the danger would always be you that you rest on your laurels. I see none of that obviously with Coca-Cola but that is the key to compete the same way when you’ve got 1.8 billion servings being sold daily as when you were selling you sold ten a day and that restlessness, that belief that tomorrow is more exciting than today. You just have it permeate the organization.

See the video here.

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Canadian Value
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