3G Capital

With the Heinz purchase, moreover, we created a partnership template that may be used by Berkshire in future acquisitions of size. Here, we teamed up with investors at 3G Capital, a firm led by my friend, Jorge Paulo Lemann. His talented associates — Bernardo Hees, Heinz’s new CEO, and Alex Behring, its Chairman — are responsible for operations.

Two years ago my friend, Jorge Paulo Lemann, asked Berkshire to join his 3G Capital group in the acquisition of Heinz. My affirmative response was a no-brainer: I knew immediately that this partnership would work well from both a personal and financial standpoint. And it most definitely has.

CAROIL LOOMIS: So, my first question is from a man in Timpson, Texas, who happens to have a familiar name, Frank Gifford, but wants to make it clear that he isn’t the football Frank Gifford, but rather a travel photographer. And his question is a hard one. He says, “I’ve been a shareholder for 15 years, but I’m now suffering heartburn. Until recently I considered Berkshire an ethical company, benefiting society through” — and here he mentions two Berkshire companies headquartered in his home state — he says, ”— through BNSF and ACME Brick. “Two points call that opinion into question now: One is the Seattle Times story on predatory practices at our Clayton Homes subsidiary. “Clayton mainly responded with platitudes to this article and would not answer questions, so I have to assume the facts in the story are correct. “The other point that I want to mention is our growing partnership with 3G Capital. I sold my Tim Horton stock in disgust before 3G gutted 20 percent of the corporate staff and plunged this well-run company deep into junk territory. GREGGORY WARREN: This is sort of a follow-on to the 3G question. When we look at the body of work that the firm has put together in the consumer staples universe, Anheuser-Busch, InBev, Burger King, Tim Hortons, and now Kraft Heinz, one gets the sense that they view the average consumer staples firm as being undermanaged, with a potential for substantially greater levels of profitability. Given the ongoing struggles of many packaged food firms, most of which compete in a mature category against private label and/or store brand offerings that undercut them in price and diminish the value of their brands, and many of them having to deal with large retailers, like Walmart, that provide meaningful sales volumes but are also quite demanding and continuously pushing for the lowest price available, do you see the potential for further consolidation in the industry with a firm like Kraft Heinz emerging as a big consolidator? Or do you feel that Nestle’s more recent squawking about the deal, and 3G Capital’s reputation as being a bit heavy-handed with cost cutting, being enough to keep further consolidation at bay?

BECKY QUICK: All right. This question comes from Anne Newman (PH). She says that she’s a shareholder of the Class B stock. And her question is, “The primary investment strategy of 3G Capital is extreme cost-cutting after the purchase of a company. This typically includes the elimination of thousands of jobs. “With the current U.S. president focusing on retention of U.S. jobs, will Berkshire Hathaway still consider future investments with 3G Capital if those investments result in the purchase of U.S. companies and the elimination of more U.S. jobs?”