The Coca-Cola Company
🏗️ Origin of Relationship
Berkshire Hathaway first disclosed a major common stock position in The Coca-Cola Company in the 1988 Letter. At the time, this was Berkshire's largest single common stock investment ($592.5 million cost), representing a major shift toward high-conviction concentration in "Wonderful" businesses.
📈 Major Milestones
| Year | Event | Details |
|---|---|---|
| 1988 | Initial Investment | Berkshire acquires 14,172,500 shares for $592.5 million. |
| 1993 | Market Share Milestone | Coca-Cola's global market share of all soft drinks reaches an incredible 44%. |
| 1996 | Defense of Buybacks | Buffett aggressively defends Coca-Cola's share repurchases at high P/E multiples, explaining how they accrete intrinsic value for owners without tax friction. |
🎯 Strategic Importance
Buffett’s investment in Coke is a textbook example of his preference for dominant Moats and high returns on capital. It also marked the formalization of his "Forever" Holding Period. Buffett credits Peter Lynch for the analogy that successful investing is about "watering the flowers and cutting the weeds," and he identifies Coca-Cola as a "flower" that should be nurtured indefinitely. He agrees with Mae West that "Too much of a good thing can be wonderful."
🔗 Connections
- Key Personnel: Roberto Goizueta, Don Keough
- Related Concepts: The Moat, Holding Period, Portfolio Concentration, Intrinsic Value, Share Repurchases
- Core Sources: 1988 Letter, 1993 Letter, 1996 Meeting