Buying a Business 51
the company has equity interests in bottlers located in Mexico, South
America, Southeast Asia, Taiwan, Hong Kong, and China. In 2003, the
company sold more than 19 billion cases of beverage products.
The best business to own, says Buffett, is one that over time can
employ large amounts of capital at very high rates of return. This de-
scription f its Coca-Cola perfectly. It is easy to understand why Buffett
considers Coca-Cola, the most widely recognized brand name around
the world, to be the world’s most valuable franchise.
Because of this f inancial strength, and also because the product is so
well known, I use Coca-Cola as the primary example in Chapters 5
through 8, which detail the tenets of the Warren Buffett Way.
The Gillette Company
Gillette is an international consumer products company that manufac-
tures and distributes blades and razors, toiletries and cosmetics, stationery
products, electric shavers, small household appliances, and oral care appli-
ances and products. It has manufacturing operations in 14 countries and
distributes its products in over 200 countries and territories. Foreign op-
erations account for over 63 percent of Gillette’s sales and earnings.
King C. Gillette founded the company at the turn of the twentieth
century. As a young man, Gillette spent time strategizing how he would
make his fortune. A friend suggested that he should invent a product
that consumers would use once, throw away, and replace with another.
While working as a salesperson for Crown Cork & Seal, Gillette hit on
the idea of a disposable razor blade. In 1903, his f ledgling company
began selling the Gillette safety razor with 25 disposable blades for $5.
Today, Gillette is the world’s leading manufacturer and distributor
of blades and razors. Razor blades account for approximately one-third
of the company’s sales but two-thirds of its prof its. Its global share of
I buy businesses, not stocks, businesses I would be willing to
own forever.^11
WARRENBUFFETT, 1998