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does not expect to have to change much. His modus operandi is
to buy companies that are already successful and still have po-
tential for growth. Benjamin Moore’s current success and status
in the marketplace over the decades speak to the company’s
consistent product quality, production, brand strength, and ser-
vice. Now, 121 years after its founding, the company brings in
about $80 million of prof it on $900 million in sales.
Looking at Benjamin Moore, Buffett also saw a well-run
company. Although there were questions a few years ago about
Moore’s retail strategy, the company has undertaken a brand re-
juvenation program in the United States and Canada. Benjamin
Moore increased its retail presence in independent stores with its
Signature Store Program and bought certain retail stores, such as
Manhattan-based Janovic, outright. Just before the Berkshire ac-
quisition in 2000, the company underwent a cost-cutting and
streamlining program to improve its operations.
All that adds up to favorable long-term prospects. Benjamin
Moore is a classic example of a company that has turned a com-
modity into a franchise. Buffett’s def inition of a franchise is one
where the product is needed or desired, has no close substitute,
and is unregulated. Most people in the building industry would
agree that Moore is a master in all three categories. Considering
the company’s arsenal of over 100 chemists, chemical engineers,
technicians, and support staff that maintain the company’s strict
product standards and develop new products, the risk of Ben-
jamin Moore paints becoming a perishable commodity is slight.
The on-going and rigorous testing to which all the Moore
products are subjected is a sign that Benjamin Moore will con-
tinue to set industry standards. Finally, although Benjamin
Moore products are not cheap, their quality commands pricing
power that defeats any notion of inf lation.