It was you that first bought up the term 'moat' which has been made popular by Buffett. My point is that pricing and distribution aren't the 'moat' for Coke. Why do you think coke could charge a premium in the first place?How do they get such wide distribution? Is the product superior? Not really. It's not cheaper either. The brand which has been built over many decades and has managed to weave its way into popular culture is a massive reason behind this. To discount the importance of this is not right.
As for the relationship with Coles and Woolworths and the low margins they are receiving, this says more about the uncompetitive grocery market in Australia than anything else. Coles and Woolworths have a lot of power owing to their huge size. But think about a new soft drink rival trying to enter one of the supermarket chains. Do you think it would be easy to get a fraction of the shelf space that coke enjoys? What sort of margins would this new entrant have to give up to get shelf space? If you want to talk about being taken advantage of....think of all those farmers selling unbranded fruit and veg to coles and Woolworths.
Another way to think about the value of the Coke brand is how difficult and expensive it would be to set up a brand new soft drink company that rivals coke in size and recognition.
If Warren Buffett is often quoted perhaps it is because what he says is generally right. His results are definitely way better than mine and I'm guessing most of the people on this forum. If investing were a different field, say science, can you imagine the general mass of scientists loathed to bring up, reference or talk about the ideas and lessons of one of the leading scientists in the world.
CCL Price at posting:
$9.49 Sentiment: Buy Disclosure: Held
