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Buffett search for sure thing propels 76-year junk food quest

Published on NewsOK Modified: August 27, 2014 at 9:31 am •  Published: August 27, 2014
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NEW YORK — Billionaire investor Warren Buffett got his entrepreneurial start at age 7, buying six-packs of Coke for a quarter, then hawking the beverages for a nickel apiece on hot summer nights.

Now, at age 83, he's still betting on simple indulgences.

Berkshire Hathaway Inc. agreed Tuesday to provide $3 billion of financing for Burger King Worldwide Inc.'s purchase of doughnut chain Tim Hortons Inc.

Buffett, Berkshire's chairman and chief executive officer, has built his career investing in businesses that have broad consumer recognition and appeal. Such wagers, like a $16.6 billion stake in Coca-Cola Co., allow him to park his capital for years while the companies grow in value, fueled by customers who can't resist their treats.

"I'm the kind of guy who likes to bet on sure things," Buffett said last year at Coca-Cola's annual meeting. "No business has ever failed with happy customers."

Tim Hortons may fit the bill. The chain, known for its Timbit doughnut holes, has a cult-like following in Canada, where it has more than 3,500 stores. Fans have sent the company pictures of tattoos they've gotten of its logo, CEO Marc Caira said Tuesday on a conference call with reporters.

"A Timbit has become as much a symbol of Canada as the beaver or the Mountie," Caira said. "The Tim Hortons brand has become part of the Canadian fabric."

Berkshire also owns See's Candies and Dairy Queen, which sells ice cream and burgers. In 2008, Buffett's firm helped finance Mars Inc.'s purchase of chewing-gum maker Wm. Wrigley Jr. Co.

"More people will be drinking Coca-Cola 10 years from now, or chewing Wrigley's gum," Buffett told Bloomberg Television's Betty Liu in a 2012 interview. "I know that."

Jorge Paulo Lemann's 3G Capital, which worked with Buffett last year to take ketchup maker HJ Heinz Co. private, controls Miami-based Burger King. In the Heinz takeover, Berkshire bought half the common stock for about $4.25 billion and invested $8 billion for preferred shares.

For fast-food chains and candy and soda companies, Buffett "can look into the future and not have to wonder if they're going to be doing great things," said Tony Scherrer, director of research at Smead Capital Management, which oversees about $1 billion including Berkshire shares. "Generations to come will be eating Mars candy bars."

Coca-Cola's sugary soft drinks and red meat, like the patties in Burger King's Whopper, are among the biggest contributors to obesity-related illnesses, said Dean Ornish, a nutrition researcher and clinical professor of medicine at the University of California San Francisco.

Consuming red meat is associated with an increased risk of premature death from heart disease as well as cancer, he said. People who regularly consume sugary drinks have a 26 percent greater risk of developing type-2 diabetes, according to the Harvard School of Public Health.

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