See’s Candies’ Dedication to a Quality Experience and Customer Loyalty

Warren Buffett calls it his favorite investment of all time—and this is coming from a someone with high-profile stakes in Apple, Coca-Cola, and Amazon. With more than 50 years of experience, Warren Buffett applauds his small, slow-growing See's Candies. Why? He says it is a "prototype of a dream business."

As a brand that has been around for almost 100 years, what See's lacks in growth, it makes up for in customer loyalty—earned through its uncompromising approach to quality. When the brand threatened to discontinue a handful of products in 1987, for instance, outraged fans showered so many curses and complaints on the firm it was forced to reverse course. This amount of engagement has justified Buffett to raise prices by 10 percent a year steadily. Combined with a slow-but-steady growth through the years had added up to a river of revenue for Berkshire Hathaway. Since 1972, the company has given Berkshire Hathaway well over $2B in income. That's a return of more than 8,000 percent or 160 percent+ per year.

"See's sales crept up to $383 million by 2007 (with $82 million in pretax profits), and an estimated $430 million by 2018. Since 1972, the company has given Berkshire Hathaway well over $2 billion in income. That's a return of more than 8,000 percent or 160-plus percent per year. Over the same period, the small operation required only $32 million in capital to run," explains The Hustle.

Just as it survived the Great Depression and the rationing of WWII, See's has weathered the storm of eCommerce. The bulk of See's sales still happen in-store, an experience that, in the words of ex-CEO Brad Kinstler, "allows [customers] to step back in time to more or less a different era." The logic makes sense, in dire time or in great times, what's the one certainty in the market? Candy…yes, candy. Think about it; it's always going to be purchased. It's a commodity that never tends to inflate or rise in price. We base a majority of our American holidays around it throughout the years, and as long as there are children being born and raised through the system, there will always be candy. We have such an emotional attachment to the product. That reasoning is what made Buffett go all-in on the company, and it's undoubtedly paid him dividends.

The recipe is simple - continue the plan that has worked for years and never disrupt the formula that has built the foundation of success to this point. Maybe it's not a sexy Silicon Valley start-up with the next greatest technology, but it's the consistency that makes it a hot buy and investment.

The value of customer loyalty and the importance of quality are a couple of apparent lessons. But probably the most important takeaway is that substance beats flash. In an era where companies often chase impressive growth while running up huge losses (hello, Uber and Slack), Buffett's all-time favorite investment is a reminder that the game is making money after all. Sometimes the best way to do that isn't to grow big fast, but to choose a great business and run it well for the long term, connecting with a loyal fan base going on 100 years now.

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