Warren Buffett, the world’s most famous investor, thrives on a diet of Coca Cola, McDonald’s breakfasts and Dairy Queen ice cream.
At 94 and going strong, this clearly has done the man they call the Sage of Omaha no harm.
It also demonstrates his investment strategy of backing global consumer brands. He doesn’t just drink Coca Cola and eat Dairy Queen – he invests in the companies.
Apple and American Express are among the other brands he favours for his portfolio.
It has delivered a return of 5,502,284pc in his six decades as boss of the $1.1trillion Berkshire Hathaway fund. This is twice the return on the S&P 500 US stock market index between 1964 and 2024.
Buffett is now bowing out of his role, but his sway over the investment universe is unlikely to diminish. The insights of the world’s fifth richest man – Buffett has a $160bn (£120bn) fortune – are something to be prized at a time of uncertainty in the markets.
Investment sage Warren Buffett, 94, doesn’t just love his cherry Coca Cola, he has invested more than $1bn in the company
So can small investors make big bucks from big brands, too? Peter Branner, chief investment officer at Aberdeen Investments, says: ‘Buffett could be described as the original ‘finfluencer’ [financial influencer]. He has probably done more than anyone else to bring investing to life, and likely will continue to do so.’
The diverse brands that have won the Buffett blessing include Visa, Kraft-Heinz and Mitsubishi, the Japanese trading house.
Buffett thinks you should always bet on the US but, interestingly, his choice of electrical vehicle maker is the Chinese BYD, not Tesla.
Berkshire Hathaway also directly owns Dairy Queen and NetJets – provider of the private jets to celebrities, CEOs and sports stars.
As Buffett, a man with a flair for words and numbers, has put it: ‘When you find a truly wonderful business, stick with it. Patience pays, and one wonderful business can offset the many mediocre decisions that are inevitable.’
It sounds easy to place your trust in solid businesses with strong brands, but following this path will not be simple. Foreboding surrounds the outlook for the US.
The turbulence following Trump’s tariff threats did not make Berkshire shares any cheaper, however – the current price for the A shares is $769,000 apiece. The B shares, which have lower voting rights, are a slightly more affordable $518. This is a mere 2,026pc above the level at their creation in 1996.
In other words, investing directly is not an option for most UK private investors.
As Branner explains, private investors should be able to emulate the master, provided they can be patient, and also recognise that they will make mistakes – as Buffett certainly has done.
Here’s what you need to know about adding some brand power to your portfolio… the Warren Buffett way.
Coca cola and the importance of the moat
Buffett has always looked for brands that have an ‘economic moat’: a defensive barrier that fends off would-be competitors. Coca Cola embodies these qualities, which is why Buffett first bought the shares in 1988, shortly after the 1987 stock market crash.
At the time the shares stood at about $2.50. The price today is $70 owing to the attachment that people in more than 200 countries have with this drink.
Dan Brocklebank, of Orbis Investments, says that Coca Cola enjoys huge consumer loyalty – but its moat also relies on other key attributes. He adds: ‘Coca Cola has a phenomenal distribution system worldwide. You have to get the drink into every shop, cafe, restaurant.’
Five cans a day of cherry-flavoured Cola is Buffett’s beverage choice, making the lively and forceful nonagenarian the ultimate brand ambassador.
Analysts are similarly enthusiastic, with the majority rating Coca Cola shares a ‘buy’.
By contrast, Buffett’s foray into Kraft-Heinz, which began in 2013, illustrates that a moat may not shield a brand if management is poor.
A rueful Buffett has conceded it was not his best buy. Meanwhile, analysts rate Kraft-Heinz shares a ‘hold’, hoping, perhaps, that current management can do better.
Berkshire also has a slice of Domino’s Pizza which the majority of analysts consider to be a ‘buy’.
However, while Buffett may be fond of McDonald’s meals, Berkshire only briefly held the shares in 1996.
Does Buffett suspect that the fast food chain does not have sufficient competitive advantage? It seems that way.
Buffett first viewed Apple as more of a consumer goods company whose iPhone and other devices his grandchildren liked
Apple and why it’s all about price and timing
Buffett’s attention to price and timing has been crucial in his success. Brocklebank says: ‘Buffett has always been very selective about the price he pays for a share, seeking out great brands that are undervalued. If you pay a silly price for a great brand, it’s still a silly investment.’
Brocklebank points to Apple as the prime example of price and timing. When Berkshire first invested in 2016, Apple shares were trading at around $24. They have soared to $255 – an increase of 962pc.
Apple remains Berkshire Hathaway’s largest bet, although the holding has been trimmed recently.
When Buffett began to buy, he viewed the business less as a leader in innovation and more as a consumer goods company, whose iPhone and other devices his grandchildren liked.
Subsequently, the global devotion to Apple devices has vastly expanded, but the company faces an array of tariff and other challenges – such as a slump in sales in China. Apple’s phones for the US will no longer be made there with manufacturing being switched to India and Vietnam. There will still be tariffs to pay, however.
Apple’s CEO Tim Cook is a skilled problem solver, though, which is probably why 21 of the 48 analysts that follow the company rate the shares a ‘buy’, with only two declaring them a ‘sell’. The rest consider them to be a ‘hold’ or set to outperform the market.
At the annual general meeting, Buffett thanked Cook for making Berkshire a vast amount of money. As a result, Apple seems likely to be at the core of the fund for a while yet.
Buffett is big on Japan
Not all of Buffett’s favourite brands were born in the US. Berkshire holds chunks of Japanese sogo shosha trading houses: Itochu, Marubeni, Mitsui, Mitsubishi and Sumitomo.
At the end of 2024, these stakes were valued $23.5 billion, having been acquired for a total of about $13.8 billion.
The names of these corporations, whose empires span everything from oil to salmon farming, may not be familiar in the West – but they control businesses including the convenience stores that are a Japanese national institution. FamilyMart is part of the Itochu empire, while Mitsubishi has Lawsons.
The trade war may impede the progress of the trading houses. Yet, Buffett is evidently sanguine about their prospects as the fund has been adding to its holdings and has said he would like to own them ‘forever’.
Analysts rate Itochu and Marubeni a ‘buy’. Mitsui, Mitsubishi and Sumitomo are rated as a ‘hold’.
Buffett’s Berkshire Hathaway investment in Bank of America was made in 2011 – when the institution was also in a spot of bother
Banking on brands like Bank of America
Buffett likes a banking brand, but he is picky, as was shown at the height of the global financial crisis in 2008. On three occasions he declined to inject capital into Lehman Brothers, sensing the bank was doomed.
He did, however, come to the rescue of another bank – Goldman Sachs – taking a $5bn stake on which he made a $3bn profit.
The fund’s investment in Bank of America was made in 2011 when this institution was also in a spot of bother.
Since then, Bank of America shares have risen from $6 to $40 and the majority of analysts rate the shares a ‘buy’, following optimistic statements from the bank’s chief executive in the wake of the recent better-than-expected results.
Analysts are similarly keen on Citigroup, which Berkshire Hathaway has owned since 2022, also rating these shares a ‘buy’.
Citigroup shares have bounced by about a third since 2022. But, as of last year, the fund has been selling off small chunks of most of its bank shares – with the exception of American Express which was first purchased in 1991. This is another ‘forever’ stock.
As a result of the cash raised by these disposals, Buffett could have made much of his foresight during the April stock market rout – when other funds were hard hit.
The Sage of Omaha did not do so, of course. He’s not a petty man. But, thanks to the sales, the Berkshire cash pile is now $350bn, giving the fund ample scope to pursue bargain-priced shares in global brands if the US stock market suffers another reverse later this year.
By that time, Greg Abel – Buffett’s 62-year-old successor – will be in charge of the deals, although it is most unlikely that he swerve from the Buffett path.
Such a deviation would be ‘gobsmacking’, says Brocklebank, who points out that Abel will be primed to depend on another source of funds that enabled Buffett to become king of brands – insurance group Geico.
A household name in the US and the provider of a ‘float’ of premium income which can be invested, Buffett first spotted this opportunity in 1951 and Berkshire took over the whole business in 1996.
Obviously, this is something that ordinary investors cannot imitate. But if you are seeking to add some brand power to your portfolio, build a stash of cash so that you can shop like Buffett: doing your homework and preferring for reasonably priced shares in high-quality companies.
And don’t forget the moat. As Buffett himself put it: ‘I want sharks in the moat to keep away those who would encroach on the castle.’
