Comments on: Juicy Fruit, Gourmet Jelly Beans and Point of Sale http://blog.ionom.com/2009/07/wrigleys-juicy-fruit-gourmet-jelly-beans-and-point-of-sa/ Debate and advice on digital marketing Sat, 28 Aug 2010 10:01:25 +0000 http://wordpress.org/?v=2.8.5 hourly 1 By: Alan Reid http://blog.ionom.com/2009/07/wrigleys-juicy-fruit-gourmet-jelly-beans-and-point-of-sa/comment-page-1/#comment-4721 Alan Reid Fri, 14 Aug 2009 11:22:16 +0000 http://blog.ionom.com/?p=240#comment-4721 enjoyed reading your blog mentioning Wrigley’s juicy fruit; it reminded me of a talk given to a group of MBA students by the legendary investor Warren Buffett. In it Warren told the students if you were to give him a limitless budget to launch a brand to compete with Wrigley’s, he would not be able to do it, or for that matter make any discernable impact in the gum business. Warren’s association with Wrigley’s dates back to one of his earliest business ventures when at school, more than 60 years ago, he would buy packets of juicy fruit and six-packs of coca cola and would then go on to sell them as single sticks and bottles to his classmates. They are both classic Buffett businesses with a durable competitive advantage, they sell brands accessible to almost everyone which as the world has gotten wealthier take up a smaller part of an individual’s purchasing power, they importantly have pricing power, and most importantly of all they have what Warren would describe as mind share. Significant mind share no doubt influenced his decision later in his career to make a sizeable investment in both companies. The moat around these businesses is widened when mind share is increased and subsequently narrowed – think Ten Square toilets – when it decreases, every day the moat widens or narrows and only over a period of years is it possible to see if it has been maintained or not. Eastman Kodak, once associated with events such as the Olympics is an example of a business which over time let its mind share erode and let the moat around its business narrow to such an extent that Fujitsu was able to take advantage. Unlike Google, Microsoft, Apple or other fast evolving technology businesses, the business of chewing gum is unlikely to change much over the next 50 years. Warren likes this degree of certainty when investing in an ever changing world; I have to say I also quite like the idea of it myself! I will finish with a story of an older man who crashed his shopping trolley into that of a much younger man while they both were shopping. The elderly man explained apologetically that he had lost track of his wife and was preoccupied searching for her. His new acquaintance said that by coincidence his wife had also wandered off and suggested that it might be more efficient if they jointly looked for the two women. Agreeing, the older man asked his new companion what his wife looked like. “She’s a gorgeous blonde,”the man answered, “with a body that would cause a bishop to go through a stained glass window, and she’s wearing tight white shorts. How about yours?” The senior citizen wasted no words: “Forget her, we’ll look for yours.” enjoyed reading your blog mentioning Wrigley’s juicy fruit; it reminded me of a talk given to a group of MBA students by the legendary investor Warren Buffett. In it Warren told the students if you were to give him a limitless budget to launch a brand to compete with Wrigley’s, he would not be able to do it, or for that matter make any discernable impact in the gum business. Warren’s association with Wrigley’s dates back to one of his earliest business ventures when at school, more than 60 years ago, he would buy packets of juicy fruit and six-packs of coca cola and would then go on to sell them as single sticks and bottles to his classmates.

They are both classic Buffett businesses with a durable competitive advantage, they sell brands accessible to almost everyone which as the world has gotten wealthier take up a smaller part of an individual’s purchasing power, they importantly have pricing power, and most importantly of all they have what Warren would describe as mind share. Significant mind share no doubt influenced his decision later in his career to make a sizeable investment in both companies.

The moat around these businesses is widened when mind share is increased and subsequently narrowed – think Ten Square toilets – when it decreases, every day the moat widens or narrows and only over a period of years is it possible to see if it has been maintained or not. Eastman Kodak, once associated with events such as the Olympics is an example of a business which over time let its mind share erode and let the moat around its business narrow to such an extent that Fujitsu was able to take advantage.

Unlike Google, Microsoft, Apple or other fast evolving technology businesses, the business of chewing gum is unlikely to change much over the next 50 years. Warren likes this degree of certainty when investing in an ever changing world; I have to say I also quite like the idea of it myself!

I will finish with a story of an older man who crashed his shopping trolley into that of a much younger man while they both were shopping. The elderly man explained apologetically that he had lost track of his wife and was preoccupied searching for her. His new acquaintance said that by coincidence his wife had also wandered off and suggested that it might be more efficient if they jointly looked for the two women. Agreeing, the older man asked his new companion what his wife looked like. “She’s a gorgeous blonde,”the man answered, “with a body that would cause a bishop to go through a stained glass window, and she’s wearing tight white shorts. How about yours?” The senior citizen wasted no words: “Forget her, we’ll look for yours.”

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