zyzhu2000

Thanks. These are the "hard" qualities and make sense to me. However, I cannot find any reference to this logic in Buffett's literature. In fact I have never seen the logic explained other than that "even if he invested billions of dollars to create a cola that competes with Coca Cola, he would not be able to do it." This said, if the true value of Coke lies in the distribution system, and if its executives recognize this too, then it is only logical for them to leverage this same distribution system to create other products. They could create an array of soda products, with some tweaks on the formula. But they didn't?

@rb, I buy Coke because it tastes okay, it contains caffeine, and I have some fond childhood memory attached to it. But it is not something I will miss much if it disappears tomorrow. I did not buy the stock. This is about my understanding of Buffett's literature. @Seanzy, thanks for the thoughtful response. So it is about brand loyalty, which is group psychology, which is mysterious. A brand gives consumers some unique expectations of the product or service. But how do we know what brand will have loyalty and what brand will not? Brand in printer papers will not matter much, even if a certain brand of paper will have some unique texture/feel. Some people swear by the Moleskine notebooks, but a lot of others seem content buying any reasonably high-quality notebooks. I personally don't have brand loyalty in things like toothpaste. So what makes Coke so special as opposed to yet another soda drink?

I understand the concept of moat. But I am very confused why Buffett thought that Coke and See's Candies had a moat. I often drink Coke, but I never really think that it is special. If there is no more coke tomorrow, I would not miss it much. It is the same for See's Candy. I bought some because Buffett raved so much about it. They were tasty for sure, but it was not something I would buy exclusively. I can't see what's wrong with giving a girlfriend candies of other brands. Maybe it is personal taste. Maybe I happen not to think these are big deals. There are other things that I think are big deals but are probably not very important or desirable to others. But the problem is that when investing is concerned, my taste does not matter. It is the collective taste that matters. So the question becomes how I can reliably judge the taste of a crowd without being biased by that of my own. Anyway, I am confused why Buffett thought there was a moat in Coke and See's Candy. I would appreciate if someone can explain it.