How come Sees Candy isn't sold wholesale?

[ratiman]

Buffett has said that it's hard to grow Sees sales but chocolatiers like Godiva and Lindt sell in supermarkets and also maintain independent shops. I've heard that Buffett wanted to maintain the Sees brand and didn't want Sees sold next to Hershey's or something but it works for Godiva and Lindt, it should work for Sees too.

[DooDiligence]

Probably an anomaly, but they've been in the Navy Exchange in Pensacola, FL for a very long time.

 

They've always had their own freestanding display placed very close to the checkout line.

 

I'm embarrassed to say I've never bought any, but I'll change that soon.
 

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FWIW, here's some old NEXCOM candy sales publications:

(scroll down to see See's hitting top spots for Christmas sales)

 

2013 Seasonal Best Sellers

 

https://www.ebmpubs.com/ECN_pdfs/ecn0914_NEXCOMHolidayCandy.pdf

 

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2016 Seasonal Best Sellers

 

https://www.ebmpubs.com/ECN_pdfs/ecn1217_NEXCOMTaylorCandyPlanogram.pdf

Edited May 14 by DooDiligence

[bookie71]

For several years one of the local nurseries (plants) has had See's for sale

[ratiman]

I didn't plan this but this is a good story about the growth of Sees.

 

https://thehustle.co/how-a-small-candy-company-became-warren-buffetts-dream-investment/

[LearningMachine]

1 hour ago, ratiman said:

I didn't plan this but this is a good story about the growth of Sees.

 

https://thehustle.co/how-a-small-candy-company-became-warren-buffetts-dream-investment/

 

I get wowed every time I see this table.   Buffet has said before he sees Apple as more like See's.  However, he was able to buy See's at about 10x, not at Apple's current 24x price.  Also, See's Profit margin compared to Revenue was extremely low 6.7% at time of purchase and had room to multiply to 9.8%.  Apple's already at gross margin/sales at 41.8%, operating income/sales at 29.8%, and net income/sales at 25.9%.

 

Just like See's was able to double price in 7 years, I think Buffett sees Apple having similar pricing power to be able to double the prices over the next 7-10 years if inflation continues.  But if P/E goes from 24 to 12 at some point that will negate that increase at least in public stock price at that time.   Maybe not permanently, but hoping there will be some buying opportunities close to P/E of 10 at some moment in the next 7-10 years. 

 

Edited May 15 by LearningMachine

[Parsad]

On 5/14/2022 at 7:58 AM, ratiman said:

Buffett has said that it's hard to grow Sees sales but chocolatiers like Godiva and Lindt sell in supermarkets and also maintain independent shops. I've heard that Buffett wanted to maintain the Sees brand and didn't want Sees sold next to Hershey's or something but it works for Godiva and Lindt, it should work for Sees too.

 

I spoke to Chuck Huggins about this many years ago...he was a very nice man!  Wondered why they didn't do that, as well as expand to Canada on the West Coast.

 

He said it was about quality and freshness control.  Apparently, the window of making chocolate to delivery at locations is 3 days maximum.  Huggins didn't want the distribution taking any longer than that.  Also said that competition was quite tough in Canada with some very well known local brands...Purdy's, Laura Secord, Roger's Chocolates, etc.

 

That's also the reason why they've grown organically for the most part out of regions where they were already known...other than a handful of licensed stores and kiosks outside of their core region.  The manufacturing sites are within three days delivery to the locations in their region.  This maintains quality control and margins are better on the retail side.  

 

Cheers!

[ratiman]

4 hours ago, Parsad said:

indow of making chocolate to delivery at locations is 3 days maximum.  Huggins didn't want the distribution taking any longer than that.  Also said that competition was quite tough in Canada with some very well known local brands...Purdy's, Laura Secord, Roger's Chocolates, etc.

 

That's also the reason why they've grown organically for the most part out of regions where they were already known...other than a handful of licensed stores and kiosks outside of their core region.  The manufacturing sites are within three days

Thanks, that's very helpful. But i'm not sure it totally answers the question. The same concerns about freshness would apply to Lindt or Godiva. I had no idea that chocolate could be fresh or not fresh.

[JGBRK]

I don't think See's uses preservatives.  Not sure about the others.  That might be the freshness factor.

[MikeL]

I remember from the past annual letters many years ago, WB mentioned they tried to expand See's to the east coast, but it was not successful, due to brand recognition.

 

I doubt the 3 days thing, if they sell >75% of volume in Dec, they are going to need a lot of capacity in Dec to produce See's, for the rest of year, the production lines don't have much to do.

[Parsad]

10 hours ago, ratiman said:

Thanks, that's very helpful. But i'm not sure it totally answers the question. The same concerns about freshness would apply to Lindt or Godiva. I had no idea that chocolate could be fresh or not fresh.

 

Godiva chocolate can sit for months in third-party retail stores.  They usually go on a half price sale after every Christmas...chocolate that has been sitting there since October!  Don't even get me started on Lindt!  So quality control isn't the same as See's. 

 

Now Godiva stores are different...the chocolate doesn't sit, just like See's stores.  Although, some of the boxed chocolates at Godiva's stores comes prepackaged.  Most of the chocolate at See's (not lollipops, toffee, etc) that you see in prepackaged boxes are prepared at the stores as chocolate arrives.  

 

Just because a burger may taste fine sitting for three hours under a heat lamp, doesn't mean it's fresh!  So when you buy See's at store locations, it's made recently.  Cheers!

[IceCreamMan]

On 5/14/2022 at 10:58 AM, ratiman said:

Buffett has said that it's hard to grow Sees sales but chocolatiers like Godiva and Lindt sell in supermarkets and also maintain independent shops. I've heard that Buffett wanted to maintain the Sees brand and didn't want Sees sold next to Hershey's or something but it works for Godiva and Lindt, it should work for Sees too.

 

You provided a good answer in your question: See's wants to protect its brand. Letters from Buffett to See's president to this effect are on the 'net.

[ratiman]

I've read that if you show up at a Godiva just before closing you can get the chocolate covered strawberries for free, right before they're thrown out. Just a heads up for the true value investors out there.

[DooDiligence]

3 hours ago, ratiman said:

I've read that if you show up at a Godiva just before closing you can get the chocolate covered strawberries for free, right before they're thrown out. Just a heads up for the true value investors out there.

 

[Ballinvarosig Investors]

Maybe it's like Herbalife, the distribution needs to be tightly controlled? 

 

Honestly, I never understood See's. I tried it at the Berkshire meeting and found it far too rich for my taste, I think the box I brought home ended up in the bin.

[longlake95]

Send the leftovers to me next time 

[Parsad]

51 minutes ago, Ballinvarosig Investors said:

Maybe it's like Herbalife, the distribution needs to be tightly controlled? 

 

Honestly, I never understood See's. I tried it at the Berkshire meeting and found it far too rich for my taste, I think the box I brought home ended up in the bin.

 

Are you crazy?!  Try the See's truffles...if they are too rich, then buy the chocolate covered nuts.  But don't throw them away!  Cheers!

[ratiman]

I stopped giving chocolate at Christmas because everybody on my list is either a) fat or b) desperately trying to keep off the weight. Nobody looks at a box of chocolates and says "Oh thank you for adding an inch to my waistline."