Tasting Quality: Berkshire's Defining Bet on See's Candies

Step into a See's Candies shop, and you're stepping into a world where quality, tradition, and a certain kind of nostalgia are present in every bite. But behind those delicious treats lies a story of business expertise, an unlikely partnership, and a strategic cornerstone in the Berkshire Hathaway empire.

• A slice of nostalgia in every bite: Since 1921, See's has captured hearts (and wallets) with Mary See's original recipes and nostalgic black-and-white stores, creating a loyal, multigenerational customer base.

• Beyond numbers: When Berkshire bought See's in 1972, Munger saw its brand loyalty as a major opportunity, inspiring Buffett to value intangibles like brand equity in future investments.

• Pricing power: See's has consistently raised prices without losing customers for half a century, proving the power of its brand.

• At the very heart of Berkshire: See's represents the essence of Berkshire's investment philosophy: low capital needs and high cash returns in a slow-moving industry.

See's Candies got its start in 1921, thanks to Charles See, who built the business around his mother Mary See's classic, homemade recipes. If you've ever picked up a box of See's, you've probably noticed Mary's face smiling back at you on the packaging. That iconic black-and-white checkerboard design? It was inspired by her own kitchen back in Pasadena.

The first shop opened its doors on Western Avenue in Los Angeles in 1921, offering a little slice of indulgence to a world just starting to recover from World War I. The business quickly took off, with its recognizable black-and-white stores – staffed by friendly, uniformed employees – becoming a staple across the West Coast. Just four years after its inception, See's operated 12 shops in the region.

What set See's apart was its insistence on using the finest ingredients and sticking to Mary's original recipes. Quality was never compromised, and Mary's image became a symbol of the brand's homemade, handcrafted appeal.

In fact, “Quality Without Compromise” became, and still serves as, the company's slogan. While the brand was rooted in traditional recipes and a timeless ethos, the real transformation was waiting decades down the line when two men with a penchant for businesses with durable moats would step in.

One of See's Candies' earliest Los Angeles locations, near the Grand Central Market.

One of See's Candies' earliest Los Angeles locations, near the Grand Central Market.

By the time Warren Buffett and Charlie Munger entered the scene, See's had already become a very successful, family-run company. But it was 1972, and a big shift was on the horizon. Buffett and Munger, already rising stars in the investing world, bought 100% of See's in 1972 for $25 million, which would later be defined as a pivotal moment in Berkshire Hathaway's history. But the deal wasn't without its doubts.

Buffett, ever the cautious, value-focused investor, was naturally skeptical. Paying $25 million – nearly three times book value – was far more than he normally paid for any business at the time. To him, the numbers simply didn't immediately scream "bargain."

But Munger? He saw something more.

See's wasn't just selling chocolates; it was selling a piece of California's heart and soul. Munger was confident that See's had something priceless: remarkable brand equity. For half a century, customers had been coming back for those signature chocolates, not just for the taste, but for the tradition. Munger believed this emotional connection was an intangible asset that went far beyond financial spreadsheets.

He was convinced that See's could steadily increase profits for many years, even if it never became a high-growth company. Why? Because See's customers were loyal, and they'd keep paying more for their chocolates over time – without needing any flashy innovations or meaningful reinvestment.

Munger pushed Buffett to see the bigger picture. He urged him to look past the raw financials and focus on what really mattered: See's ability to generate cash over the long haul. And, as it turned out, Munger was right.

Buffett has acknowledged Munger countless times for his spot-on intuition about this deal. See's didn't need to expand into a global empire to become one of Berkshire's crown jewels. Instead, its power came from consistently producing high returns on capital – thanks to its devoted customer base and the brand's ability to raise prices without losing customers.

This acquisition didn't just mark a financial win; it represented a turning point in Buffett's investment philosophy. Before See's, Buffett had focused heavily on undervalued companies based on hard numbers like book value. But See's taught him the value of things you can't always measure: brand, reputation, and customer loyalty. It was a shift in thinking that would shape many of his future investments.

In hindsight, Munger's insistence on buying See's, despite Buffett's initial hesitation, was a stroke of genius. What once seemed like a hefty price tag turned out to be one of the best deals they ever made. See's Candies wasn't just a sweet acquisition – it became a blueprint for Buffett's evolving strategy and a case study in the power of intangibles.

Here's a fun fact: Buffett and Munger made a tradition out of munching on See's Candies at Berkshire's annual shareholders meeting, especially their beloved Peanut Brittle. Buffett's love for See's sweets is no secret – he's joked about it countless times over the years, and it's now a staple at the event. In fact, See’s event kiosk sold eleven tons of candy, racking up $400,000 from, during the 2022 annual meeting.

We actually had the privilege to experience this live, as several Quartr team members embarked on the long journey from Sweden to Omaha to attend the event in 2022 and 2023 (the latter sadly being Munger's last). Rumors are now starting to circulate at the office about another trip in 2025...

A See's Candies' Peanut Brittle box that one of us carried back home to Sweden after our first Omaha visit in 2022.

A See's Candies' Peanut Brittle box that one of us carried back home to Sweden after our first Omaha visit in 2022.

When it comes to See's Candies, there's something almost magical about the way they've been able to increase their prices over the years without losing customers. This ability to raise prices and still retain a loyal following is what Buffett calls "pricing power," and it's a key factor in what makes See's such a valuable asset in Berkshire's portfolio.

The story behind See's Candies' pricing power is also a key chapter in Buffett and Munger's investing evolution, and it unfolded shortly after the acquisition in 1972. When they first bought See's for $25 million, Munger already had a strong intuition about the company's untapped potential. But it wasn't until they tested See's pricing strategy that both Buffett and Munger fully grasped the power of the brand and its ability to generate outsized returns through pricing power alone.

In the years following the acquisition, Buffett and Munger made a crucial decision: they started raising the prices of See's chocolates. Typically, raising prices risks losing customers, especially if a product is viewed as a commodity. But See's wasn't just selling chocolates – it was selling a cherished experience, particularly in California. For many customers, buying See's was deeply tied to tradition, especially around holidays like Christmas, Valentine's Day, and Easter.

To their surprise and delight, the demand remained incredibly resilient. See's had such strong brand loyalty that customers were willing to pay more without blinking – pricing power in its purest form.

The pricing experiments at See's convinced Buffett and Munger that they had acquired something much more valuable than they initially thought. See's ability to raise prices year after year without losing customers revealed the full strength of its brand. Buffett later described this pricing power as a reflection of the company's "moat" – a durable competitive advantage that allowed See's to generate outsized profits without needing to meaningfully expand capacity or invest in R&D.

In the 2007 Berkshire AGM, Buffett said:

It took a few years for Buffett to fully appreciate this, but by the late 1970s, he had joined Munger in being a strong believer in See's remarkable brand equity. Buffett has credited Munger countless times for pushing him in this direction.

As you've now understood, this revelation had a profound impact on future Berkshire investments. Buffett's focus shifted toward high-quality companies with pricing power, like Coca-Cola and Apple, where the strength of the brand allowed for similar dynamics. See's Candies essentially became a textbook case for Buffett on the importance of intangibles.

At the time of acquisition in 1972, a pound of See's chocolates sold for around $2. As the years went by, Buffett and Munger incrementally raised prices. By 2024, a pound of See's chocolates sells for around $25 – a 12.5x increase, and a gradual price increase of roughly 5% annually for over half a century. Despite these price hikes, See's loyal customer base stuck around, continuing to purchase the chocolates for special occasions and as gifts, proving the brand's emotional and nostalgic pull.

Visualizing See's price per pound increase between 1972-2024.

Visualizing See's price per pound increase between 1972-2024.

In the first decade under Berkshire's ownership, See's had already increased its annual pre-tax earnings from less than $5 million to $13 million, primarily by raising prices. By the year 2000, See's Candies was generating more than $60 million annually in pre-tax earnings, without needing any significant capital reinvestment.

See's wasn't just highly profitable – it didn't need to reinvest heavily expansion or inventory and could therefore operate with low maintenance costs and high cash flow. Between 1972 and 2023, See's has generated about $2 billion in cumulative cash flows for Berkshire.

Buffett has often credited See's as one of the foundational investments that helped pave the way for Berkshire's success. In his 2007 letter to shareholders, Buffett wrote, "Without See's, there would have been no Coca-Cola," a reference to how the qualitative insights regarding intangible assets led them to investing in Coca-Cola in 1988.

Thanks to Adam Mead's extensive work with “The Complete Financial History of Berkshire Hathaway”, which we highly recommend, and sourcing old Berkshire-related material, we have managed to create this visual that covers the first 27 years of See's after being acquired by Berkshire – including 22 years of pre-tax earnings. Apart from a few sporadic numbers in annual meetings or Buffett's shareholder letters, this is the only structured public financial data for See's as far as we are concerned.

See's Candies' revenue (1972-1999) and pre-tax earnings (1977-1999).

See's Candies' revenue (1972-1999) and pre-tax earnings (1977-1999).

See's Candies hasn't changed much over the years, and that's exactly why it has endured. The company isn't about rapid expansion, flashy marketing campaigns, or keeping up with the latest trends. Instead, it sticks to what it knows best: tradition, quality, and putting customers first. From day one, See's has stayed true to Mary See's original recipes, and that commitment to heritage has created a strong sense of nostalgia that keeps bringing customers back, generation after generation.

For many, a box of See's is more than just a collection of chocolates – it's a symbol of thoughtfulness, care, and love. Whether it's gifted for a birthday, an anniversary, or a holiday, See's carries emotional weight. People don't just buy chocolates; they buy into a tradition that feels personal and familiar, making it more than just a sweet treat.

So next time you're indulging in a piece of See's chocolate, remember that you're tasting more than just a sweet treat. You're tasting the result of decades of carefully cultivated branding and pricing power, a perfect example of how a business can thrive by knowing exactly what it does well and sticking to it.

This emotional connection is what Munger understood right away. They weren't just acquiring a candy company – they were buying into a piece of American culture. See's wasn't about chasing the latest trends or expanding to every corner of the globe. It was about staying consistent and delivering a timeless experience that resonated with people on a deeper level. That's the real magic of See's: it's not just candy; it's a part of people's lives, memories, and traditions. Quality Without Compromise.

See's Candies might be just a small piece of the massive Berkshire Hathaway empire, but it holds a special place in the puzzle. See's embodies many of the timeless principles that have guided Buffett and Munger's investment philosophy. It's the perfect reminder that sometimes, the best companies aren't the ones chasing global domination or trying to be everything to everyone – they're the ones that stick to what they do best and do it exceptionally well.

See's isn't just a profitable business for Berkshire; it's a symbol of their ethos. It represents the value of patience, quality, consistency, and above all, simplicity – traits that have been central to how Buffett and Munger think about investing.

And while See's doesn't make headlines with explosive growth or market-shaking moves, it quietly generates a steady stream of cash – money that Berkshire then uses to fuel other acquisitions and investments. From a financial standpoint, it's the perfect example of what Buffett loves: low capital needs and high cash returns in a slow-moving industry.

An old photo taken inside a See's Candies store where every employee is wearing a headpiece with the words “Quality First”.

An old photo taken inside a See's Candies store where every employee is wearing a headpiece with the words “Quality First”.

Even as the world keeps spinning forward, See's Candies stays delightfully grounded in its traditions. It's proof that staying true to your roots, while being open to a few subtle changes, can be a winning formula. Sure, the company has embraced online sales and found ways to bring its chocolates to new customers in a digital age, but at its core, See's is still that same charming candy shop it was back in 1921. It's never strayed too far from what made it special in the first place.

The magic of See's lies in its ability to stay consistent while the world around it changes. It's like a time capsule of quality and tradition, wrapped up in a simple, classic white box. And that's exactly what keeps customers coming back year after year.

So, the next time you walk into a See's Candies shop, take a moment to appreciate what you're stepping into. It's American business history, preserved in every chocolate, waiting to be enjoyed. And as long as there's a craving for quality and tradition, See's will keep on thriving, as it has now for more than a century.

• 100 years of See's Candies (Los Angeles Times)

• A Few Lessons for Investors and Managers (Peter Bevelin)

• Berkshire Hathaway annual reports and transcripts (Quartr Pro)

• The Complete Financial History of Berkshire Hathaway (Adam Mead)