2016: Why does Berkshire own Coca-Cola?

ANDREW ROSS SORKIN: Thank you, Warren. Great to see you today.

Got a lot of questions on this particular topic, and this question is a particularly pointed one.

“Warren, for the last several years at this meeting, you’ve been asked about the negative health effects of Coca-Cola products, and you’ve done a masterful job dodging the question, by telling us how much Coke you drink personally. (Laughter)

“Statistically, you may be the exception. According to a peer-reviewed study by Tufts University, soda and sugary drinks may lead to 184,000 deaths among adults every year.

“The study found that sugar-sweetened beverages contributed to 133,000 deaths from diabetes, 45,000 deaths from cardiovascular disease, 6,450 deaths from cancer.”

Another shareholder wrote in about Coke, noted that you declined to invest in the cigarette business on ethical grounds, despite once saying, quote, “It was a perfect business because it cost a penny to make, sell it for a dollar, it’s addictive, and there’s fantastic brand loyalty.”

“Again, removing your own beverage consumption from the equation, please explain directly why we Berkshire Hathaway shareholders should be proud to own Coke.”

WARREN BUFFETT: Yeah, I think people confuse — (Applause)

— you know, the amount of calories consumed.

I mean, I happen to elect to consume about 700 calories a day from Coca-Cola. So I’m about one-quarter Coca-Cola, roughly. (Laughter)

Not sure which quarter, and I’m not sure we want to pursue the question.

I think if you decide that sugar, generally, is something that the human race shouldn’t have — I think the average person consumes something like 150 pounds of dry weight sugar here and 125 pounds — I mean, you know, it —

What’s in Coca-Cola, largely, are more of the calories come from is sugar.

I elect to get my 26 or 2700 calories a day from things that make me feel good when I eat them. And that’s been my sole test. That wasn’t a test that my mother necessarily thought was great, or my grandfather.

But there are over 1.9 billion 8-ounce servings of some Coca-Cola drink. Now they have an enormous range of products, you know. I mean, you have a few that are called Coke, Diet Coke, Coke Zero and that sort of thing, but they have literally thousands of products.

One-point-nine billion. That’s — what is that — 693,500,000,000 8-ounce servings a year, except it’s a leap year. (Laughter)

That’s almost 100 8-ounce servings per capita for 7 billion people in the world every year. And that’s been going on since 1886.

And I would find quite spurious the fact that somebody says, if you’re eating 3500 or so calories a day, and you’re consuming 27-or-8 hundred, and some of the 3500 is Coca-Cola, to lay it — any particular obesity-related illnesses — on the Coca-Cola you drink.

You have the choice of consuming more than you use, I mean. And I make a choice to eat — or get — 700 calories from this, and I like fudge a lot, peanut brittle.

And I am a very, very, very happy guy and I don’t know — I think — and I’m serious about this — I think if you are happy every day, you know, it may be hard to measure, but I think you’re going to live longer as well. So there may be a compensating factor. (Applause)

And I really wish I’d had a twin, and that twin had eaten broccoli his entire life, and we both consume the same number of calories. I know I would have been happier. And I think the odds are fairly good I would have loved longer.

I think Coca-Cola is a marvelous product, you know. I mean, if you consume 3500 or 4000 calories a day, and live a normal life, in terms of your metabolism, you know, something’s going to go wrong with your body at some point.

But if you keep — I think if you balance out the calories so that you don’t become obese, I do — I have not seen evidence that convinces me that, you know, I’ll make it — it will be more likely I reach 100 if I suddenly switch to water and broccoli.

Incidentally, a friend of mine, Arjay Miller, a remarkable man — born about 100 miles from here, west — eighth child — near Shelby, Nebraska.

He said Shelby’s population was 596 and it never changed because every time some girl had a baby a guy had to leave town, it was a very stable. (Laughter)

But Arjay went on to be president of Ford Motor Company, from this farm near Shelby, and he had his 100th birthday on March 4th of this year. So I went out to see Arjay for his birthday on March 4th, and Arjay told me that there were 10,000 men in the United States that had lived to be 100 or greater, and there were 45,000 women that were 100 or greater.

So I came back and I checked that on the internet — I went to the census figures — and sure enough, that is the ratio. There’s 10,000 men over 100, roughly, and 45,000 women.

So if you really want to improve your longevity prospects, I mean a guy in my position, you have a sex change. (Laughter)

I mean as a — you’re 4 1/2 times more likely to get to be 100.

That sounds like one of those studies that people put out. It’s just a matter of facts, folks.

I think I’ll have Charlie go first, though, on that one. (Laughter)

Charlie, do you have any comments?

CHARLIE MUNGER: Well —

WARREN BUFFETT: Have some fudge.

CHARLIE MUNGER: I like the peanut brittle better than the Coke. I drink a lot of Diet Coke and — I think the people who ask questions like that one always make one ghastly error that’s really inexcusable. They measure the detriment without considering the advantage.

Well, that’s really stupid. That’s like saying we should give up air travel through airlines because 100 people die a year in air crashes or something. That would be crazy. The benefit is worth the risk.

And if every person has to have about 8 or 10 glasses of water every day to stay alive, and it’s pretty cheap and sensible, and it improves life to have a little extra flavor to your water, and a little stimulation, and a little calories, if you want to eat that way, there are huge benefits to humanity in that, and it’s worth having some disadvantage.

We ought to have, almost, a law in the editorial — I’m sounding like Donald Trump — (laughter) — where these people shouldn’t be allowed to cite the defects without citing the offsetting advantage. It’s immature and stupid. (Applause)