Buffett may love drinking Coke, but he’s part of a shrinking minority. Soda has been under siege for a decade from health advocates around the world, who blame it for helping increase obesity rates. In response, Coca-Cola has diversified its portfolio by pushing further into categories such as juice, coffee and water.
But, in the most recent quarter, its ties to soda continued to weigh on results. Coca-Cola shares plunged the most in more than a decade on Feb. 14, after the company issued an underwhelming profit forecast. That’s put even more pressure on Chief Executive Officer James Quincey to make good on the company’s $5.1 billion purchase of U.K. coffee chain Costa last month. But this shift isn’t a slam dunk because the coffee category is highly competitive.
Estimate Cut
In the short term, Kraft Heinz’s announcement stings. Barclays Plc analysts cut their estimate in half for Berkshire’s fourth-quarter operating earnings, to $1,726 from $3,522 per Class A share. Berkshire’s scheduled to report results Saturday.
In some ways, Berkshire’s been tilting away from investing in some iconic consumer-brand companies. Last year, the company piled even further into financial institutions and technology stocks, a move that might also be influenced by investing deputies Todd Combs and Ted Weschler.
And Buffett’s bet on Kraft Heinz isn’t a total wash. In 2016, he pegged the cost of his Kraft Heinz investment at $9.8 billion, putting the per-share cost at about $30. With today’s drop, the value of his shares still stands at $11.4 billion. In addition, Berkshire has collected $2.3 billion in dividends since 2016, putting the total return on the investment at 41 percent.
This article was provided by Bloomberg News.