Warren Buffett calls the U.S. beer business "fascinating"

Modern Brewery Age, May 9, 2005

Warren Buffett, the noted investor, and the world's second richest person, called his recent investment in Anheuser-Busch, an entry into a "fascinating" industry that nevertheless may not generate quick payoffs for Berkshire shareholders.

On April 21, Anheuser-Busch announced that Buffett's Berkshire Hathaway Inc. had acquired an unspecified "significant" stake in the company. This announcement sent A-B shares up more than 6 percent.

Anheuser-Busch is "going through a period that is certainly less fun for them than was the case a few years ago," Buffett told shareholders at Omaha, Nebraska-based Berkshire's annual meeting. "Beer industry sales are very flat. Wine and spirits have gained."

This past week, Anheuser-Busch said first-quarter net income fell about 7 percent to $513 million. The company said that lower U.S. beer volume, rising raw materials costs and increased marketing expenditures contributed to the decline.

Buffett said he views beer as a "fairly easy to understand" product.

Historically, Buffett has favored companies that produce common consumer products, and he focuses on the long term.

"What's happening in the beer industry is fascinating to me and to Charlie," he said, referring to Berkshire vice chairman Charlie Munger, who sat by him. "The beer business is not going to grow significantly in the U.S.Worldwide, beer is popular in a great many places, and Anheuser-Busch has a very strong position. I would not expect the earnings to do much for some time, but that's fine for us."