As I’ve mentioned a few times here on this blog, I have been reading Warren Buffett’s letters written to Berkshire Hathaway shareholders starting with the 1977 letter. In the 1989 letter, Warren Buffett tells a little about his relationship with Coca-Cola and how everything started.

Buffett is known for drinking 5 Cokes a day and still. In addition to being an active consumer, Buffett bought Coca-Cola stock in 1988.

In the 1989 letter, he tells a little about the story of how his relationship with Coca-Cola began.

He begins his story by even making fun of himself, saying, “This Coca-Cola investment provides yet another example of the incredible speed with which its president responds to investment opportunities, no matter how obscure or well-disguised they may be.”

That’s because Buffett says he drank his first Coke in 1935 or 1936 and only in 1988 did he buy shares in the company.

In 1936, Buffett began buying Cokes at a price of six Cokes for 25 cents on the dollar for Buffett & Son, the family grocery store, to sell in the neighborhood for 5 cents each.

Buffett says that, in this period, the extraordinary attractiveness of the consumer and commercial possibilities of the product was already observed.

how it all began with Coca-Cola

“I continued to observe these qualities for the next 52 years as Coca-Cola covered the world. During this period, however, I carefully avoided buying even a single stock, instead of allocating large portions of my net worth to railroad companies, windmill manufacturers, jewelry producers, textile companies, commercial stamp issuers, and the like. (If you think I’m doing it, I can provide the names.) It wasn’t until the summer of 1988 that my brain finally made contact with my eyes.”

“What I realized was clear and fascinating. After being a bit adrift in the 1970s, Coca-Cola in 1981 became a new company with Roberto Goizueta moving to CEO. Roberto, along with Don Keough, once my neighbor across the street in Omaha, rethought and focused company policies and energetically executed them. What was already the most ubiquitous product in the world has gained new momentum, with overseas sales virtually exploding.”

“Of course, we should have started buying Coke much earlier, right after Roberto and Don started running things. In fact, if I had thought about it, I would have convinced my grandfather to sell the grocery store in 1936 and put all the money in Coca-Cola stock. I learned my lesson: my response time to the next glaringly attractive idea will be reduced to less than 50 years.”

This is the story of how the relationship between Warren Buffett and Coca-Cola began.

This can teach us that we often see a product or service that has potential, but we don’t think about being a part of it by buying stock in the company.

Even Warren Buffett, who is known as the greatest investor, can take more than 50 years to see an opportunity that was in front of him almost every day.

I hope you enjoyed the story.

Happy investing!

Photo by Rick Wilking/Reuters