The 144-year-old House Of Brands Has Warren Buffett Investing Behind Strong Brand Equities
Heinz’s £18bn sale to one of the most renowned investors in the world is an example of the power of a smart brand builder.
The Power Of Marketing Brands
Off the beaten path found in news statements, the Buffett and Heinz announcement aimed squarely at gaining the attention of investors and financial markets through solid references to brands. Yesterday’s announcement of Berkshire Hathaway and 3G Capital’s deal to buy Heinz pointed to the power of marketing.
Warren Buffett, one of the world’s richest men and internationally acclaimed for his business acumen, told CNBC that he has been impressed with Heinz’s growth potential and success based on "investing behind strong brand equities". Coinciding, Alex Behring, managing partner of 3G Capital talked about the "great respect" Heinz’s brands command and the intention to expand the "value of the storied brand". Private equity firms aren't generally the voice for such explicit backing of marketing.
5th Best Brand On The Market
Heinz ranked 5th in 2012 according to YouGov's Brand Index
"Heinz was an appealing acquisition due to the strength of its brands and its global presence", said Alex Behring, 3G managing partner. Both market giants know the resonance of the brand in developed markets - it has the highest Buzz ranking in its category in the UK, according to YouGov’s Brand Index. YouGov Brand Index’s Buzz score, which asks respondents if they have heard anything about the brand in the last two weeks, through magazine advertising, news or word of mouth, whether positive or negative, ranked Heinz 5th with a brand score of 47.9. Buffet owns Pampered Chef, Dairy Queen, GREIDO, Benjamin Moore & Co. for starts. He also owns stock in the Washington Post, Cola-cola, Goldman Sachs, ABC and many more.
Best Brands On The Market 2012 According To YouGov Brand Survey
Internationally and overall, Samsung emerged as the strongest performer of 2012 appearing in the Top 10 lists for eight out of the eleven countries monitored.
U.S Top Best Brands On The Market
Subway - 40 3
Amazon - 36.8
Cheerios - 35.4
History Channel - 33.8
Lowe's - 32.7
Ford - 32.1
Target - 31.1
UK Top Best Brands On The Market
Amazon - 58.1
Google - 54.8
BBC iPlayer - 53.7
Marks & Spencer- 52.2
Heinz - 47.9
John Lewis - 46.5
Buffett Owns A Group Of "Best Brands"
Buffett and Behring’s comments ring well in the ears of marketers. The power of brand building is not a subject usually discussed openly with such passion by cold hard business operators. Marketing as a revenue generator is a reality but not one that often raises the pulses of investors- a group of fantastic brands. 3G will be handling daily operations. With a long history of working together before the Heinz partnership, Berkshire knows what the BUFFETT brand is and what it represents.
Buffet said he know Georgie Powell ever since being on the Gillette board together. "For a dozen years I have admired him as a business man enormously - and as a human being."
Buffett has been quoted for saying, "Honesty is very expensive gift. Do not expect it from cheap people." The partnership seems to have grown out of on strong relationship of trust and the common skill to build companies that produce some of the best brands on the market. Berksire is putting something between 12 and 13 billion in the deal. Buffet indicated that his companies excess cash at end of 2012 was about 27 billion and is potential cash for another brand investment. "I am ready for another elephant - if you see any walking by just call me. The cash builds month to month. The gun is always getting reloaded," said Buffett on CNBC news line.
Effective Building Brand Cohesiveness By Targeting And Nurturing Prospects
This time Buffett’s Berkshire Hathaway wasn't on the search for this particular core brand and core values with brand building cohesiveness that fit his style. It was the investment firm 3G Capital that initiated the takeover effort and will run operations at the food giant, according to the New York Times. Buffet's vast brand ownership seems to beyond the convention of many seeking profit by brand building. How clear does profit speak? It is hitting news headlines everywhere.
One could say that at the heart of Warren Buffett's brand empire is a meat and potatoes strategy - with ketchup and a cherry coke. Buffett usually prefers simple businesses, consistent earning power and solid returns on marketing equity while employing little or no debt, if you study his annual report.
Media Tour to Tout Book
Buffett had several books published in 2012 about his career, giving a glimpse into his success at becoming holder of some of the best brands on the market and comprehensive media buying. He is the focus of Carol Loomis' new book "Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2012." The book is a collection of Fortune magazine articles on Buffett. Several of the magazine articles were written by Buffett himself. In one he states, "Your premium brand had better be delivering something special, or it's not going to get the business."
Buffett's Investment In Print Media
Buffett's company has spent more than $342 million on 80 newspapers, including its hometown paper, the Omaha World-Herald, showing his strong belief in the role of print media. Buffett celebrated his 82nd birthday on August 30 last year, yet clearly he isn’t done investing. Though the division announced plans to close an under performing newspaper in Virginia last month, he’s said that more acquisitions may be in store. Terry Kroeger, the newly installed chief of Buffett’s newspaper empire, says, "the goal is to reintroduce newspapers to what they do best: delivering urgent, local information that readers can’t get elsewhere".
Buffett believes that newspapers can evolve quickly enough to revive a decaying business. They’re confronting shrinking demand for print newspaper and magazine advertising, declining circulation, and encroachment from Internet companies such as Google Inc. and Facebook Inc. The industry’s ad dollars dropped 6.6 percent in the first six months of 2012 from a year earlier, according to the Newspaper Association of America. While community papers have an edge over publications in crowded media markets, no one has found a way out of the slump, said Ken Doctor, a media analyst with Outsell Inc. in Burlingame, California. Given Buffett's track record of astounding success, Doctor may be proven wrong. Kroeger said that Buffett’s total newspaper division is solid in the black and anticipates remaining so, despite the shrinking revenue, according to a December 11, 2012 article titled Buffett Is Latest Billionaire to Struggle With Newspaper Revival in Bloomberg. “We’re profitable this year,” he said. “I have a high degree of confidence we will remain profitable next year as well. We’re very high on the industry.”
Bullish To Publish News And Advertising Content
World Media Enterprise operates the 63 newspapers that Berkshire Hathaway acquired from Media General in June 2012. Doug Hiemstra, president of World Media Enterprises, wrote on the News & Messenger's website: "Let me be clear: World Media remains bullish on community newspapers and our ability to publish news and advertising content on a variety of platforms that is useful to our readers and the communities in which they live."