Wednesday, September 17, 2014

The wrath of Warren Buffett: How Benjamin Moore almost broke his promise

Link to: The wrath of Warren Buffett: How Benjamin Moore almost broke his promise
Turmoil roiled Benjamin Moore, a paint company owned by Berkshire Hathaway, after it decided to break a pledge Warren Buffett made to Moore’s dealers. How did it happen—and how did the Oracle of Omaha respond? A case study in pluses (and occasional minuses) of being owned by Berkshire.
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The part of the article reminded me a lot of what some of the luxury-type brands have done by opening outlet stores (emphasis mine):
Buffett offers a historical analogy: “If you go back to the mid-1930s, Packard was an aspirational auto brand. It was above Cadillac. Around 1936 they came out with a considerably lower-priced model. It did wonders for them immediately, but they destroyed the brand over time. If you’re a high-end brand, you can always pick up a lot of sales by dropping down. I’m not saying that’s what Valspar does; they probably have a bunch of different brands that are doing that. But it would be a big mistake for Benjamin Moore to try and take the Benjamin Moore name downscale and have a cheaper paint.”

[H/T Matt]