1994: What are the long-term growth prospects for Guiness?

AUDIENCE MEMBER: My name is Peter Bevelin from Sweden.

How do you perceive Guinness long-term, economics growth-wise?

WARREN BUFFETT: Fitz — would you repeat that please, Fitz. What was it? What firm growth-wise?

VOICE: Guinness.

AUDIENCE MEMBER: Guinness.

WARREN BUFFETT: Oh, Guinness.

I’m not as much of an expert on Guinness’ products as Charlie is.

CHARLIE MUNGER: We approved that. (Laughter)

WARREN BUFFETT: You didn’t hear him. He said, “I approved that.”

I made the decision to buy Guinness and Guinness has — it’s down somewhat from — actually, the price in pounds is about the same but the pound is at about $1.46 or -7 against an average of $1.80-something, so we’ve had a significant exchange loss on that.

The — Guinness’ — despite the name — you know, the main product, of course, is scotch. And that’s where most of the money is made, although they make good money in brewing.

But, distilling is the main business. And, you know, the usage of scotch, particularly in this country, the trends have not been strong at all, but that was true when we bought it, too.

There are some countries around the world where it’s grown and there are certain countries where it’s a huge prestige item.

I mean, in certain parts of the Far East, the more you pay for scotch, the better you think people think of you. Which I don’t understand completely, but I hope it continues. (Laughter)

But — the scotch — worldwide scotch consumption has not been anything to write home about.

Guinness makes a lot of money in the business. But, I would not — I don’t see anything in the — in published history that would lead you to believe that the growth prospects, in terms of physical volume, are high for scotch.

The — Guinness itself, the beer, actually has shown pretty good growth rates in some countries. Actually, from a very tiny base in the U.S. as well.

But, they will have to do well in distilling or — I mean that will govern the outcome of Guinness.

I think Guinness is well run and it’s a very important company in that business. But, I wouldn’t count on a lot of physical growth.

Charlie, what — any consumer insights?

CHARLIE MUNGER: No. (Laughter)