Updated Coca-Cola for Berkshire at 2025 - 2026-06-20

Here is the updated 2025 analysis of Berkshire Hathaway's investment in Coca-Cola, incorporating the latest dividend and valuation figures from the 2024 copy - https://daddymm.blogspot.com/2025/02/berkshire-hathaways-coca-cola-2025-02-05.html

Using weighted CAGR to calculate the compounding return for the period, the average holding time from 1988/1989/1994 to 2025 is 34.67 years:

Year of Purchase	Years till 2025
1988	37
1989	36
1994	31
Average	34.67

The 2025 end of year market capital for Coca-Cola is $ 27,964,000,000 with accumulated dividend since 1988 is $ 12,440,771,000. For simplicity, I just assume the return is the year end market value plus the dividend, which is $ 40,404,771,000.

To calculate the annualized return, we use the following formula: (Ending Value / Initial Investment)^(1 / average number of years) - 1.

In Buffett's case, this translates to: (40,404,771,000 / 1,298,900,000)^(1 / 34.67) - 1 = 10.42%.

It's important to note that this calculation doesn't account for taxes or dividend reinvestment. Including these factors would result in an even higher return than 10.42%.

Due to stock splits, the average cost per share has decreased significantly from US$41.80 to US$3.25. Remarkably, in 2002 alone, the total accumulated dividends collected (US$1.31 billion) exceeded the initial investment cost (US$1.298 billion). By 2025, the total dividends received had reached US$12.44 billion, a remarkable 9.57 times the initial investment.

Coca-Cola has consistently increased its dividend payments each year, even after stock splits. In 2025, the dividends collected totaled US$816 million, representing 62.82% of the initial investment. Which increase from US $776 million in 2024  (increase of 5.15%). This impressive return demonstrates the power of long-term investing and dividend growth, effectively returning nearly 63 cents annually for every dollar originally invested.

Compounding Increment of Dividend

Coca-Cola's dividend growth is truly remarkable. Over the years, it has soared from US$17 million to a staggering US$816 million for Berkshire.

Focusing on the period from 1994 to 2025, the dividend increased from US$78 million to US$816 million. This represents a compound annual growth rate of 7.60%, calculated as: (816 / 78)^(1/32) - 1 = 0.0760 or 7.60%. This demonstrates the power of compounding over the long term, with Coca-Cola consistently increasing its dividend payouts over the past three decades.

The Long-Lasting Quality of Coca-Cola

One key factor in understanding Warren Buffett's investment in Coca-Cola lies in the company's history. During the rollout of "New Coke," the company faced significant backlash, causing its stock price to plummet. This presented a valuable opportunity for Buffett.

Coca-Cola's business model is elegantly simple. They sell concentrated syrup to bottlers, who then handle the bottling and distribution. This structure minimizes Coca-Cola's capital expenditure on manufacturing facilities, freeing up capital for what they do best: advertising and brand promotion. Bottlers handle the significant investment in machinery.

Buffett has highlighted a crucial element of Coca-Cola's success: the "taste of memory." This refers to the refreshing quality of Coca-Cola that prevents taste fatigue. Unlike some flavors that linger and become less appealing with repeated consumption, Coca-Cola's taste remains consistently enjoyable. This encourages repeat purchases, driving strong and sustained demand over time. The relatively low and stable price of Coke over the years has also contributed to its widespread appeal.

Low-Cost Manufacturer

Coca-Cola's commitment to low-cost manufacturing is a cornerstone of its enduring success. The company has maintained remarkably low prices for its products over an extended period.

Warren Buffett recalls purchasing Coca-Cola for 5 cents in 1936. As of early 2026, a 24-pack of 12-ounce Coca-Cola cans on Walmart's website remains highly affordable, often translating to roughly US$0.55 per can.

Using the compound annual growth rate formula, we can calculate the price increase over these 89 years: (0.55 / 0.05)^(1/89) - 1 = 0.0273 or 2.73%, which lower than the 2024 for 2.81%.

This incredibly low price increase over nearly nine decades is astounding.

According to historical inflation data, US$1 in 1936 has the same buying power as approximately US$ 23.18 (end of 2025) compare to US$22.56 end of 2024. The compound annual inflation rate is: (23.18 / 1)^(1/89) - 1 = 0.0447, or 4.47% as compare to 3.6% in 2024.

Remarkably, Coca-Cola's price increases have significantly lagged behind general inflation, effectively defying the trend while preserving tremendous margins.

What if Berkshire Doubled the Purchase Price of Coca-Cola?

Warren Buffett and Charlie Munger have emphasized that with quality investments held for the long term, returns can be very rewarding even if you pay a higher price. Let's explore this by considering a hypothetical scenario: What if Berkshire had paid double their initial investment for Coca-Cola, totaling US$2.597 billion? Would the returns still be compelling?

Using the same formula for calculating the Compound Annual Growth Rate (CAGR): (Ending Value / Initial Investment)^(1 / Number of Years) - 1, and assuming the same ending value of US$40.40 billion after 34.67 years, the CAGR would be: (40,404,771,000 / 2,597,800,000)^(1/34.67) - 1 = 8.20%.

Even with double the initial investment, the return remains impressive. For every dollar invested, the final value (including dividends) would be approximately 15.55 times the original investment. It's important to remember that this calculation doesn't include the benefits of dividend reinvestment, which would further enhance the overall return.