Last March, Charlie Munger was asked about Berkshire Hathaway’s partnership with 3G Capital that has resulted in an unspecified number (estimated to be in the 4,000-8,000 range) of jobs that have been terminated as a result of 3G operators taking the helm of the combinated Kraft and Heinz. Munger responded: “What’s interesting about 3G is that they’re teaching us something about reality.” Munger didn’t offer a detailed elaboration. This begs the obvious follow-up: What’s the lesson on reality we are supposed to take from this?
In my view, there are five things–two good, three bad–that 3G is teaching us about the 21st century large-cap food sector.
First, the good:
The rise of 3G lets shareholders reap the benefits of wealth creation that previously stood unexploited. Usually, M&A activity, activist investing, and shareholder agitation are most prominent in industries that are subject to market demand changes or regulatory changes. Look at … Read the rest of this article!