So what's the appeal of such a hum-drum consumer product now? "It's a ketchup-style product that's becoming an increasing part of consumers' diets and a staple item for people," he says. It's also a product that appears able to sell steadily even in a bad economy, says S&P in its report "Stock Up On Yogurt." In a decade marked by a major recession, yogurt sales have doubled, retail researcher NPD Group reports. Buffett's Berkshire Hathaway often invests in food and beverage companies with the potential to keep generating sales and profit through all economic cycles.
"Buffett invests for the long haul and with Heinz he is looking out ahead and seeing there is going to be inflation in foods. It is a company that sells a staple item for which they will be able to increase prices," says Mark Germain, chief executive officer of Beacon Wealth Management.
That's been the broad case for consumer goods stocks for the past few years. Consumers always need foods and detergents, and their brand marketing helps them survive in hard times that test customer loyalty. Ideally, when the economy is weak customers don't defect to cheaper non-brands, and when inflation hits, they pay for prices increases. For years, Buffett's Berkshire Hathaway has managed far above average returns from buying and holding the stock of such companies.
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But Germain says that investors who want to think like Buffett might also consider buying a consumer staple fund like Consumer Staples Select SPDR, an ETF with a broad list of foods and beverages that has some overlaps with Berkshire Hathaway and offers a diverse mix of stable demand consumer products. For managed fund buyers, Fidelity Select Consumer Staples has a similar makeup and has been one of the best performers in the sector over the past year with a return just over 20 percent, and a solid 10-year annualized 12.38 percent. Its fees are a relatively low 0.82 percent. (Though as a pure-play, neither of these funds list significant yogurt holdings.)