Warren Buffett watched Coca-Cola for 52 years — Why his $1.3 billion bet is still yielding 65% annually
Billionaire hedge fund manager Bill Ackman has long considered Warren Buffett his "great professor" in the business of investing. But even for a close associate like him, Buffett's extreme brand loyalty caught him completely off guard.
Speaking on a recent episode of the Equity Mates Investing podcast, Pershing Square founder Ackman recounted hosting Buffett for dinner at his home “years ago”.
Ackman, anticipating his guest's well-known preferences, stocked up on Cherry Coke, but politely offered still or sparkling water to start. Buffett declined and asked for a Coke.
“But I said, you know, ‘Don't you drink water?’” Ackman recalled on the podcast. “And he said, ‘Bill, I haven't had water in 48 years.’”
But this isn't the only time Ackman has commented on Coke. During a 2015 symposium celebrating Buffett's 50th anniversary at Berkshire Hathaway, Ackman said, “Coca-Cola has probably done more to create obesity and diabetes on a global basis than any other company in the world.”
A Coca-Cola spokesman dismissed the remarks as "irresponsible" shortly after.
While the accuracy of the 48-year claim remains unconfirmed, Buffett's affinity for soda is well-documented. In 2019, Buffett, 96, told CNBC that he consumes "probably five 12-ounce Cokes a day."
Interestingly, "48 years" is the exact timeframe Buffett referenced in his 1985 shareholder letter when he announced his switch to Cherry Coke after “48 years of allegiance to another soft drink.”
Hydration habits aside, the soda allegiance has yielded astronomical returns for Berkshire Hathaway.
Berkshire initiated its Coca-Cola purchases in 1988, months after the Black Monday crash, and completed its stake in the mid-1990s.
Today, Berkshire holds 400 million shares—roughly 9% of the company—acquired at a base cost of about $1.3 billion. At the stock's October 30 close of $94.08, that position is valued at a staggering $37.6 billion.
However, the true crown jewel of the investment is the dividend yield. On February 19, Coca-Cola increased its quarterly payout to 53 cents per share, marking its 64th consecutive annual hike. This translates to $2.12 per share annually, generating about $848 million in passive income for Berkshire.
In other words, Berkshire recoups nearly 65% of its initial investment annually, in cash dividends alone.
In his 2022 shareholder letter, Buffett noted that Berkshire's Coke dividend was a mere $75 million in 1994 and had organically ballooned to $704 million by 2022.
Coca-Cola, traditionally viewed as a defensive, slow-moving stock, has been anything but in 2026. Shares hit a record $95.34 on October 22 and have surged approximately 37% this year.
On October 27, the beverage giant reported third-quarter revenue of $13.4 billion, up 7% from a year earlier. Comparable earnings per share jumped 11% to 91 cents, beating analyst estimates of 88 cents. Global unit case volume grew 5%, prompting the company to raise its full-year guidance.
There is a hint of irony in the latest numbers: Coca-Cola's water volume grew 8% globally in the quarter—meaning consumers are drinking the water Buffett seemingly avoids, even though the company's water, sports, coffee, and tea category declined in North America.
Buffett’s connection to the brand is deeply rooted in his childhood. In his 1989 shareholder letter, he recalled drinking his first Coke in 1935 or 1936. He soon began buying six-packs for 25 cents at his family's grocery store, reselling the bottles around the neighbourhood for a nickel apiece.
Despite this early exposure, he admitted to observing the company for 52 years without buying a single share, joking that it took until the summer of 1988 for his brain to catch up with his eyes.
By that time, he wrote, CEO Roberto Goizueta and Don Keough—Buffett's former across-the-street neighbour in Omaha—had revitalised a company that drifted in the 1970s, and overseas sales were “virtually exploding”.
Keough, who was Coke's president at the time, also played a direct role in Buffett's transition to Cherry Coke.
According to investment historian Glen Arnold's book The Deals of Warren Buffett, Volume 2, Keough read in a magazine in 1985 that his former neighbour favoured Pepsi-Cola Cherry. He immediately wrote to offer Buffett samples of the yet-to-be-released Cherry Coke, describing it as the “nectar of the gods”.
While Berkshire has seen a recent changing of the guard—Buffett handed the CEO reins to Greg Abel at the start of 2026 and stepped down as chairman on September 18 in favour of his son, Howard—the conglomerate's Coke position remains unshakable.
In his inaugural shareholder letter as CEO, Abel highlighted Coca-Cola as one of four core holdings that Berkshire expects to "compound over decades," adding that he anticipates "limited activity" regarding the stock.
This seamlessly echoes the enduring investment philosophy Buffett established in his 1988 letter: “Our favourite holding period is forever.”
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