“We regard product quality as sacred.” Warren Buffett wrote that line in his 1983 shareholder letter while discussing See’s Candies — and it reads today like a mission statement for Berkshire Hathaway’s (BRK.A) (BRK.B) entire playbook: put the customer first; defend the brand; and let quality widen the economic moat over decades.
Buffett’s comment was made at a time when Berkshire resolved to keep buying the best ingredients regardless of price at See’s, even as it tightened other costs. The point was simple: never compromise what the customer experiences. That stance underpins See’s enduring franchise and illustrates a broader Berkshire doctrine — win on value, not gimmicks.
In the same 1983 letter, he praised Nebraska Furniture Mart as the “ideal business” — one that passes savings to customers and converts trust into superior economics.
From Quality to Moat
Four decades of Buffett’s shareholder letters echo the same idea with different words: widen the moat. Berkshire looks for businesses with favorable long-term economics and durable competitive advantages, then invests with the intent to make that edge a little wider every day. Buffett and his longtime business partner, the late Charlie Munger, both believed explicitly that management’s job is to extend and improve products and service to strengthen the moat — an owner orientation that resists shortcuts and squeezes.
That philosophy rests comfortably alongside Buffett’s preference for brands and franchises whose value to customers, rather than their cost to produce, sets price — what he calls economic goodwill. See’s is his canonical example, offering high returns on modest tangible assets because the customer’s affection is the asset. In inflationary periods, he noted, true goodwill compounds — it’s “the gift that keeps giving.”
Customer-First Compounds Into Owner Value
Berkshire’s customer-first ideology has scaled into one of the world’s largest public companies. As of mid-August 2025, Berkshire’s market value sits around $1.0 trillion — a testament to decades of reinvestment behind moats instead of chasing fads or financial engineering.
And the culture shows up repeatedly in the letters:
- Protect the franchise: If there’s a tradeoff between reported earnings and the long-term franchise with customers, Berkshire favors the franchise (e.g., See’s kept quality inviolable and worked costs elsewhere).
- Value over optics: Accounting never dictates operations; intrinsic value does. Berkshire would rather own “$2 of earnings that is not reportable” than chase reported numbers, because customers and cash flows, not GAAP optics, sustain moats.
- Low-cost, high-trust retailing: Nebraska Furniture Mart’s model — buy brilliantly, run lean, pass savings on — is quintessential Berkshire: customer surplus comes first, and owner surplus follows.
Why It Still Matters to Investors
Buffett has consistently argued that long-term competitive advantage in a stable industry is the target — even if top-line growth is ordinary — because “the lush earnings” can be redeployed into similarly advantaged businesses. However, that only works when a company delights customers so reliably that rivals can’t pry them away.
The result is a flywheel: quality results in customers’ trust, which gives the company stronger pricing power and loyalty, resulting in better high returns on capital, allowing for more investment in quality. Berkshire has repeated that cycle across insurance, specialty retail, and regulated infrastructure — often choosing discipline over leverage and intrinsic value over stock-price theatrics, another quiet moat builder.
That single sentence — “We regard product quality as sacred” — is more than See’s lore. It’s Berkshire’s operating system. Protect the customer experience at any cost, and then let the numbers catch up. Do that for 40 years, and you don’t just have a brand — you have a moat wide enough to underwrite a trillion-dollar compounder.
On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
