The pricing pressure on supermarket giants such as Target, downgraded this week by Citi, and on food companies and their stocks, isn't certain. The Amazon deal for Whole Foods is not complete — there could still be counter bids by other grocery companies — and Amazon's strategy for Whole Foods remains an unknown. Kroger has also been among the supermarket chains rumored to be in a position where making an offer would make sense.
There are also concerns that a push by Amazon into better foods will force the "bad food" brands that Buffett loves into narrower shelf space within stores. But Wal-Mart will not simply cede any ground just because Bezos wants it — it's still the biggest force in the grocery sector, with nearly 15 percent share, double any other company's scale, and could make its own bid for Whole Foods. Whole Foods and Amazon together have about 1.4 percent of the grocery market.
One thing that benefits Berkshire is its size: No matter how much it holds in any single stock or sector, the $400 billion conglomerate is not going to see a major price move based on action related to one of its holdings. If Berkshire trades like any sector, it's financial stocks, because of its banks and wholly owned insurance companies, like Geico.
"BRK as a conglomerate is well positioned to withstand, overall, the tech onslaughts. So yes, it is good to be a conglomerate as a defensive matter," Cunningham said.
But there's one reaction from Buffett that Bezos' big deal could lead to: more buying.
Buffett was part of a failed bid by Kraft Heinz for Unilever earlier this year with his recent private equity partner on deals, 3G Capital. Ever since, the markets have been chattering about more deals in Buffett's future. S&P said in a report this week that Mondelez, General Mills, Kellogg, Campbell Soup as well as Colgate-Palmolive and Kimberly-Clark could all be targets, maybe even PepsiCo.
"Warren will not do more or fewer deals because of the M&A environment or deals of others, but I do think with $100 billion sitting around, the world is watching," Cunningham said.
Expectations for food deals won't slow down with Amazon using its might to get into the mix and terrifying everybody.
But few have been in food retail for as long as Buffett and Munger. Both have deep — more than most people know — experience as grocers. Buffett (86) and Munger (93) worked for the Buffett family grocery store, in their youth, mostly for Warren's grandfather, Ernest.
"Grocery stores are in their blood!" Cunningham said.
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