Why Does Warren Buffett Keep Buying Kroger Stock?


We recently heard about Warren Buffett and his team at Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) in Q4 2020, retailer Kruger (NYSE: KR). In a Fool Live video recorded Feb. 22, Fool.com contributor Matt Frankel, CFP and Industry Focus presenter Jason Moser discusses why Buffett loved Roger and the grocery industry so much.


Why Does Warren Buffett Keep Buying Kroger Stock

Matt Frankel: You mentioned Kruger, and he has been with Kruger for quite some time. Remember that the supermarket has been losing popularity for a while. Everyone thought Amazon (NASDAQ: AMZN) would take the job.

Jason Moser: Yes, I remember Amazon buying Whole Foods. At that point, we saw all the store owners on the day the deal was announced, and stocks at all the grocery stores had fallen. I do not know. This seems to be an unusual response as people have forgotten the opportunity and how great it was to run errands. I think Walmart (NYSE: WMT) is technically the largest supermarket in the country. Kruger, right behind them. Kroger, like other brands, clearly owns Harris Teeter. This is a really good opportunity. Groceries, people should eat. Again, this may not be the hottest act in the world, but it’s perfectly stable.

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Frankel: Yeah, during the pandemic, supermarkets got pretty good across all channels. I think Buffett looked into this other thing. Everyone thinks this is Amazon’s secret to buying Whole Foods. This will be a grocery store where you can stand on the sidewalk or a grocery store. But now I can get delivery from Publix if needed and if needed I can get delivery from Kroger. There is a retail chain called Lowe’s Foods in the Southeast which is great. They make roadside trucks very efficient and easy. Supermarkets have already adopted Amazon’s main advantage in a number of ways. If I can drive and someone puts food in my box, what’s the difference between ordering it and having it delivered on Amazon the next day? This is almost more convenient.

Moser: You study various processes that are already being implemented at a national level. I immediately thought of Target Stock (NYSE: TGT). In this regard, he has done very well.

Frankel: Yes. When Buffett joined, Kruger was extremely disappointed. I really don’t blame them. I think this is a very worthwhile investment.

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