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Home » Warren Buffet likes potential of McLane Company

Warren Buffet likes potential of McLane Company

By    Thomas P.  Gale 
May 10, 2003
More about:  Grocery/Foodservice,  Mergers/Acquisitions
News that Wal-Mart is selling its $15-billion convenience store and grocery distribution subsidiary, McLane Company, to Berkshire Hathaway (Wal-Mart to buy McClane) raises a mixed bag of positives and negatives. The king of value investing, Warren Buffet, the guy who stayed away from the dot-com bubble and prospered very well, thank you, recognizes the power this finely tuned distributor can wield if independent from the biggest retailer of all time.


The distribution industry and its diverse roles across every aspect of commerce have never been understood by the mainstream media. They just don't get it! It's not rocket science but it is too complex to boil into sound bites. So when someone like Mr. Buffet buys a ...

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News that Wal-Mart is selling its $15-billion convenience store and grocery distribution subsidiary, McLane Company, to Berkshire Hathaway (Wal-Mart to buy McClane) raises a mixed bag of positives and negatives. The king of value investing, Warren Buffet, the guy who stayed away from the dot-com bubble and prospered very well, thank you, recognizes the power this finely tuned distributor can wield if independent from the biggest retailer of all time.


The distribution industry and its diverse roles across every aspect of commerce have never been understood by the mainstream media. They just don't get it! It's not rocket science but it is too complex to boil into sound bites. So when someone like Mr. Buffet buys a major distribution company, it can only help to elevate the national awareness of how critical distribution is and will be to this country. When he anoints a company, a lot of people pay attention and start doing research. It may not drop to your bottom line, but it's nice in these times to at least have the distribution industry recognized for the real value it provides.


But it's also important to note that Mr. Buffet buys potential. So independent distributors have to at least take a few minutes to consider the future of McClane (and other national logistics firms that measure things in billions of dollars), and what growth segments might look attractive down the road.


Will McLane be selling drill bits to job shops next year? Not likely, but who's to say in five years they couldn't be a dominant master distributor for an increasing number of manufacturers across many product segments, providing high service levels to the independent distributor who is the "convenience store" for job shops or other customers?

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