Category Archives: Duracell

Berkshire Hathaway Promotes Thom Lachman to CEO of Duracell

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Berkshire Hathaway has elevated Thom Lachman to CEO of the Duracell Company, effective January 1, 2018. Roberto (Bobby) Mendez will take over Lachman’s former role, being promoted to President of Duracell North America.

Angelo V. Pantaleo, who served as CEO of the Duracell Company since Berkshire Hathaway’s acquisition of the company was completed in March 2016, has accepted the new position of President & COO of Marmon Holdings, Inc., a Berkshire Hathaway Company. He will also continue to provide oversight as Chairman of the Duracell Company Board of Directors.

Lachman joined Berkshire Hathaway as a member of Berkshire Hathaway’s Duracell Transition Team on November 1, 2015, and has served as Duracell’s President of North America since March 1, 2016.

Before coming to Berkshire Hathaway, Thom gained over 30 years of experience with Procter & Gamble (P&G). His last role as President of P&G Canada was preceded by a role leading the North America integration of the Gillette acquisition. He also served as the Global Marketing Director for PUR Water Filtration. Rounding out Thom’s P&G career is a variety of brand and manufacturing management roles, having earned both his B. S. in Chemical Engineering and his MBA from Tulane University.

“Thom and Bobby are crucial members of the Duracell leadership team,” said Angelo Pantaleo. “We are excited to see them flourish in these new roles and strengthen even further the success of this great company.”

Bobby joined Berkshire Hathaway officially on the date the Duracell acquisition was completed: March 1, 2016, and has served as Duracell’s President of Latin America & OEM business since that time. Prior to coming to Berkshire Hathaway, Bobby enjoyed a career with Procter & Gamble that spanned over 23 years. For the last 6 years of his P&G career, Bobby served as Duracell’s CFO. Before Duracell, Bobby held a number of financial roles including CFO for P&G Mexico, LA HQ Corporate Finance Associate Director, and Group Manager for Puerto Rico/Caribbean Finance. Bobby earned his BSBA in Finance from Georgetown University.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Duracell PowerForward Team on the Ground in Puerto Rico

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Duracell’s PowerForward teams are on the ground in Puerto Rico. The emergency response teams give out thousands of batteries and provide charging stations through their specially outfitted vehicles.

The vehicles wiil deliver $1 million worth of batteries, making this the program’s largest deployment to date.

Since 2011, Duracell PowerForward has been helping affected communities across the country by distributing free Duracell batteries, charging mobile devices, and providing Internet access to those in need so they can connect with family. They have given out over 463,000 batteries in 30 deployments
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The Duracell PowerForward fleet consists of five trucks, custom-designed to handle specific disasters, and strategically stationed to get to any U.S. location within 24 hours. Each one is equipped with mobile charging stations and stocked with thousands of Duracell batteries.

In Puerto Rico, Duracell has deployed two of its highest capacity vehicles. The Heavy Haulers pull trailers that help them transport over 100,000 AA batteries – more than any other vehicle in the fleet. Normally, one is stationed in San Francisco, California while another is kept in Portsmouth, New Hampshire. These trucks specialize in handling earthquakes, floods, landslides, wildfires, hurricanes and winter storms.

“We at Duracell have been deeply moved by the resilience of those in Puerto Rico. Through our PowerForward initiative, a program I am most humbled and proud to be a part of, we will be distributing more than $1 million worth of batteries to local residents over the next month or more,” said Ramon Velutini, Vice President of Marketing at Duracell. “Trusted power is absolutely critical following widespread power outages caused by storms like Hurricane Maria, and we will be offering free Duracell batteries to help residents stay safe and connect with their loved ones by powering mobile devices, radios and flashlights, and providing trusted power for critical medical devices like dialysis machines, hearing aids and ventilators.”

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Duracell Believes in the Alkaline Battery

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While lithium batteries are always in the news, Duracell, which is the king of the alkaline battery, believes that the alkaline battery will continue to be relevant and can even increase its share of the battery market.

That’s good news for Berkshire Hathaway, which purchased the venerable brand from Proctor and Gamble in 2016.

The key Duracell believes are the many performance benefits of the alkaline battery. The alkaline battery is safe, it doesn’t get hot, and it has a long shelf-life. Duracell offers its batteries with a 10-year guarantee in storage. It also has a level of availability and ease of use that can’t be beat.

Just a few decades ago, flashlights and toys were the primary uses of disposable batteries, but today, alkaline batteries are used in a host of applications, including everything from wireless mice to medical devices.

Sales of household batteries are still growing and will reach $4,750 million by the year 2020, up from $4,125 million in 2015, according to Research and Markets’ report, “Household Batteries: Consumer Market Trends in the U.S.”

According to the report, the compound annual growth rate for the period is projected to be 2.9%.

Under Berkshire, Duracell’s in a new position as its own company rather than as a division of P&G (and before that Gillette). With Warren Buffett’s legendarily hands-off management style, which lets his CEOs chart their own course, Duracell’s in position for the first time to have total control over the direction of its brand.
For Berkshire, Duracell looks to be a brand that can continue to shine brightly.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Duracell Sues Wholesaler Over Grey Market Batteries

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Berkshire Hathaway’s battery-maker Duracell has sued a St. Louis-based battery wholesaler that is selling grey market Duracell batteries in the U.S. market.

The wholesaler, JRS Ventures Inc., has been sued for trademark infringement by Duracell in The United States District Court for the Northern District of Illinois.

According to Duracell the batteries were never intended for direct purchase by consumers.

In its lawsuit, Duracell noted:

“Although the batteries appear to be authentic Duracell products, many of them were manufactured in China, for the sole purpose of being distributed to [original equipment manufacturers] only, and not for the importation and direct sale to consumers in the United States,” Duracell states in its filing.

While Duracell admits that the batteries are genuine, it notes that the batteries that JRS Ventures are selling lack Duracell’s consumer information and its 10-year guarantee.

Duracell asserts that purchasers of the batteries “are likely to be confused and indeed disappointed.”

“Further, such sales of infringing products cause great damage to Duracell and greatly damage the goodwill in Duracell’s valuable trademarks.”

Duracell is asking for the court to halt the sale of the batteries and award unspecified punitive and triple damages.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Sonoco Products Company Creating Packaging Facility to Support Duracell

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Sonoco Products Company, a global provider of packaging products and services, is investing $20 million in a new packaging center that will provide packaging services for Berkshire Hathaway’s battery manufacturer, Duracell.

Sonoco’s Display and Packaging unit will be located in Duracell’s new leased facility in the Atlanta area. Sonoco will install and operate state-of-the-art primary packaging equipment at the new center and provide all packaging materials. In addition, the Company will produce retail merchandising displays which will also be packed out at the same facility.

“This unprecedented go-to-market packaging solution for Duracell is unlike any effort provided in our industry,” said Jack Sanders, Sonoco president and chief executive officer. “Because Sonoco is a solutions company which offers multiple packaging products and services, we are able to meet all of Duracell’s unique packaging and retail merchandising needs.”

Full production is expected in the fourth quarter of 2018. Sonoco’s sales of packaging and services annualized over the five-year contract period are expected to be more than $50 million.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Duracell to Close Cleveland, Tennessee Packing Plant

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Berkshire Hathaway’s recently acquired battery maker Duracell will close its Packing Plant in Cleveland, Tennessee by 2018. The move will lay off 140 workers.

Duracell President of Global Operation Robert Lorch said that the closure “makes Duracell’s supply chain more efficient.”

Duracell’s manufacturing plant in Cleveland, Tennessee will not be affected by the closure.

Berkshire Hathaway acquired Duracell in February 2016 when it swapped its shares of Procter & Gamble for the company’s Duracell division.

With Duracell’s $2 billion in annual revenue, Berkshire now owns the market leader in batteries for the home and workplace. The company has highly recognizable brands that consumers in home and work settings are willing to pay more for than private label store brands.

According to the company, Duracell’s CopperTop® and Quantum® batteries command the highest average percent of spending among battery brands, with 33% and 16%, respectively.

Combined, the two product lines now account for close to 50% of the market.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Duracell Powers Star Wars Franchise

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Duracell will continue to benefit from the success of the revived Star Wars film series, as the official battery power for the Star Wars franchise and its new release, Rogue One: A Star Wars Story.

Berkshire Hathaway acquired Duracell from Procter & Gamble just as Star Wars: The Force Awakens hit a record-breaking $936,662,225 at the U.S. box office.

In conjunction with its campaign tied to the latest Star Wars film, Duracell is supporting the healing power of imaginative play with a donation of one million batteries to Children’s Miracle Network Hospitals nationwide. To launch its new holiday campaign, Duracell released an all-new 60-second commercial, “How the Rebels Saved Christmas,” featuring young patients forging an epic Star Wars duel while delivering a battery-powered toy to another patient’s hospital room.

“Tapping into our imaginations during the healing and recovery process reduces stress, pain and anxiety,” said Dr. Charlotte Reznick, Ph.D., an internationally recognized child educational psychologist, former UCLA associate clinical professor of psychology, and author of the Los Angeles Times best-selling book, “The Power of Your Child’s Imagination.” “I’m delighted that Duracell has embraced the fact that letting kids be kids through imaginative play is healthy – mentally, emotionally and physically.”

Duracell’s donation of 1 million batteries will power toys at 147 Children’s Miracle Network (CMN) Hospitals nationwide. The batteries will ship in early November and will arrive by the holidays.

“After visiting the Children’s Miracle Network Hospitals, we saw first-hand the impact that the power of imaginative play has on children and we were instantly inspired to support their mission,” said Ramon Velutini, Marketing Director of Duracell. “Imaginative play truly is the best medicine – that’s why this holiday season Duracell is on a mission to power long-lasting play for those who need it most.”

“There is no better way to do this than by partnering with Star Wars,” said Velutini. “The sheer power of this story has ignited imaginations for decades, and Duracell is excited to continue working with Star Wars to power the imaginations of the next generation.”

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Federal Judge Throws Out Duracell Lawsuit

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Duracell’s guarantee that its batteries stay powered for up to 10 years in storage is not a promise that its batteries will never leak during that period says a Federal Judge.

U.S. District Judge Lucy Koh in San Jose, California, has thrown out a class-action lawsuit against Procter & Gamble Co. and its Gillette unit for allegedly defrauding consumers in ads and packaging for Coppertop batteries containing “Duralock Power Preserve” technology.

Plaintiff Renee Punian brought a lawsuit against The Gillette Company and Procter & Gamble Company alleging that the companies mislabeled packaging on Duracell Coppertop AA- and AAA-sized batteries with the statement that Defendants “guaranteed” such batteries would last 10 years in “storage,” when in fact “Defendants’ batteries would not last for 10 years, and could damage any device in which the batteries were stored.”

In her ruling that dismissed the lawsuit, Judge Koh said reasonable consumers would understand that P&G’s representation that the batteries were “guaranteed for 10 years in storage” was simply a warranty to repair, replace or refund batteries that failed within that timeframe, and not a promise that the batteries “have no potential to leak.”

She also noted in her 33-page decision that the complaint did not identify any cause, including any design or manufacturing defect, as to why the batteries might leak.

Berkshire Hathaway acquired the Duracell Battery unit from Procter & Gamble Co. on February 29, 2016.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Duracell Deal Finally Scheduled to Close in February

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2016 is starting off with some heavyweight acquisitions for Berkshire Hathaway.

Berkshire’s acquisition of aerospace manufacturer Precision Castparts closed on January 29, and February should be when Berkshire finally swaps it shares of Procter & Gamble’s stock for the company’s Duracell division.

With Duracell’s $2 billion in annual revenue, Berkshire is acquiring the market leader in batteries for the home and workplace. The company has highly recognizable brands that consumers in home and work settings are willing to pay more for than private label store brands.

According to the company, Duracell’s CopperTop® and Quantum® batteries command the highest average percent of spending among battery brands, with 33% and 16%, respectively.

Combined, the two product lines now account for close to 50% of the market.

Duracell’s growth has come at the expense of competitors Energizer and Rayovac.

Energizer has seen its market share shrink from 40% in 2012 to 36% in 2014, and Rayovac, which is a much smaller player, has seen its market share drop from 8% in 2012 to just 5% in 2014.

The total alkaline battery market in the U.S. alone is roughly $2.2 billion a year, with Duracell just over $858 million in alkaline batteries sales a year, or roughly 43% of the market.

Of the away-from-home market, healthcare/medical uses $70 million worth of batteries annually, followed closely by manufacturing, which consumes approximately $61 million worth of batteries annually.

A Mountain of Tax Savings for Berkshire

Berkshire’s not only acquiring the market leader for batteries, it’s also receiving a Mount Everest-sized bundle of tax-free cash.

By acquiring Duracell, Berkshire is able to cash out its $4.7 billion stake in Procter & Gamble that came from an original investment in Gillette of only $600 million.

In cashing out its position, Berkshire not only gets control of Duracell, but Duracell has been recapitalized by P&G with $1.7 billion in cash. This allows Berkshire a transfer of cash that is three times its original investment in Gillette, and the entire $4.7 billion transaction incurs no capital gains taxes.

For Berkshire, the Duracell deal shines brightly indeed.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Commentary: A Christmas Wish List for Under Warren Buffett’s Tree

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Here’s a Christmas wish list for presents under Warren Buffett’s tree. The items are big, so we’ll fit them under Charlie Munger’s tree as well.

1. Precision Castparts: There’s nothing like getting the present you bought for yourself. The pending acquisition the aerospace manufacturer looks like the gift that will keep on giving.  Demand for new airplanes will double over the next 15 years, as aging fleets are retired and millions more people start to fly regularly in India and China.

2. Duracell: Because everyone likes to get cash for Christmas! With the Duracell acquisition set to close in February 2016, Berkshire will gain not only the leading alkaline battery manufacturer, but will also get a company recapitalized by P&G with $1.7 billion in cash, and will get huge tax savings as it trades in its appreciated P&G stock for the battery maker.

3. More German Companies: Warren Buffett’s admiration for the German economy was on full display at the Berkshire Hathaway annual meeting in May 2015. This past February, Berkshire Hathaway struck a deal to acquire Devlet Louis Motorradvertriebs, a mail-order and retail chain selling motorbike clothing and accessories. The move, according to Buffett, was just the first small acquisition in a country with a strong economy and work ethic. And, with a rising dollar and a shaky euro, will more German companies fit under Berkshire’s tree?

4. Lots of Natural Gas: As the world dumps coal and moves to cheaper and cleaner forms of energy, Berkshire’s on the verge of striking it rich in Australia’s gas fields. Natural gas prices may be cratering now, but it never hurts to have a majority share of four trillion cubic feet of gas-in-place (yes, trillion) in Australia’s Whicher Range and Wonnerup gas fields. A new test well hopefully will bring good news in the new year.

5. More Auto Dealers: When Berkshire Hathaway jumped into the auto retailing business in March 2015, with its acquisition of the Van Tuyl Group, it added a whole new line of business to the mega-conglomerate. The Van Tuyl Group was the largest privately owned auto dealership group in the U.S., and Buffett promised that this was just the start of building a major auto-retailing empire. So, will Herb Chambers Companies, a privately-held, Boston-based dealership group with 55 total dealerships, be the perfect fit for Berkshire Hathaway Automotive? Its owner looks ready to sell. Time to wrap this one up and put a bow on it.

6. Happy Pilots at NetJets: Forget your crazy uncle, there’s nothing like having a happy family at Christmas. This holiday, NetJets’ pilots and its flight attendants will be celebrating their new contracts that bring substantial raises. Hopefully, they’ll use it to buy some of Berkshire’s fine products. How about some jewelry from Borsheims? It’s been a good year. Go for it!

7. More Solar & Wind! Berkshire’s quickly becoming the leading energy producer and distributor of solar and wind energy. This year saw major wind farm projects, including a new wind farm site in Adams County, Iowa, which will produce 162 megawatts of additional wind generation capacity in Iowa. Berkshire’s aggressive expansion of it solar power farms saw its Topaz Solar Farm in San Luis Obispo County, California, become one of the largest photovoltaic solar farms in the world. And, there’s plenty of room under the tree for more such projects, which not only bring cheap energy, but also lower environmental costs as they are emissions free. With the cost of solar energy dropping fast, Berkshire’s been signing amazing deals that are a Christmas present now and for decades to come. In Nevada, it has contracted to buy electricity from First Solar’s soon to be built Playa Solar 2 at the astoundingly low rate of only 3.87 cents a kilowatt-hour, and the deal is a fixed rate contract for twenty years.

8. More Deals with 3G Capital: Because everyone likes surprises. 3G’s aggressive acquisition strategy has been the perfect partner for Berkshire’s cash. 3G brings not only the aggressive cost-cutting (aggressive is an understatement) that is bringing legacy companies such as Kraft-Heinz into the 21st century, but also gives excellent financing and equity opportunities. 3G’s merger of Burger King with Tim Hortons brought Berkshire fat interest payments and made Berkshire a minority owner of the newly formed Restaurant Brands International. Surely, there are more deals to be done.

Hard to fit this all under the Christmas tree? Berkshire’s a big company. There’s room for all this and more.

Merry Christmas everybody!

–David Mazor

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.