If Warren Buffett does team up with Mars to buy Wrigley for more than $22bn, it will be not only a quintessential Buffett deal but a reminder of where value lies in a downturn.

Mr Buffett has a sweet tooth, not only personally (he is known for his devotion to Cherry Coke) but as an investor. Berkshire Hathaway’s 8 per cent stake in Coca-Cola is among his longstanding stakes in big consumer brands.

Famously, confectionery companies are often good investments during in recessions as people cut back on luxuries and comfort themselves with small indulgences such as chocolate bars.

They also meet the Buffett test, which he used recently to justify not taking a stake in Google, that he has to be able to grasp a company’s product and the sustainability of its competitive edge.

One might put chewing gum at the opposite end of the scale to Bear Stearns. Mr Buffett was said to have discussed taking a stake in the Wall Street firm last September but rejected the idea, which was a smart decision.

He has more faith in chewing gum than credit derivatives.

April 28, 2008 6:03am in Food and Drink | Comment