General Foods Corporation was a company whose direct predecessor was established in the
USAThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
by
Charles William PostCharles William Post , also known as C.W. Post, was an American breakfast cereal and foods manufacturer and a pioneer in the prepared-food industry.-Biography:...
as the Postum Cereal Company in 1895. The name General Foods was adopted in 1929, after several corporate acquisitions. In November, 1985 General Foods was acquired by Philip Morris Companies (now Altria Group, Inc.) for $5.6 billion, the largest non-oil acquisition to that time. In December, 1988 Philip Morris acquired
Kraft, Inc.Kraft Foods, Inc. is the largest food and beverage company headquartered in the United States and the second largest in the world ....
, and in 1990 combined the two food companies as Kraft General Foods (KGF). "General Foods" was dropped from the corporate name in 1995 and now exists only as part of a brand name for a flavored coffee-based beverage,
General Foods InternationalGeneral Foods International is a subdivision of the Kraft Foods corporation, based in the United States. General Foods International produces several different flavors of instant coffee....
.
History
C.W. Post established his company in
Battle Creek, MichiganBattle Creek is a city in the U.S. state of Michigan, in northwest Calhoun County, at the confluence of the Kalamazoo and Battle Creek Rivers. It is the principal city of the Battle Creek, Michigan Metropolitan Statistical Area, which encompasses all of Calhoun county...
, having lived there since 1891, when he was a patient at an holistic sanitarium operated by Dr.
John Harvey KelloggJohn Harvey Kellogg was an American medical doctor in Battle Creek, Michigan, who ran a sanitarium using holistic methods, with a particular focus on nutrition, enemas and exercise...
. Dr. Kellogg, with his brother
W.K. KelloggWill Keith Kellogg, usually referred to as W.K. Kellogg was an American industrialist in food manufacturing, best known as the founder of the Kellogg Company, which to this day produces a wide variety of popular breakfast cereals...
, had developed a dry corn flake cereal that was part of their patients’ diet. Post's first product, introduced in 1895, was not a cereal, however, but a roasted, cereal-based beverage,
PostumPostum was a powdered roasted grain beverage sold by the Kraft Foods company as a coffee substitute. The caffeine-free beverage mix was created by The Postum Cereal Company founder C. W. Post in 1895 and produced and marketed by Postum Cereal Company as a healthful alternative to coffee...
. Having developed an aversion to coffee during his time in the sanitarium, Post positioned Postum as a healthy alternative. Its advertising slogan, which he coined himself, was "There's a Reason." Postum's main ingredients were naturally-caffeine-free wheat grain, bran and molasses. Initially Postum had to be brewed like coffee, but in 1911 Post introduced a powdered, instant formulation. This version of the product was manufactured in Battle Creek until it was discontinued in 2007.
In 1897 Post introduced his first dry cereal, a crunchy blend of wheat and barley, which he called Grape Nuts. His first corn flake product, originally called "Elijah's Manna," appeared in 1904. Owing to consumer resistance to the biblical reference (even Great Britain flatly refused to register the name as a trademark), it was renamed Post Toasties in 1907.
C.W. Post was an astute businessman who believed that advertising and aggressive marketing were the keys to a successful enterprise. Within 10 years of its incorporation his Postum Cereal Company had more than $10 million in capital and was spending $400,000 a year on advertising, sums which were remarkable for the period. Although he vigorously opposed labor unions, his employees were the highest-paid in his industry and working conditions at the Post factory were exemplary. He even developed a factory town in which he sold homes to his workers at favorable rates.
Postum Cereal Company lost its founder in 1914. C. W. Post underwent an apparently successful appendectomy at the
Mayo ClinicMayo Clinic is a non-profit organization and internationally renowned group medical practice headquartered in Rochester, Minnesota. Its headquarters consist of the Mayo Medical School, the Mayo Graduate School, the Mayo College of Graduate Medical Education, and several other health science schools...
, but shortly after returning home to recuperate he died of a self-inflicted gunshot wound. Post had for years suffered from bouts of illness and depression. While his death was without warning, his company was not left rudderless. His daughter,
Marjorie Merriweather PostMarjorie Merriweather Post a.k.a. Marjorie Merriweather Post Close Hutton Davies May was a leading American socialite and the founder of General Foods, Inc...
, had literally been raised in the business and was familiar with virtually every aspect of its operations. She assumed control of the now $20 million Postum Company and managed its affairs for the next eight years. While she did not oversee major product innovations, she did have a good feel for business and for promoting talented managers. In addition, her second marriage, in 1920, was to a man, E.F. Hutton, who was a major force on Wall Street.
Gross revenues in 1921 were $17.75 million. In 1922 Hutton took the newly incorporated Postum Cereal Company public by issuing 200,000 common shares. The 1920s was a period in which common stock was still considered highly speculative, and consequently the newly-issued shares carried a dividend at the rate of $5.00 per year.
Revenues in 1922 were essentially the same as in 1921, but in 1923 they were $22.25 million and a
stock splitA stock split or stock divide increases or decreases the number of shares in a public company. The price is adjusted such that the market capitalization of the company remains the same after the split, so that dilution does not occur...
, in the form of a 100% stock dividend, increased the authorized shares to 400,000. These shares also earned a $3.00 annual cash dividend, representing a 20% increase over the pre-split rate. In 1925, with revenues now at $27.4 million, the stock was split once again and the dividend was increased to $4.00 per new share.
Major acquisitions
Starting in 1925, under the leadership of financier (and at one point, son in-law to the founder),
E.F. HuttonEdward Francis Hutton was an American financier and co-founder of E. F. Hutton & Co....
as chairman and Colby M. Chester as president, Postum Cereal made the first of a series of corporate acquisitions which would within a few years transform it into the dominant U.S. packaged grocery products manufacturer.
It began late that year with the purchase of the
Jell-OJell-O is a brand name belonging to U.S.-based Kraft Foods for a number of gelatin desserts, including fruit gels, puddings and no-bake cream pies. The brand's popularity has led to its becoming a generic term for gelatin dessert across the U.S. and Canada...
Company. Jell-O had been first produced in 1897 by Pearl B. Wait. His product was based on a patent that had been issued to
Peter CooperPeter Cooper was an American industrialist, inventor, philanthropist, and candidate for President of the United States.-Biography:...
, the inventor and industrialist, in 1845, but which Cooper had never developed commercially. However, Wait was unsuccessful in marketing Jell-O and in 1899 he sold the rights to it for $450 to a neighbor, Orator Francis Woodward, who had founded the Genesee Pure Food Company in 1897. Genesee became the Jell-O Company in 1923, the same year it began marketing D-Zerta, a sugar-free gelatin, and a powdered mixture for making ice cream in the kitchen.
In 1926 Postum Cereal acquired Igleheart Brothers, Inc (established in 1856), the makers of Swans Down cake flour, and followed this with the purchase of the Minute Tapioca Company. "Tapioca Superlative" had been invented in 1894 by a Boston woman, Susan Stavers, who made it from tapioca flakes that she ran through her coffee grinder. Later that year she sold the rights to John Whitman, of
Orange, MassachusettsOrange is a town in Franklin County, Massachusetts, United States. The population was 7,518 at the 2000 census. It is part of the Springfield, Massachusetts Metropolitan Statistical Area.Part of the town is included in the census-designated place of Orange....
, who changed its name to "Minute Tapioca." In 1908 he changed the name of his company to that of his product. The "Minute" brand would later become better known for a General Foods innovation
introduced in 1949 known as
Minute Rice- About the creator of Minute Rice :Minute Rice is a brand of instant rice. The product was introduced in 1949 by General Foods, who merged with Kraft in 1990 and became Kraft General Foods, which became Kraft Foods in 1995...
, a brand of parboiled rice.
As a consequence of the Jell-O and Minute Tapioca acquisitions, Postum Cereal's revenues in 1926 jumped to $46.9 million. The number of shares stood at 1.375 million, including shares issued to acquire Jell-O and Minute Tapioca. The dividend was increased to $4.70 a year.
The acquisition spree continued in 1927 with the purchase of two similarly named confectionery companies, chocolate-maker Walter Baker (founded in 1765, making it the oldest component of the Postum constituent companies), and coconut-maker Franklin Baker, which had begun earlier in the 19th century as a flour broker but whose confectionery products dated from 1895. This was followed by the purchase of Log Cabin Products, the maker of Log Cabin Syrup (first produced in 1887), and of Richard Hellmann, Inc. (established in 1913), the producer of Blue Ribbon
MayonnaiseMayonnaise is a thick condiment. White or yellowish-white in color, it is a stable emulsion of oil, salt and vinegar, or lemon juice which uses egg yolks as an emulsifier...
. And late in the year Postum Cereal began selling its first coffee product, "
SankaSanka is a brand of decaffeinated coffee, sold around the world, and was one of the earliest decaffeinated varieties. Sanka is distributed in the United States by Kraft Foods.-History:...
," by obtaining U.S. marketing rights from Dr.
Ludwig RoseliusLudwig Roselius was a German coffee merchant and founder of the company KAFFEE HAG. He was born in Bremen and is credited with the development of commercial decaffeination of coffee...
of Bremen, Germany. Roselius had developed the decaffeinated coffee in 1906 and began selling it in the U.S. in 1923.
Three more acquisitions followed in 1928. The most important was that of the Cheek-Neel Coffee Company. Its product,
Maxwell HouseMaxwell House is a brand of coffee manufactured by a like-named division of Kraft Foods. It is named in honor of the Maxwell House Hotel in Nashville, Tennessee. For many years until the late 1980s it was the largest-selling coffee in the U.S. and is currently second behind Folgers, which is...
, dating from 1892, was a well-known brand in what was still a fragmented U.S. coffee market. Within a few years, however, it was to become the number one brand in America and would retain that position well into the 1980s. Also acquired during 1928 was the La France Manufacturing Company, a maker of starch and other laundry products (this being Postum's first venture into non-edibles), and the
Calumet Baking Powder CompanyCalumet Baking Powder Company was an American food company established in 1889 in Chicago, Illinois, by baking powder salesman, William Monroe Wright. His newly formulated double-acting baking powder took its name from the Native American name for a peace pipe given to the lands now known as...
, the leading maker of this kitchen essential.
Financially, the year culminated on October 1 with the inclusion of Postum, Inc. in the newly reformulated
Dow Jones Industrial AverageThe Dow Jones Industrial Average also referred to as the Industrial Average, the Dow Jones, the Dow 30, or simply as the Dow; is one of several stock market indices, created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow...
of 30 common stocks. By year-end, revenues stood at $101 million and the dividend on the five million authorized shares was $5.00 per year, a twenty-five-fold increase since 1922.
Purchase of Birdseye
But, by far, the most important acquisition of 1929 was of the frozen-food company owned by
Clarence BirdseyeClarence Frank Birdseye II was an American inventor who is considered the founder of the modern frozen food industry.-Early life:...
, called General Foods Company. (Following this acquisition Postum, Inc. changed its name to General Foods Corporation.) Birdseye (December 9, 1886 - October 7, 1956) was one of the most important entrepreneurs in the history of the food industry. Born in New York City, he became interested in the frozen preservation of food during the course of working as a fur trader in
LabradorLabrador is a region of Atlantic Canada. Together with the island of Newfoundland from which it is separated by the Strait of Belle Isle, it constitutes the province of Newfoundland and Labrador. The region is part of the much larger Labrador Peninsula on the Canadian mainland...
between 1912 and 1916. By 1923 he had developed a commercially viable process for quick-freezing foods using a belt mechanism, which he patented. In 1924, with backing from three investors, he formed the General Seafoods Company, in
Gloucester, MassachusettsGloucester is a city on Cape Ann in Essex County, Massachusetts, in the United States. It is part of Boston's North Shore. The population was 30,273 at the 2000 census...
, to produce frozen haddock fillets packed in plain cardboard boxes.
It was the founder's daughter,
Marjorie Merriweather PostMarjorie Merriweather Post a.k.a. Marjorie Merriweather Post Close Hutton Davies May was a leading American socialite and the founder of General Foods, Inc...
who first became excited about the prospects for the frozen foods business. In 1926 she had put into port at Gloucester on her yacht, Sea Cloud, and was served a luncheon meal which, she learned to her amazement, had been frozen six months before. Despite her enthusiasm it took Post three years to convince General Foods' management to acquire the company. GF paid $10.75 million for a 51% interest and its partner,
Goldman SachsThe Goldman Sachs Group, Inc. is a bank holding company that engages in investment banking, securities services and investment management. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street and has its secondary office at 30...
, paid $12.5 million for the other 49%. (Goldman sold its share back to General Foods in 1932, apparently at a slight loss.)
Shortly after the Birdseye acquisition General Foods began test-marketing an expanded line of frozen foods. But the company quickly realized that a packaging process alone would not be sufficient to effectively market frozen products in stores. In order to be sold, the packages had to be kept frozen while on display, so Birdseye engineers began development of a freezer cabinet designed specifically to hold frozen foods. The cabinet, which first appeared in 1934, required a great deal of space and electricity, which were not readily available in most grocery stores of the period. But for those stores which could accommodate them, the payback was immediate. Housewives quickly realized that keeping packages of frozen food in the icebox could mean fresher meals and fewer trips to the market.
Timeline of selected later events
- 1953 - General Foods acquired Perkins Products Company, maker of Kool-Aid
Kool-Aid is a brand of flavored drink mix owned by the Kraft Foods Company.-Invention and production:Kool-Aid was invented by Edwin Perkins and his wife Kitty in Hastings, Nebraska, United States. All of his experiments took place in his mother's kitchen..Its predecessor was a liquid concentrate...
.
- 1957 - The company introduced Tang
Tang is a sweet and tangy, orange-flavored, non-carbonated soft drink from the United States. Named after the tangerine, the original orange flavored Tang was formulated by William A...
, which became available nationally two years later.
- 1964 - General Foods introduced Maxim, the first American brand of freeze-dried coffee.
- 1968 - General Foods makes its ill-advised purchase of the Burger Chef
Burger Chef was an American fast-food restaurant chain founded in 1954 in Indianapolis, Indiana. The chain expanded throughout the United States, and at its peak, it was second only to McDonald's in the number of locations nationwide...
fast-food chain.
- 1969 - General Foods buys Rax Restaurants
Rax Roast Beef is a small regional U.S. fast food restaurant chain specializing in roast beef sandwiches, currently based in Ironton, Ohio. Once a big player in the fast food segment, Rax has extensively scaled down their operations since their peak in the 1980s due to poor marketing decisions and...
.
- 1971 - General Foods acquired the maker of Gevalia
Gevalia, a wholly owned subsidiary of Kraft Foods, is the largest coffee roastery in Scandinavia. In North America, the company sells premium coffee and teas directly to consumers via home delivery. Customers order from a customer service center and a website that was relaunched in August 2009...
.
- 1978 - General Foods sells Rax Restaurants
Rax Roast Beef is a small regional U.S. fast food restaurant chain specializing in roast beef sandwiches, currently based in Ironton, Ohio. Once a big player in the fast food segment, Rax has extensively scaled down their operations since their peak in the 1980s due to poor marketing decisions and...
to Rac.
- 1981 - General Foods acquires Oscar Mayer
Oscar Mayer is an American meat and cold cut production company, owned by Kraft Foods, known for its hot dogs, bologna, bacon and Lunchables products.-History:...
& Company.