The King Arthur Flour Company

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The King Arthur Flour Company

P.O. Box 1010
Norwich, Vermont 05055
U.S.A.
Telephone: (802) 649-3881
Toll Free: (800) 827-6836
Fax: (802) 649-3323
Web site: http://www.kingarthurflour.com

Private Company
Incorporated: 1904 as Sands, Taylor & Wood Co.
Employees: 120
Sales: $22 million (1999)
NAIC: 311211 Flour Milling; 45411 Electronic Shopping and Mail-Order Houses

The King Arthur Flour Company celebrates its 210th anniversary in the year 2000. Founded in Boston, it is America’s oldest flour company and the earliest food company in New England. The King Arthur Flour Company is the fifth-fastest-growing company in Vermont, as measured by its five-year employee growth, according to Vermont Business Magazine. The company is the number one seller of whole-wheat flour in New England, where it commands more than 80 percent of that market. The company’s main product, King Arthur Flour, is a premium flour that outsells all other combined brands in New England by four to one. For many years this flour was available only in New England, but it is now sold in supermarkets throughout the Northeast and in select markets across the United States. It also is available nationwide by mail order from the company’s Baker’s Catalogue and from the company’s web site. The team-managed company operates as four closely related divisions: a flour division, a bakery, a mail-order and on-line catalogue, and a retail store. As its slogan—“Never Bleached, Never Bromated”—implies, King Arthur Flour is a natural food containing no chemicals.

1790–1896: Postwar Troubles and Creation of a Premium Flour

The company’s origins go back to 1790, seven years after the end of the American Revolutionary War and a year after the inauguration of George Washington. While the war prompted a boycott of English products, American colonists kept a taste for fine English flour. When the war ended and trade was resumed, Henry Wood—under the name of Henry Wood & Son—was one of the commission merchants (wholesalers or distributors) who distributed the flour brought by English ships to the Long Wharf in Boston’s harbor. At the end of the 18th century, bread was still a basic dietary item for New Englanders, who ate much more bread than people do today, and Henry’s company thrived.

In 1838 Henry Wood and a partner, George J. Cook, bought a flour company named Richards and Co. Two years later they were joined by salesman John Low Sands, who was the first of five generations of Sands to lead the company. As the years went by, deaths and departures from Richards and Co. brought in new partners and, consequently, changes to the company’s name. By 1895 the company was owned in a limited co-partnership by Orin E. Sands (youngest son of John Low Sands), Mark C.Taylor, and George E. Wood. The company—renamed Sands, Taylor & Wood Co. (ST&W)—was incorporated on July 1, 1904, and kept that name for 95 years.

Freed from England, the colonists prospered as they resumed trading and shipping. Soon, however, the booming economy caused inflated land values and speculation. Furthermore, the climate of uncertainty and suspicion that followed the end of the Civil War contributed to a financial panic in New York in 1873. John Sands and his two sons, Benjamin and Orin, safeguarded the flour company’s reputation for honesty and promoted its flour by pioneering advertisements in Boston streetcars.

When famine spread throughout Russia in 1891, demand drove wheat prices up and standards of quality deteriorated. Meanwhile, ST&W conducted many costly experiments to produce flour of the highest quality. When the company tried to find a name for this high-quality flour, George E. Wood recalled his reaction to a musical production titled King Arthur and the Knights of the Round Table. He had been impressed by how the legendary King Arthur defended and upheld the ideals of strength, purity, and honesty. These were precisely the ideals that George held for his company, where he felt a strong corporate structure was represented by honest salesmen, high standards assured quality products, and the new unbleached and unbromated flour was to be sold to all dealers at the same fair price. ST&W did not allow merchants to do any price-cutting and guaranteed the quality of each purchase.

King Arthur Flour was introduced at the Boston Food Fair in October 1896. The display at the fair was built to represent a castle, and, according to the Boston Post of November 14,1896, “a horseman clad in glittering armor and armed cap-a-pie [from head to foot]” carried a standard bearing the words King Arthur Flour as he rode a black horse through the streets of Boston. The newspaper went on to say: “the inference is obvious—that as King Arthur was a champion without fear and above reproach, so is King Arthur Flour the peerless champion of modern civilization.”

Early 20th-Century Events and the Flour Market

To assure the quality of King Arthur Flour, ST&W had to contend with a number of difficulties, including distance from agricultural centers, weather, world events, advances in technology, and government regulations. Initially, King Arthur Flour was made of only hard, red, spring wheat from Minnesota and Canada. This high-protein wheat produced more gluten, which absorbed moisture better, made yeast-baked goods rise better, and kept baked goods fresher for a longer time. Wheat crops, however, were very vulnerable to vagaries of the weather: hot, dry spells caused deterioration and diseases such as black rust. Nevertheless, ST&W continued to safeguard the quality of its flour, even if that meant paying premium prices for the best grade of wheat.

Henry Ford’s invention of the farm tractor in 1915 helped farmers to raise more wheat, but the quality wheat on which ST&W depended was very expensive and in short supply because of exports to U.S. troops and to the European countries involved in World War I. By 1917 sales of King Arthur Flour had dropped 50 percent from sales in 1914, when the war began. At this time, ST&W was still selling wheat flour, rye flour, oatmeal, cornmeal, rice flour, and even soybean meal, among other products made from 13 different kinds of grains—products that were reminders of the company’s origin as a wholesale distributor.

During the war, new technology and mass production changed the way business was conducted, and an era of prosperity created further divisions between rich and poor. After serving in the war, Donald Sands returned to work as general manager for his father, Frank E. Sands, who had helped in the early marketing of King Arthur Flour and been named president of the company in 1917. In 1922 demand for flour in the retail market had dropped—in 1914 housewives baked 60 percent of the bread consumed, as opposed to only 25 percent after the war—so ST&W began concentrating on its bakery business, which helped to increase sales.

In the 1930s, however, ST&W struggled to remain in business because of Congress’s attempt to stabilize the economy by passing laws—such as the 1933 Agricultural Adjustment Act and the Farm Credit Act—that increased the price of available hard wheat. Furthermore, the U.S. Department of Agriculture established a processing tax for manufacturing wheat into flour. This tax was expected to yield about $150 million a year, part of which was to be given to the wheat growers who promised to reduce their wheat acreage. Historian Whitney Sands pointed out that when the tax was lifted, “all the money collected as taxes had to be returned to the customers, mostly bakeries. Refunds were made at a great loss to ST&W, and it is generally believed that it was Donald’s frustration over the situation that killed him” at the age of 41. He was succeeded as general manager by his younger brother, Walter E. Sands.

Walter followed up on Donald’s earlier suggestion for introducing King Arthur Flour to New York stores and established the King Arthur Coffee business in Boston. The company also began to sell King Arthur Wheat Germ and King Arthur Tea. Several other products appeared on the market during the next decade: King Arthur Biscuit Mix, King Arthur Farin-O-Gram, and King Arthur Whole Wheat Shreds. These products, relatively inexpensive and high in nutritional value, appealed to consumers in the throes of economic depression.

1944–66: More Inhibiting Legislation, Continuing Decline of Flour Sales

In 1944 Walter Sands was elected ST&W president; by 1963 his two sons, Frank E. Sands II and Robert Graham Sands, were helping to lead the company. During World War II and its aftermath, Walter was very vocal about the subsidy the government paid farmers and the high prices millers had to pay for wheat. In a 1944 article he wrote that “The wheat subsidy [for the farmers] has changed our industry from a healthy American enterprise into a zombie of bureaucracy.” He predicted that flour would become harder and harder to obtain because wheat was being used for feed and for making alcohol instead of being stored to take care of European needs after the war.

Walter’s forecast proved to be accurate when, at the end of the war, many flour mills were shut down because wheat was being shipped to Europe in order to implement the United Nations’ Refugee Relief Act—designed to feed the millions of people left homeless after World War II—and the Marshall Plan for funding the rebuilding of Europe. The price of wheat soared and supplies dried up. During these years of economic recession, wheat shortages, and government intervention, Walter kept the company free of debt and maintained its professional salesmanship. By 1963 ST&W held only six percent market share but upheld its high standards of quality even when it became necessary to notify customers that shortages of quality wheat prevented the company from filling any more orders.

Company Perspectives:

The most important things in business are confidence in the integrity of the men who manage it and the merchandise offered its patrons. This business was built on honor by its founders and will be so maintained. We seek wider knowledge, greater enthusiasm, more friendliness.

As the radio grew in popularity, ST&W was quick to use that medium for promotion. In 1931 a company-sponsored radio show starring Marjorie Mills was broadcast in Massachusetts, Maine, Connecticut, and Rhode Island. Listeners were invited to write in for purchase warrants that allowed them to receive free five-pound bags of flour. During the 1940s, Mills also began to make personal appearances in grocery stores. Later, Bert Porter—an ST&W employee—gave live demonstrations of bread baking.

By the 1960s, home baking was rapidly decreasing and retail sales of flour were declining. ST&W then adopted a two-pronged marketing strategy: increase consumer awareness of the nutritional benefits of baking with King Arthur Flour and expand wholesale relationships with bakers. Attentive to the American public’s growing awareness of additives to foods and of the differences between natural and processed foods, ST&W’s advertisements emphasized “the high protein and lack of bromate that were exclusive to King Arthur Flour” because, true to its slogan, it was “Never Bleached, Never Bromated.” The process for bleaching flour includes benzoyl peroxide—an ingredient in acne medicine—and chlorine dioxide, the principal ingredient in laundry bleach. Potassium brómate, recognized as a carcinogen, has been outlawed in Europe, Japan, Canada, and California. The wholesale division expanded rapidly and branched into sales of all the bakery products.

1967 and Beyond: Expansion and Restructure

In 1967 Frank E. Sands II was named president. The company leased the Wayside Inn Grist Mill (made famous by Longfellow’s Tales of the Wayside Inn) in Sudbury, Massachusetts, and began to sell stone-ground whole wheat flour. Frank then launched a series of acquisitions that made ST&W the largest New England distributor of bakery supplies, including practically every ingredient bakers use; the company also sold pie fillings, jams, jellies, flavorings, and ice cream toppings. Within ten years ST&W sales shot up to $45 million, and the number of employees rose from 20 to 150. However, when interest rates rose in the late 1970s, the company found it almost impossible to pay off its expansion debt. Frank Sands sold off the bakery supply business and the new acquisitions, resolved a large part of the debt, and decided to restructure the company into one operation: the sale of family flour. Over the years, ST&W had moved its headquarters from Boston to other cities in Massachusetts. In 1984 Frank relocated company headquarters to Norwich, Vermont.

From its narrow focus, the company gradually expanded its geographic reach and developed new products. In 1990 demand for King Arthur Flour from outside ST&W’s New England market led to the publication of a mail-order catalog under the title The Baker’s Catalogue. Baking enthusiasts responded quickly to this catalog, which was little more than a pamphlet about various kinds of flour. Then ST&W increased the number of available mail-order items to include professional-quality baking equipment and ingredients (such as whole grains and seeds, specialty flours, spices, dried fruits, and natural sweeteners). In 1998 The Baker’s Catalogue was mailed to some 3.5 million people and accounted for $10 million in sales. By 1999, the brightly illustrated monthly catalog featured seasonal recipes and more than 600 items, including hard-to-find baking supplies, accessories, and extracts. In 1992 ST&W opened the King Arthur Flour Baker’s Store in Norwich, offering all the items in the mail-order catalog as well as locally produced teas, jams, and other Vermont specialties.

In 1993 ST&W introduced a white whole-wheat flour made from a new variety of hard white winter wheat. This flour contained 100 percent of the wheat berry and was a lighter, sweeter-tasting flour especially suited to most baked goods calling for all-purpose flour. Bakeries could buy this flour—as well as Queen Guinevere Cake Flour, Sir Lancelot High-Gluten Flour, and Round Table Pastry Flour—in 50- and 100-pound bags. In 1995, in response to the growing popularity of bread machines, ST&W launched King Arthur Special for Machines Bread Flour. This flour was made from a high-protein hard, red spring wheat and was especially milled for machine-kneaded, yeast-baked goods; it was ideal for use in bread machines, food processors, and heavy-duty mixers. In 1996 the Sands Family established an employee stock-ownership plan.

In addition to selling a variety of flours, baking equipment, and supplies, ST&W was interested in educating future home bakers and perpetuating traditional American baking. In 1992 the company inaugurated the “Life Skills Bread Baking Program” for 900 middle-school students in Dayville, Connecticut. Since then, more than 40,000 students across the country have learned how to make basic hearth bread. Michael Jubinsky, who served for more than 20 years at ST&W as a culinary arts instructor and expert bread baker, traveled with a team to conduct baking demonstrations for adults. Regular classes and demonstrations were also held at the company’s store in Norwich.

Key Dates:

1790:: Henry Wood & Co. is established to market English flour.
1838:: Henry Wood & Co. acquires and merges into Richards and Co.
1840:: John Low Sands joins Richards and Co. as a flour salesman.
1896:: King Arthur Flour is introduced at the Boston Food Fair.
1904:: Sands, Taylor & Wood Co. (ST&W) is incorporated.
1917:: Frank Edgar Sands is named ST&W president.
1933:: The Agricultural Adjustment Act, the Farm Credit Act, and the processing tax threaten ST&W’s viability.
1944:: Walter Edgar Sands becomes ST&W president.
1967:: Frank E. Sands II becomes president, launches a decade of acquisitions, and introduces new products, including stone-ground whole wheat flour.
1984:: Frank E. Sands II moves company headquarters to Norwich, Vermont, and restructures the company.
1990:: ST&W introduces a mail-order catalog: The Baker’s Catalogue.
1996:: ST&W establishes an employee stock-ownership plan.
1999:: ST&W changes its name to The King Arthur Flour Company.

On the Threshold of the 21st Century

On July 1, 1999, ST&W changed its name to The King Arthur Flour Company, thereby emphasizing the name of its main product, the flour that since 1896 was “Never Bleached, Never Bromated.” Late that year the company made all its products available electronically by placing The Baker’s Catalogue on the company’s Web site, where it was expected to generate nearly a million dollars in sales over the next 12 months. Although industry-wide flour sales had declined slightly, The King Arthur Flour Company’s increased geographic distribution and catalog sales helped increase sales from $5.2 million in 1990 to $22 million in fiscal year 1999.