Rowntree Mackintosh

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Rowntree Mackintosh

York YO1
1XY United Kingdom
(0904) 653071

Wholly owned subsidiary of Nestlé S.A.
Incorporated: 1969 as Rowntree Mackintosh PLC
Employees: 33,200
Sales: £1.5 billion (US$2.71 billion)

The history of Rowntree Mackintosh before 1969, when Rowntree & Company merged with John Mackintosh and Sons to create Rowntree Mackintosh, has two distinct branches. The Rowntree branch begins with a Quaker woman named Mary Tuke, a grocer in York who dealt in a variety of products but became well known for her coffee and tea. By 1785 she was also selling chocolate and cocoa, and in time the manufacturing of cocoa, chocolate, and chicory became a distinct, although relatively small part, of the Tuke business. When Mary died the business was carried on by her nephew, William, and after William by his sons and grandsons. But by 1862, the Tuke family was ready to disengage itself from various aspects of the business. Their tea business was sold to John Casson and the chocolate business was sold to Henry I. Rowntree, who, like Mary Tuke, was a devout Quaker.

In 1869 Joseph Rowntree joined his brother Henry in the business, eventually becoming the more active and influential of the two brothers. H.I. Rowntree and Company began to experiment with the manufacture of gum sweets, a confectionery more popular at the time in France than in England, and in 1881 started to produce crystallized gums. The experiment was a success and soon led to Rowntree’s expansion through the purchase of a facility on North Street.

Henry Isaac Rowntree died in 1883, leaving the business to his brother Joseph (who was later joined by his two sons John Wilhelm and B. Seebohm). At this time the firm manufactured two main cocoa products: Superior Rock Cocoa, a mix of cocoa and sugar compressed into a cake, and a cocoa powder that was ground cocoa with sugar and starch added. But Dutch “cocoa essence”—a pure cocoa powder from which the cocoa butter had been removed—began to gain in popularity. Joseph Rowntree devoted himself to manufacturing a pure cocoa essence using the Dutch method, which he brought out in 1887 and called Rowntree’s Elect Cocoa. The success of this product led to even further expansion, and land on the outskirts of York was purchased in 1890. This estate became known as the Haxby Road factory, and by 1922 had grown into a 220-acre complex of factories and other company buildings. In 1897, with over 1,000 employees, the company became a limited liability company called Rowntree and Company, Ltd. That year an electric generator was built to provide power and light for the factories. In 1899, the company began manufacturing its own boxes.

Throughout his long career with the company, Joseph Rowntree spent much of his time and energy building the company’s reputation as a good employer. By 1906, Rowntree employed 4,000 workers, who were offered a pension plan, free medical and dental facilities, and education classes. Rowntree even employed seven full-time welfare workers to supervise the young girls working in his factories.

Temperance played an important role in Joseph Rowntree’s political thinking; in 1897 he coauthored an important study called The Temperance Problem and Social Reform. He also advocated a fairer distribution of wealth and industrial democracy. To a large extent he incorporated his ideas into factory life, forming work councils and becoming one of the first employers to enact a minimum wage. Rowntree also created three influential trusts, one of which was used to finance liberal newspapers and periodicals, including The New Statesman. Another of the trusts built a model village with low-income housing, called New Earswick.

Joseph Rowntree’s idealism influenced not only employee relations but other aspects of his business life as well. For a long time he refused to advertise his products, putting the company at a commercial disadvantage for a few years. When at one point a local grocer put a promotion label on a packet of Rowntree cocoa powder, Joseph Rowntree reacted angrily to what he felt were outrageous claims: “It is not a pure ground cocoa. It is not produced from the finest Trinidad Nuts. It is not the ’best for family use.’ In fact the whole thing is a sham....”

However with time and under the influence of his son John Wilhelm, Joseph Rowntree dropped his objections to advertising. Strong promotion, including full-page advertisements complete with a coupon, helped make Rowntree’s Elect Cocoa a success. And during the 1920s and 1930s under the influence of George James Harris, the husband of Henry Rowntree’s granddaughter, savvy marketing and consumer research became a hallmark of the company.

In 1923 B. Seebohm Rowntree succeeded his father as chairman, and that year profit sharing for Rowntree’s 7,000 employees was established. Seebohm Rowntree also shared his father’s work and study on the nature of poverty. He conducted a far-reaching survey of social conditions by interviewing every working-class household in the city of York and published Poverty, A Study in Town Life in 1901. He also wrote numerous other books on the subject of poverty.

During the 1920s, the company underwent a period of expansion and acquisition, moving into South Africa, Canada, Ireland, and Australia, and buying Gray Dunn and Company and W. and M. Duncan.

A number of influential and lasting brands were introduced during the 1930s, including Black Magic chocolates in 1933, Kit Kat and Aero bars in 1935, and Smarties in 1937. Much of the success of these new products can be attributed to the detailed market research conducted by George James Harris.

In 1941 Harris succeeded Seebohm Rowntree as chairman of Rowntree. Although Harris is best remembered for his consumer research and marketing efforts, he continued the company’s tradition of community service and employee care. Under his leadership, a company rest house was opened. During World War II, he served as president of the British Cocoa, Chocolate and Confectionery Alliance and after the war he was chairman of the industry’s reconstruction committee.

During the 1950s, under the chairmanships of William Wallace and then Lloyd Owen, the company acquired N.M.U. Transport Ltd. and built a new factory in Newcastle. In 1961 the first computer was installed in York. During the 1960s, Rowntree expanded its interests into Germany, Belgium, Holland, and Italy; introduced Jellytots and the After Eight line of chocolate mints; and acquired Valley Transport Company, Creamola Food Products, Maconochie Brothers, Sun-Pat Products, and Stewart Esplen and Greenhough. In 1969, after an attempt by General Foods to take over Rowntree was abandoned, Rowntree merged with John Mackintosh and Sons Ltd. to form Rowntree Mackintosh Limited.

The history of the Mackintosh company began with John Mackintosh, who in 1890 opened a confectionery shop in King Cross Lane, Halifax, which came to specialize in toffee. Mackintosh’s innovation was to combine soft American caramel with hard, brittle English toffee, resulting in Mackintosh’s Celebrated Toffee. The product was introduced with free samples and much promotion and became quite a success. After four years, Mackintosh sold his shop to concentrate on manufacturing toffee. By 1895, the business had to move to a larger facility, and in 1899 Mackintosh formed a private company, John Mackintosh Ltd. That year he also built a factory in Queens Road. The business prospered; by 1903 Mackintosh toffee was being exported to Italy, Spain, and China, and in 1904 Mackintosh opened a factory in the United States.

In 1909, a year after John Mackintosh’s son Harold joined the company, a fire destroyed the factory on Queens Road and business was transferred to the company’s present site. Eventually the Queens Road factory was rebuilt and, after Mackintosh began to make chocolate in 1912, it became the center for chocolate manufacturing.

After John Mackintosh’s death in 1920, Harold Mackintosh became chairman, and in 1921 the company, with 1,000 employees, changed its name to John Mackintosh and Sons Limited.

Under Harold, the company continued to prosper. A laboratory was opened in 1922, and in 1929 the company formed Anglo-American Chewing Gum Ltd. In 1932 Mackintosh acquired A.J. Caley and Son Ltd. in Norwich. The Caley company had begun in 1880 as a chemist’s shop, selling mineral waters as a sideline. From soft drinks Caley branched into cocoa as a way of providing its customers with a winter drink, and from there began making chocolate. By 1898, the firm was also manufacturing Christmas crackers.

The acquisition of Caley expanded Mackintosh’s chocolate line considerably. During the 1930s, Mackintosh introduced two important brands: Quality Street, in 1936 and Rolo, in 1937.

During World War II, Mackintosh’s Norwich factory was destroyed by bombs, in 1942, halting all production there. But by 1946 Mackintosh was able to begin rebuilding.

In 1950 the Quality Street brand was first exported to the United States, and in 1956 the Norwich factory was reopened. Mackintosh introduced several new brands during the late 1950s and early 1960s, including Munchies in 1957, Caramac in 1959, and Toffee Crisp and Tooty Frooties in 1963.

During the 1960s Mackintosh made a series of acquisitions: Joseph Bellamy and Sons Ltd. in 1964, John Hill and Son in 1965, Gainsborough Craftsmen Ltd. in 1966, and Fox Glacier Mints Ltd. in 1969.

In 1969 Mackintosh merged with Rowntree to become Rowntree Mackintosh Limited. The new company had 28,000 employees at 22 factories making candy exported to 120 countries. During 1969 the new company negotiated an agreement with Hershey Foods Corporation allowing Hershey to market and manufacture some of its products in the United States, and in 1972 an agreement was negotiated with Fujiyi Confectionery Company Ltd. of Tokyo to manufacture selected products for the Japanese market. The new Rowntree Mackintosh also lost no time in making more acquisitions, buying James Stedman Ltd. of Australia and the chocolate confectionery business of Chocolat-Menier S.A. in 1971; Chocolat Ibled S.A. in 1973, and the Dutch Nuts Chocoladefabriek B.V. in 1979.

The 1980s marked continued expansion and acquisitions: by 1986 it had added another 13 companies in the United Kingdom, France, Australia, the United States, and Canada. All of these acquisitions made a reorganization necessary. In 1984 the company was divided into four geographic regions, and in 1987, the company incorporated four new trading subsidiaries in the United Kingdom: Rowntree Mackintosh Confectionery Ltd., Rowntree Mackintosh Distribution, Rowntree Mackintosh Export Ltd., and Rowntree Mackintosh European Exports Ltd. In 1982 the parent company changed its name to Rowntree Mackintosh PLC.

In 1988, two Swiss companies, Nestlé and Jacobs Suchard, began a bidding war for Rowntree. Both companies had chocolate businesses they hoped to strengthen in preparation for the unification of the European Common Market in 1992. On June 25, 1988, after a two-month battle between Nestlé and Jacobs Suchard—neither a welcome suitor—Rowntree was acquired by Nestlé, whose winning £2.5 billion bid made the deal the largest takeover of a British company by a foreign one to date. Nestlé agreed to keep Rowntree’s headquarters in York and has created a chocolate, confectionery, and biscuit group based in York responsible for Nes-tlé’s worldwide chocolate and confectionery strategy.

Rowntree may miss the independence it fought so hard to maintain, but Nestlé seems content to let the company continue to do what it has done so well for nearly 200 years. And as a part of a global food giant like Nestlé, Rowntree will have tremendous marketing strength behind it in the battle for dominance of a post-1992 Europe.