Universal Foods Corporation

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Universal Foods Corporation

433 E. Michigan Street
Milwaukee, Wisconsin 53202
U.S.A.
(414) 271-6755
Fax: (414) 347-3785

Public Company
Incorporated: 1882 as Meadow Springs Distilling Co.
Employees: 5,924
Sales: $883 million
Stock Exchanges: New York
SICs: 2099 Food Preparations Nec; 2037 Frozen Fruits & Vegetables; 2034 Dehydrated Fruits, Vegetables & Soups; 2022 Cheese—Natural & Processed

Universal Foods Corporation is a major international manufacturer and marketer of value-added food products for both commercial and consumer uses. The company’s product line includes flavor and color ingredients for food processing, frozen french fried potatoes, dehydrated vegetables, and a wide range of yeast products. Universal’s corporate structure is organized into six divisions: Frozen Foods, Flavor, Red Star Yeast and Products, Color, Dehydrated Products, and Red Star Specialty Products. The Frozen Foods division specializes in an assortment of fried potato forms, the vast majority of which are marketed to food service operations. The Flavor division markets exclusively to food processing companies. Its products include flavor ingredients for beverages and for bakery items. Commercial bakers make up 93 percent of the market for the Red Star Yeast and Products division. This division manufactures yeast products under the Red Star and Quick Rise brand names for baking, nutritional, and wine-making applications. The Color division operates in the marketplace primarily as Warner-Jenkinson. It supplies natural coloring ingredients for food processing as well as pharmaceutical and cosmetics uses. Universal’s Dehydrated Products division, which also deals entirely with food processors, produces a line that includes dehydrated onion, garlic, chili peppers, and parsley. Red Star Specialty Products produces yeast-based products for a variety of uses, including fermentation, flavor enhancement, and diagnostics. In all of these markets, Universal ranks among the top companies in North America.

Meadow Springs Distillery, the earliest incarnation of Universal Foods, was founded in December of 1882 by three Milwaukeans: Leopold Wirth, Gustav Niemeier, and Henry Koch, Jr. At the company’s first stockholders’ meeting the following month, Wirth was elected to the company’s presidency, Niemeier became vice-president, and Koch secretary-treasurer. Wirth was a well-known merchant in Milwaukee, dealing in horses, furs, and a variety of other items. His entry into the distillery business probably came about as a result of one of his sideline business ventures. Wirth would purchase spent grain from area distillers, use it to fatten up thin, cheaply bought cattle, then sell the cattle at a sizeable profit. Opening a distillery was a way of compacting this operation, while at the same time tapping into the growing whiskey market. The major financial backer of Meadow Springs was Adolph C. Zinn, a local financier. William Bergenthal, the owner of a distillery and a successful outlet—the Wm. Bergenthal Wholesale Liquor Company—was named to manage day-to-day operations at the distillery.

Meadow Springs sold its first barrel of whiskey on July 5, 1883. The whiskey was produced at Bergenthal’s distillery. A month later, the company bought its first piece of property, a choice plot at the bottom of a hill in the Menomonee Valley. To the one building that already stood on the property, Wirth added a grain elevator, a railroad siding, and a pipeline for the spent grain. In September, Koch resigned, and Bergenthal became the company’s secretary, retaining his duties as general manager. About a week later, Wirth was forced to resign as president, when a number of surprise billings and overdue claims arrived from out of town, including writs of attachment for $2,000 from the Chicago Distilling Company, and debt notices from Philip D. Armour & Co., the Chicago packing firm. A stockholder and local cattle dealer named Henry Heilbronner was elected president.

In 1886, August Bergenthal, William’s brother, replaced Niemeier as vice-president of Meadow Springs. A year later, both brothers were elected to the board of directors. At the same meeting, Levi Tabor was named president. In March of that year, however, both Tabor and William Bergenthal resigned during a dispute over a company purchase. Tabor was succeeded as president by August Grau, vice-president of the Bergenthal company and a recently elected director of Meadow Springs. August Bergenthal became secretary and treasurer. Grau would remain president of the company for 35 years. In May of 1887, the name of the company was changed to National Distilling Company. Among the changes that accompanied the renaming of the firm was the addition of a filtering press for squeezing yeast. The primary line of yeast the company produced was called Red Star.

National Distilling began to expand in the 1890s. The company opened yeast distribution branches in several cities during this period, including Duluth, Chicago, Detroit, and Cleveland. National’s net earnings for 1894 were over $112,000. In 1903, the company established a second manufacturing plant on the site of the recently purchased local DuPont Chemical Company facility. By 1917, National was operating over 30 yeast branches throughout the region, with major outlets in Louisville, Kansas City, and Detroit. In 1917, the government passed a measure outlawing the use of grains to make liquor, meaning that liquor could be sold, but not manufactured. Two years later, the 18th Amendment to the Constitution created prohibition. National responded by changing its name once again, this time to the name of its most important nonalcoholic product. It became Red Star Yeast and Products Company.

During prohibition, Red Star focused increasingly on yeast production and distribution. John Wiedring, the company’s laboratory chief, introduced a new process for making yeast by aeration in 1918. By 1921, Red Star was operating 50 branches throughout the eastern half of the United States. The company’s yeast was marketed as a health food, and sales were brisk. In July of 1922, new leadership was needed when Grau and Bergenthal died suddenly within a few weeks of each other. The presidency was assumed by Bruno Bergenthal, August’s son. The company grew rapidly through the remainder of the 1920s. Its 27th Street and Cudahy manufacturing facilities were expanded and a higher quality drier was purchased during that time.

The repeal of prohibition in 1933 created a dilemma for Red Star. The company needed to decide whether to reenter the liquor distilling business or to continue to concentrate on yeast production. Beer and gin were once again brought into production in 1933. By 1937, however, Red Star had pretty much committed to yeast and vinegar as its main products. Factors leading to this shift in direction included the bottoming out of the gin market in 1935, and a legal quarrel over the use of the National Distilling name waged against the National Distillers Products Corporation of New York. With its gin department already shut down, Red Star gave up its right to the National brand name for a settlement of about $20,000.

In 1938, a policy disagreement led to Bergenthal’s resignation. He was replaced as president by Charles Wirth, Jr., grandson of Leopold Wirth, one of the company’s founders. Bergenthal stayed on as chairman of the board until his retirement in 1940. During World War II, the government became interested in the nutritional qualities of yeast. Since active dry yeast was less perishable than earlier forms, it was considered an excellent food item for a mobilized Army. Therefore, huge amounts of the yeast were ordered from Red Star and other companies by the government to meet the baking needs of the growing military. When the war ended, Red Star began looking for ways to diversify its product line with related baking items. The company experimented for a short time with a frozen egg department, but this venture proved to be too risky and was quickly aborted.

Charles Wirth, Jr., died of a heart attack in 1950. He was succeeded as Red Star president by his cousin, Russell Wirth. Under Russell Wirth, Red Star diversified quite a bit within the realm of yeast products. During the 1950s, the variety of products the company was marketing included packaged yeast for rolls and mixes, consumer yeast, feed yeast for livestock, nutritional yeast for cereal and baby food, and, of course, compressed and dry yeast cakes for bakers. Pillsbury, using millions of packages of yeast supplied by Red Star, was the leader among companies marketing hot roll mixes, which enjoyed a period of great popularity during the 1950s. Because of its ability to anticipate the needs of the yeast market, and to tailor its products accordingly, Red Star was one of only five to emerge among major yeast producers in the country, from a group of about 24 that existed in the 1930s.

In 1951, Red Star opened a plant in New Orleans, enabling the company to better serve the southern market, as well as reduce the cost of transporting molasses from that region. Several acquisitions in the mid-1950s elevated Red Star to the status of nationwide yeast distributors. These included the purchases of Food Industry Corporation in Dallas, San Francisco’s Consumer’s Yeast Corporation, and the Peerless Yeast Company, also located in California. The company went international in the 1950s as well. A yeast production plant was opened in Cuba. Red Star had interests of up to 25 percent in yeast operations in Peru, the Philippines, Iran, Korea, and elsewhere. Agreements for technical services were entered in Guatemala and Colombia. Later in the 1950s, Red Star’s Cudahy plant was closed when it was discovered that Lake Michigan had eroded much of the 140-foot cliffs on which the facility rested, leaving the complex in danger of toppling into the lake. The vinegar works that operated there were sold to the Richter Vinegar Company, and, in 1957, the 10-acre plot of land on which it was built was sold to Milwaukee County.

Red Star began to diversify outside of the yeast business in the early 1960s. In 1961 and 1962, the company purchased Universal Foods Company of Chicago, a maker of institutional food products, and Chili Products Corporation of Los Angeles, a company that produced paprika and chili peppers. The company went public in 1961, making stock available for the first time to people outside the small circle of founding families and their friends. Red Star’s sales that year were $12.1 million. The following year, the company’s name was once again changed to reflect the wider spectrum of its activities. The new name was Universal Foods Corporation. Universal made a major acquisition with the 1963 purchase of Stella Cheese Corporation. By 1965, the company’s sales had grown to $31 million.

In 1965, Robert Foote became Universal ’s president, and Wirth became its chairperson. Around that time, the company began marketing an active dry yeast for use in wine production. By 1967, most of the major food companies in the United States were Universal customers, including General Mills, Kraft, Hormel, Gerber, and Ralston Purina. Universal purchased the National Yeast Company, a New Jersey firm, in 1968. By that time, the company, mainly by virtue of its acquisition of Stella, controlled about 20 percent of the nation’s aged Italian cheese market. It also controlled 12 percent of the market for industrial yeast, and 30 percent of the chili powder and paprika production. In September of 1968 Universal was stunned by the murder of Russell Wirth. August K. Bergenthal, Bruno’s son, was convicted of the crime and sentenced to life imprisonment. It seemed that the younger Bergenthal harbored long-standing resentment regarding the events that led to his father’s exit from the company’s presidency.

Universal continued to grow steadily in the 1970s. Sales in the first half of the decade grew from $61 million in 1970 to $151 million in 1975. Two areas the company moved into heavily during the 1970s were soft drink bottling and gourmet foods. Universal acquired the bottling franchises for 7-Up and other beverages in a number of states, starting with Michigan. The company entered the gourmet foods market with the 1972 acquisition of Lankor International Inc., and followed this up with the acquisitions of Rema Foods Inc. and Ramsey Imports, giving Universal a substantial foothold in the fancy processed foods market. In 1976, John Murray was elected president of Universal Foods. Foote, like his predecessor Wirth, stayed on as chairperson. In 1977, production began on a line of imitation cheeses. The cheese product was made from vegetable oil at costs that were 30 to 40 percent lower than those of the real item. That year, Universal common stock was first traded on the New York Stock Exchange.

In 1979, Universal purchased Rogers Foods, a California company engaged in the dehydration of onion and garlic. The early 1980s brought the expansion of the company’s bottling operations, including the addition of the St. Louis franchises for Royal Crown Cola and Canada Dry. In 1981, the company bought out one of its long-standing competitors, the Federal Yeast Company, solidifying its position as a major player in the yeast business. By 1983, three of Universal’s five divisions—cheese, beverages, and fermentation—were together accounting for about three-fourths of the company’s sales, each providing about a quarter of the total. Over the next couple years, Universal chose to narrow its focus somewhat. In 1983, the company dismantled its snack food division, selling off its cookie and pretzel business. The following year, Universal left the bottling business, essentially trading it for entry into the food color and flavor business. This was accomplished by dealing four 7-Up bottling plants to Philip Morris in exchange for the Warner-Jenkinson Co. plus about $10 million cash.

Universal moved into the frozen potato business in 1985 and 1986, with the purchases of Idaho Frozen Foods from Sara Lee, and of Rogers Walla Walla Inc. The two companies taken together had sold about $100 million worth of frozen potatoes to the food service industry the previous year. As the 1990s approached, Universal removed itself from a couple of the markets in which it had been operating. In 1988, the company divested its import division, which consisted of Rema Foods and Gourmet Products. In 1990 Universal got out of the cheese business, selling that division to INVUS Group, Ltd., a subsidiary of the Belgian firm R.T. Holding S.A. By that year, under chair and chief executive Guy Osborn, sales had reached over $873 million. Frozen potato products accounted for nearly 30 percent of the company’s revenue for that year. In April of 1990, Universal became a major force in the flavor market with the acquisition of the British flavoring producer Felton International. Another flavor company, Fantasy Flavors, an Illinois dairy flavoring company, was acquired the following year. Also in 1991, Universal purchased the food, drug, and cosmetic color business of Morton International, Inc. Universal reported record sales in 1992, in spite of an off year for the frozen potato business. The Color division made a particularly strong showing in 1992, emerging as the market leader among North American companies in that field. Universal Foods entered 1993 poised to continue its strong record of consistent growth.