Wm. B. Reily & Company Inc.

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Wm. B. Reily & Company Inc.

640 Magazine Street
New Orleans, Louisiana 70130
U.S.A.
Telephone:(504) 539-5200
Toll Free: (800) 535-1961
Fax: (504) 539-5426
Web site: http://www.luzianne.com

Private Company
Incorporated: 1902
Employees: 600 (2002)
Sales: $215.7 million (2001)
NAIC: 311941 Mayonnaise, Dressing, and Other Prepared Sauce Manufacturing; 311920 Coffee and Tea Manufacturing

Wm. B. Reily & Company Inc.’s primary division is Reily Foods, a subsidiary which owns and operates Luzianne Blue Plate Foods. Its signature products are Luzianne teas and coffees, CDM coffees, and Blue Plate mayonnaise, but the company also offers an extensive line of the other labeled food products, including, for example, Bean Cuisine pasta and beans, Abita Springs bottled water, JFG Coffee, Herb Magic No-Oil Salad Dressing, Wick Fowler’s Two Alarm Chili and Taco Seasonings, La Martinique salad dressings, Carroll Shelby’s Original Texas Chili, and Swans Down cake flour, the nation’s number one selling cake flour. In addition, the company owns and operates Standard Coffee Service, one of the largest office coffee-services in the nation. The private, low-profile company, owned by the Reily family from the start, is now headed by William B. Reily III, grandson of the founder.

Beginnings in Coffee Roasting and Grinding: 1902–18

What would become Reily Foods was started in December 1902 by William B. Reily, who, up through the turn of the previous century, had operated a wholesale grocery business in Monroe, Louisiana. Reily, believing that he could create a profitable coffee roasting and grinding business, moved from the northern part of the state and set up shop in New Orleans. It was there that Reily and his workers began blending, roasting, and packaging coffee for the local market with its distinct Creole culture and culinary traditions.

At the time it was common for coffee merchants to also sell tea, and in 1903 Reily began to sell blended teas under the Luzianne name, a play on state’s name. Reily was a dedicated coffee merchant, however, and he basically sold tea blended in accordance with traditional recipes as a convenience, for his customers.

In 1909, the company moved its headquarters to 640 Magazine Street, a site it would use into the next century. At that time, the company’s focus remained on roasting and grinding coffee beans for various blends of coffee as well as producing coffee blended with chicory, a traditional favorite among New Orleans’ residents. A development that helped expand Reily’s business was the growing popularity of iced tea, particularly in the South, where summer heat encouraged its consumption. By World War I, iced tea had become so popular that Americans were purchasing iced tea sets consisting of tall glasses, long spoons, and lemon forks.

Reily Extends Its Product Line: 1919–29

After the war, in 1919, what would become a division of Reily’s company, the Standard Coffee Company, emerged as one of the first concerns in the home service industry. Standard initially delivered coffee, tea, spices, and a variety of household products to homes across the country.

Another Reily product came into existence in the 1920s when J.B. Geiger, a chemical engineer working for a subsidiary of Wesson-Snowdrift Oil, led a research team that began producing mayonnaise under the Blue Plate name in 1925 at a plant not too distant from Reily’s operation. The development occurred after Geiger’s company bought out another company with an eye to producing mayonnaise, which, by that time, had become a popular spread and dressing. As a division of Wesson Snowdrift, the company made the mayonnaise in a warehouse in Gretna, Louisiana, just across the Mississippi River from New Orleans, but in 1941 it moved to a new art deco building on the South Jefferson Davis Parkway in New Orleans.

Expanding and Diversifying through Acquisitions: 1930–70

The popularity of iced tea continued to grow during the years of Prohibition and into the 1930s, thanks in part to the progress of rural electrification and the ready availability of ice. Although not altogether commonplace in the Depression years, refrigerators were gradually entering the home market, and they helped increase the consumption of non-alcoholic cold drinks. Encouraged by iced tea’s growing appeal, in 1932 Reily began mixing and brewing its own unique, proprietary tea blended for specifically for preparing iced tea and selling it under the established Luzianne label.

In the post-World War II years, Reilly undertook some expansion through the acquisition of other companies. In 1965, it purchased JFG Coffee, a Knoxville, Tennessee company that had been founded by James Franklin Goodson in 1882 as a wholesale grocery company in Morristown, Tennessee. At first, Goodson had distributed coffee that he bought from the Arbuckle Coffee Company in New York, but he was not pleased with its quality and began roasting and grinding his own. Thereafter, James Goodson’s son, Floyd P. Goodson, produced the regionally popular coffee as the JFG Coffee Company, and, in the 1920s, moved the business to Knoxville. Because JFG also made and marketed a mayonnaise in Tennessee and North and South Carolina, Reily, virtually by default, entered the mayonnaise business.

In 1967, Reily’s Standard Coffee division began delivering coffee to various business offices, not just private households, thereby becoming one of the nation’s first coffee service companies. Over the new few decades, it would also become the largest, and in addition to servicing business offices and plants, the company expanded into the food service industry, adding restaurants, delis, diners, fast foot chains, convenience stores, healthcare facilities, and theme parks and recreation centers to its growing clientele.

Taking Luzianne Iced Tea National: 1974–89

Oddly enough, Reily Foods did not really become widely known as a tea company until after it had bought Blue Plate from Hunt-Wesson in 1974 and, the following year, created Luzianne Blue Plate Foods. The Blue Plate signature product was Blue Plate Mayonnaise, a product that at the time was only sold in a half-dozen southern states. Its popularity was the major appeal of the deal. However, as a result of the sale, Jim McCarthy, Reily’s future president, left Hunt-Wesson to go with Reily, where he was soon looking for ways to expand that company’s business. Employees told him that Reily made the best iced tea there was, but outside of a small marketing area of five states, nobody knew about it.

In order to broaden its market, Reily Foods hired an advertising agency, which, with Burl Ives as Luzianne’s spokesman, launched a television advertising campaign in 1978 that continued into the mid-1980s. The campaign successfully created a national market for Luzianne tea, soon making it second only to Lipton tea.

In the 1990s, the rate of both failure and consolidation in the nation’s grocery business reached an alarming peak, leaving fewer supermarket chains with each passing year. Also, by the end of the decade, the number of major national distributors dropped to just three, one of which, Crossmark, represented Reily products. For various reasons, the consolidation created new problems for Reily and other mid-sized, regional-brand food manufacturers, largely because the national chains were inclined to purchase and stock their shelves with branded foodstuffs known across the whole country. Some of Reily products were strictly regional in appeal, notably Blue Plate Mayonnaise, which still had exclusively a southern market. With regional chains folding or being consolidated or absorbed by giant national chains, such products faced a dwindling market appeal and shrinking number of stores stocking them.

Although it remained chiefly focused on its regional markets, Reily responded to the demise of mom-and-pop operations by expanding. As it had done in the 1960s and 1970s, in the 1990s Reily purchased other product lines. These were even more diverse than before, when the concentration had been on coffee, tea, and mayonnaise. Starting in 1990, when it bought Tiger Sauce from a local entrepreneur, Reily bought up established, branded products, including Nick Fowler’s Two Alarm Chili Kit and Taco Seasoning, Carroll Shelby’s Original Texas Brand Chili Kit, La Martinique Salad Dressings, Swans Down Cake Flour, and Bean Cuisine pasta and beans.

In 1994, Reily also acquired a controlling interest in Abita SpringsWater Co. Nine years earlier, in 1985, Boatner Reily had tried to buy Kentwood Water Co. from the Levy and Rosenblum families, in part because he liked and admired Kent-wood’s manager, Bill Roohi. Reily’s offer at the time was topped by Suntory, a major Japanese food company, and Reily lost out. However, Roohi himself shopped for a bottled water business and early in 1994 bought Abita from a local businessman, Julian Fernandez, and Boston investor Mike Berrocchi, renaming it Abita Springs Water Co. Ten months later he sold a controlling interest to Reily, keeping his post of president and about 30 percent of its stock. At the time, Abita’s anticipated gross was about $4 million, which Roohi expected to double the following year.

Company Perspectives

Based in one of the world’s great culinary centers, New Orleans, Louisiana, the company has flourished since its inception in 1902. … Today, Reily Foods continues to make not only the quality coffees, but also offers, teas, mayonnaise, CajunCreole foods, seasonings, sauces, salad dressings, and chili kits. In fact, our most popular brand, Luzianne Tea, is a Reily original that’s been made by the company since 1932.

Roohi chose to partner his company with Reily because of the latter’s business philosophy. Also, Reily planned to finance a new bottling plant that cost between $2 million and $3 million. Roohi further anticipated that Reily would help Abita develop new products. Facing hard competition from Kentwood, which had just taken over Ozone Water, Roohi knew that Abita needed an influx of new capital for growth. The bottling company had just made an agreement to distribute its products to retail outlets through the local Pepsi-Cola bottler, an arrangement that suited Reily’s established practice of marketing many of its products through wholesale distributers.

The acquisition of Abita and the various other lines helped Reily reach estimated sales of around $200 million by 1996, though specific figures are unknown as the company has never elected to make its sales and profit numbers public. Moreover, through diversifying, the company demonstrated that it could still thrive in a marketplace increasing inimical to regional brands, a focus that Reily was committed to retaining for many of its products.

In October 1999, the company began moving its Blue Plate mayonnaise production from its South Jefferson Davis Parkway facility to its more fully automated plant in Knoxville, starting with its 8-ounce and 16-ounce jars. It completed the move early the next year and added quart and gallon sized jars to the line processed in Knoxville. To remind folks in New Orleans that the local favorite would still be available, the company left the landmark, neon-etched Blue Plate sign on top of the old facility—a move designed to help it hold on to its 38 percent share of mayonnaise sales in the Big Easy. Other food processing at the plant continued, principally Wick Fowler’s Two Alarm Chili and Taco Seasonings and Carroll Shelby’s Original Texas Chili.

Product Development and Expansion: 2001 and Beyond

The start of the new century saw Reily develop and market its own new, nationally distributed products. One, Luzianne Flavorings for Iced Tea, was initially made in two flavors—Peach Mango and Raspberry—and first marketed in Florida, Texas, Arizona, and Colorado, where Luzianne Iced Tea itself sold very well. Reily began selling the bottled, unsweetened liquid flavorings in Louisiana and elsewhere in 2003. Another new product that Reily developed and began selling nationwide was the line of Luzianne Smoothies. Made in three flavors and two sizes, the powdered smoothie mixes allowed buyers to add them to their own choice of liquid for mixing in a blender. Altogether, thanks to the acquisition of companies and product licenses, by 2003 Reily was manufacturing food products marketed in 20 brand name lines.

Over the years, the policy at Reily has been to remain mum about its sales and profits, much less about such matters as its production and marketing strategies. According to Ronette King, in an April 9, 2003 Times-Picayune profile of the company for its 100th anniversary, the company’s chairman, Boatner Reily, when asked how many locations sold his company’s products, replied “over 50 and under 100,000.” At least it was an answer; until its centennial year, the company had simply refused to provide any responses to media requests for information about its business, although it has not shied away from media coverage of its philanthropic involvement in its community or its noteworthy support of such enterprises as the Crescent City Farmer’s Market.

What the future held for Reily was anyone’s guess. Nevertheless, Reily’s president Jim McCarthy confirmed that the company was bent on expanding its line of goods through both product development and acquisition, with, however, one caveat: that new food items be similar to the kinds of products already being made, ruling out, for example, refrigerated or frozen goods. Without expansion, the company believed it would become susceptible to a buy out by a bigger food maker.

Principal Subsidiaries

Reily Foods Company; The Standard Companies, Inc.; Abita Springs Water Co.

Principal Competitors

Community Coffee Company L.L.C.; ConAgra Foods, Inc.; Kraft Foods Inc.; Nestlé USA, Inc.; Unilever plc.

Key Dates

1902:: William B. Reily founds as a coffee roasting and grinding company in New Orleans.
1903:: The company begins selling tea under the Luzianne name.
1919:: Standard Coffee Company is founded.
1932:: Reily begins producing its own, original Luzianne Tea.
1946:: The firm buys a coffee-roasting plant in Baltimore, Maryland.
1968:: The company buys CDM Coffee from Blue Plate Foods.
1974:: Reily acquires Blue Plate Foods.
1975:: Luzianne Blue Plate Foods is created.
1994:: The company buys a controlling interest in Abita Springs Water Company.
2000:: Reily moves Blue Plate mayonnaise production to Knoxville, Tennessee.