Postum Cereal Company

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POSTUM CEREAL COMPANY

"Health First—Happiness Follows, POSTUM instead of coffee, 'There's a Reason."' This 1895 marketing slogan was created by Charles William Post (1854—1914), the man who, in a small white barn in Battle Creek, Michigan, made the first batch of Postum, a cereal beverage. Sales were slow initially: Post lost $800 on Postum in the first year. In writing advertisements for his product, Post brazenly blamed caffeinated beverages for any ailment, including heart disease, rheumatism, blindness, cowardliness, and diminished mental capacity. He literally scared thousands of caffeinated beverage drinkers into switching to Postum. By the end of 1896 Postum sales reached $3000 per month. The same year Postum Cereal Company Ltd. was incorporated.

"Grape Nuts," a pre-cooked cereal made of malted barley and whole wheat, was introduced in 1897. It was a commercial success. Post advertised Grape Nuts as a builder of red blood cells and stated that it steadied the nerves and prevented malaria, consumption, and appendicitis. He became well known for outlandish and flamboyant advertising and marketing practices. Post used coupons, samples, and product demonstrations to encourage people to by his products. The stage was set for the company that would become General Foods.

By the early 1900s Postum Cereal Company's Battle Creek plant was the largest of its kind in the world, with 2,500 employees and a net worth of $5 million. Charles W. Post amassed a personal fortune. Though Post crusaded against labor unions, he was not against employee benefits. Post was an active member in the National Association of Manufacturers and he founded many organizations designed to substitute labor unions. Because of Post's genuine concern for employees, Postum Cereal Company did not have any labor problems in its own factories. Post's generosity toward his employees was evident as they were paid the highest wages in the industry. The company placed a high emphasis on safe working conditions and implemented a sickness and accident benefit program. It also assisted some workers with the purchase of company built homes.

Upon the death of Charles W. Post in 1914, his daughter Marjorie Merriweather Post took over company operations. In 1923 Marjorie's husband, Edward F. Hutton, became chairman and Colby M. Chester became president the following year. Marjorie remained active in the company affairs and she was involved in the business strategy related to the acquisition of General Foods. Postum Cereal Company acquired Jell-O in 1925, followed by Swans Down cake flour, Minute Tapioca, Baker's Chocolate, and Log Cabin syrup in 1927. That same year the company also shortened its name to the Postum Company. With the acquisition of Maxwell House coffee in 1928, President Theodore Roosevelt's (1901–1909) 1907 statement "Good to the last drop" became a household phrase.

In 1929 Postum paid $22 million for controlling interest in the General Foods Company, which was owned by Clarence Birdseye. The Postum Company then adopted the General Foods title. Birdseye became head of the new General Foods laboratory and continued his research on frozen foods. After record $19.4 million profits in 1929, earnings dropped to $10.3 million in 1932 when the company acquired the remaining 49 percent of General Foods. E.F. Hutton resigned as chairman in 1935 and Colby M. Chester took over. Marjorie Post returned as director in 1936 and remained until 1958.

In 1932 the company added six new plants and offered one hundred different frozen food products. In the same year Sanka Coffee Corporation was purchased from European owners who, since 1927, had an agreement with Postum Company to distribute their coffee. By 1943 General Food sales had more than doubled those of 1929. One of the first postwar products introduced to the market was Instant Maxwell House coffee (1945). Adding to the General Foods beverage line was the acquisition of Perkins Products Company in 1953. Fruit flavored drink mixes, such as Kool-Aid, Tang, Country Time, and sugar free Crystal Light, were added to the beverage division of General Foods. Through the 1950s and 1960s General Foods expanded in the international market: it had controlling interest in La India chocolate Company in Venezuela, acquired Hostess snack food company of Canada, the Kibon ice cream company of Brazil, and numerous others. By the end of the 1960s General Foods was a giant in the industry.

The international acquisitions continued throughout the 1970s. On the domestic front the Bird's Eye brand enjoyed increased sales as frozen foods became more popular. But the Jell-O brands suffered in the dessert market. In 1980 General Foods was not performing as expected and was dependent on its various coffee brands which accounted for thirty-nine percent of entire revenues. In 1981 General Foods merged with Oscar Mayer, the largest national brand of lunchmeats. With coffee and Post Cereal sales sliding in 1984, General Foods sold its Gaines Pet Food division for $157 million. In 1985 Phillip Morris purchased General Foods for $5.6 billion. Phillip Morris chairman Hamish Maxwell had plans to diminish the company's reliance on tobacco products. A massive reorganization of General Foods began in 1987 as coffee, meats, and groceries were split into separate divisions. In October 1988 Phillip Morris purchased Kraft. In 1989, with Michael A. Miles at the helm, General Foods and Kraft merged to become an industry giant named Kraft General Foods Incorporated. The company's name was changed in January 1995 to Kraft Foods Incorporated and the company was reorganized into eleven different international divisions.

See also: Charles Post