Major acquisitions
Starting in 1925, under the leadership of financier (and at one point, son in-law to the founder), E. F. Hutton as chairman and Colby M. Chester as president, Postum Cereal made the first of a series of corporate acquisitions which would within a few years transform it into the dominant US packaged grocery products manufacturer.
It began late that year with the purchase of the Jell-O Company. Jell-O had been first produced in 1897 by Pearle Bixby Wait, a carpenter from the town of LeRoy in northern New York state. Mr. Wait's product was based upon a patent that had been issued to inventor and industrialist Peter Cooper in 1845, but which Cooper had never developed commercially. However, Wait was unsuccessful in marketing Jell-O, and in 1899, he sold the rights to it for $450 to a neighbor, Orator Francis Woodward, who had founded the Genesee Pure Food Company in 1897. Genesee became the Jell-O Company in 1923, the same year it began marketing D-Zerta, a sugar-free gelatin, and a powdered mixture for making ice cream in the kitchen.
In 1926, Postum Cereal acquired Igleheart Brothers, Inc (established in 1856), the makers of Swans Down cake flour, and followed this with the purchase of the Minute Tapioca Company. "Tapioca Superlative" had been invented in 1894 by a Boston woman, Susan Stavers, who made it from tapioca flakes that she ran through her coffee grinder. Later that year, she sold the rights to John Whitman, of Orange, Massachusetts, who changed its name to "Minute Tapioca". In 1908, he changed the name of his company to that of his product. The "Minute" brand would later become better known for a General Foods innovation introduced in 1949 known as Minute Rice, a brand of parboiled rice.
As a consequence of the Jell-O and Minute Tapioca acquisitions, Postum Cereal's revenues in 1926 jumped to $46.9 million. The number of shares stood at 1.375 million, including shares issued to acquire Jell-O and Minute Tapioca. The dividend was increased to $4.70 a year.
The acquisition spree continued in 1927 with the purchase of two similarly named confectionery companies, chocolate-maker Walter Baker (founded in 1765, making it the oldest component of the Postum constituent companies), and coconut-processor Franklin Baker, which had begun early in the 19th century as a flour broker, but whose confectionery products dated from 1895. This was followed by the purchase of Log Cabin Products, the maker of Log Cabin Syrup (first produced in 1887), and of Richard Hellmann, Inc (established in 1913), the producer of Blue Ribbon mayonnaise. And late in the year, Postum Cereal began selling its first coffee product, "Sanka", by obtaining US marketing rights from Dr Ludwig Roselius of Bremen, Germany. Roselius had developed the decaffeinated coffee in 1906 and began selling it in the US in 1923.[8]
Three more acquisitions followed in 1928. The most important was that of the Cheek-Neel Coffee Company. Its product, Maxwell House, dating from 1892, was a well-known brand in what was still a fragmented US coffee market. Within a few years, however, it was to become the number one brand in America and would retain that position well into the 1980s. Also acquired during 1928 was the La France Manufacturing Company, a maker of starch and other laundry products (this being Postum's first venture into nonedibles), and the Calumet Baking Powder Company, the leading maker of this kitchen essential.
Financially, the year culminated on October 1 with the inclusion of Postum, Inc in the newly reformulated Dow Jones Industrial Average of 30 common stocks.[9] By year-end, revenues stood at $101 million and the dividend on the five million authorized shares was $5.00 per year, a 25-fold increase since 1922.
Purchase of General Foods and renaming
By far the most important acquisition of 1929 was of the frozen-food company owned by Clarence Birdseye,[10] called "General Foods Company". Birdseye (December 9, 1886 - October 7, 1956) was one of the most important entrepreneurs in the history of the food industry. Born in New York City, he became interested in the frozen preservation of food during the course of working as a fur trader in Labrador between 1912 and 1916. By 1923, he had developed a commercially viable process for quick-freezing foods using a belt mechanism, which he patented. In 1924, with backing from three investors, he formed the General Seafoods Company, in Gloucester, Massachusetts, to produce frozen haddock fillets packed in plain cardboard boxes.
The founder's daughter, Marjorie Merriweather Post, was first to become excited about the prospects for the frozen foods business. In 1926, she had put into port at Gloucester on her yacht, Hussar (IV), and was served a luncheon meal which, she learned to her amazement, had been frozen six months before. Although she eventually became the richest woman in America because of her business genius, it took Marjorie Post three years to finally convince Postum's management to acquire the company. In a deal arranged by Marjorie, who immediately understood the value of Clarence Birdseye's patents, Postum paid $10.75 million for a 51% interest and its partner, Goldman Sachs
