Forgotten Giant: General Foods

For decades America’s largest food company, General Foods was one of the most highly regarded marketing companies in the world. Formed in the roaring twenties by consolidating companies that led the way in convenience foods, GF became an industry giant. The company’s growth enriched the founding Post family (including Marjorie Merriweather Post who pioneered frozen food and built Mar-a-Lago in Florida). By the late 1970s, General Foods was the second largest advertiser in America (after Procter & Gamble), filling the airwaves for promotions of products including Maxwell House Coffee, Kool-Aid, Jell-O, Post Toasties, Birds Eye frozen foods, and Log Cabin Syrup. 

By 1985, the company was generating over $9 billion a year in revenue. Yet its acquisition that year by tobacco company Philip Morris (in the most expensive non-oil acquisition in history to that time, at $5.8 billion) meant the end of GF as an independent company. That deal was followed by years of mergers, split-ups, and spinoffs that have left the company in pieces. Rare for a dominant consumer products company, General Foods only existed under that name for fifty-six years. (Compare Procter & Gamble, 183 years old, and Colgate-Palmolive, 214). Here is a short summary of this great company’s fascinating history.

The Amazing CW Post

Charles William Post was born in 1854 in Springfield, Illinois. He spent his early career inventing and selling agricultural equipment. He eventually moved to Fort Worth, Texas, where he developed real estate projects. Post’s constitution was weak: he suffered from illnesses and pains his entire life. The stresses of his work led to two “nervous breakdowns” in 1885 and 1891. 

The second breakdown led him to the Battle Creek Sanitarium of Dr. John Kellogg, in Battle Creek, Michigan. Dr. Kellogg’s sanitarium was internationally known for rest, recuperation, and improved health. Many prominent and wealthy Americans went to Battle Creek. Key to Dr. Kellogg’s methods were health foods and diets, including the avoidance of caffeine-laden coffee. 

Taking a cue from Kellogg, in 1895 Post developed a warm cereal-based breakfast drink, Postum, as a healthy alternative to coffee. He created the Postum Company in Battle Creek that year, and two years later added Grape Nuts, which smelled like grapes and crunched like nuts but contained neither. Dr. Kellogg’s younger brother William also saw the commercial potential in convenient health foods and started the now-famous Kellogg Company to make cereals.  

The ever-innovative, ever-curious CW Post aggressively advertised Postum and his expanding line of products, which were a huge success. Post became one of the wealthiest Americans and traveled the world, collecting art and antiques. He bought over 200,000 acres of land in West Texas and developed a model city, Post, Texas.  

He also took his little girl (and only child) Marjorie with him on many of his trips and adventures. Post insured that his daughter learned history and culture. As Post built mansions, resorts, and mountain camps, Marjorie also learned design, interior decoration, and entertaining. Before she was twenty, Marjorie Merriweather Post had visited factories across America, learned how machines worked, learned the names of all the Postum employees, and learned her father’s business ideals. Post even talked to her about how the Postum Company might expand by buying other good companies in the food industries. 

In 1913, approaching sixty years of age, Post had appendicitis. He hired a custom train to rush him non-stop from Santa Barbara, California, to Rochester, Minnesota, to see the famous doctors the Mayo brothers. Post traveled in a private railroad car owned by his friends at the Santa Fe Railroad. The trip cost him $5,000 (about $135,000 in 2020 money). After a successful operation, he returned home. His depression and pain soon struck again. Post committed suicide in 1914. At the age of twenty-seven, Marjorie Post was the sole owner of the Postum Company, generating revenues of almost $20 million per year. This made Marjorie one of the wealthiest women in the world.

Marjorie Takes Command

In 1920, Marjorie married her second husband, New York stockbroker and yachtsman EF Hutton. The couple added a third daughter to the two girls from Marjorie’s first marriage. This third daughter became known to the public as actress Dina Merrill. (EF Hutton’s niece was “poor little rich girl” Barbara Hutton.) The family continued to build fabulous homes in New York City, on Long Island (mostly now part of Long Island University Post), in Florida (Mar-a-Lago, now owned by Donald Trump), and elsewhere. They traveled the world collecting more art and antiques. Their yachts got bigger, reaching an apex in 1935 with the 316-foot long Sea Cloud, the largest private yacht in the world when built (the ship still sails today and is the world’s oldest operating ocean-going passenger ship).

Mar-a-Lago

Sea Cloud

Despite their incredibly full lives, Marjorie and Hutton focused their energy on the Postum Company and on how to expand upon its success. Following her father’s ideas, in the 1920s Marjorie and her husband led Postum to buy Calumet Baking Powder, Swan’s Down Cake Flour, Minute Tapioca, Jell-O, and Baker’s Chocolate, which had built the first chocolate mill in America in the late 18th century.

Their most important acquisition was Cheek-Neal in 1925. Joel Cheek of Nashville had developed a system for vacuum packing pre-ground coffee. He tested it at Nashville’s Maxwell House Hotel, where it was a hit, prompting Teddy Roosevelt to say the coffee was “good to the last drop.” Maxwell House Coffee, and later Sanka and Yuban, were to become the most important single part of the company; an ironic twist given CW Post’s highly successful opposition to coffee, which produced the funds to buy Maxwell House.

At about the same time that Postum bought Cheek-Neal and its Maxwell House brand, the Huttons were setting sail on their yacht from Gloucester, Massachusetts. The crew packed in food for the trip. At dinner, Marjorie noted how tasty, fresh, and juicy the goose was. Inquiring, she found out that a local man had developed a process to freeze food, and that the goose was actually a few months old. She unsuccessfully tried to convince EF Hutton that Postum should buy out the company and its food freezing process for two million dollars. EF was concerned that frozen food was a tough sell: consumers did not have home freezers, grocery stores did not have freezers, trucks did not have freezers.  

EF Hutton

Finally, in 1929, Hutton was convinced, and Postum bought the General Foods Company and its freezing process from Clarence Birdseye, for about ten times the earlier price. In June of 1929, the Postum Company adopted this more fitting name, becoming the General Foods Corporation. (General Electric had been founded in 1892 and General Motors in 1908, followed by General Tire, General Mills, and many other companies called “General.”) General Foods would go on to make Birds Eye a household name, leading the way in frozen foods.

At the exact same time in that merger-filled era – June 1929 – another “food conglomerate” was formed. Called the Standard Brands Company, it was built on Fleischmann’s Yeast, Royal Gelatin and Puddings, and Chase & Sanborn Coffee. For the next forty-plus years General Foods and Standard Brands would compete in multiple product categories, though General Foods was soon substantially larger. Another food giant created in the late 1920s was National Dairy Products, a consolidation of several dairies and ice cream companies. National Dairy’s 1930 purchase of the Kraft-Phenix Cheese Company made the company #1 in cheese; the company was later renamed Kraft.

Marjorie Merriweather Post went on to two more husbands (including 1930s Ambassador to the Soviet Union Joseph Davies), more houses, more collecting, and a life of philanthropy. She remained active with General Foods and died in 1973 at the age of eighty-six.

The Long Growth

From its 1929 birth through the 1980s, General Foods was America’s largest diversified food company. (In the early years, meatpackers Swift and Armour were larger, and for most of the 20th century, National Dairy Products/Kraft was also larger.) With solid revenues generated by low-priced products, the company never lost money in the Great Depression (the lowest points were about $100 million in sales and $9 million in profits). 

The demand for convenience foods was accelerated by the entry of women into the workforce, especially during and after World War II, playing right into General Foods’ hands. Jell-O, Maxwell House, Post Cereals, and other General Foods brands were #1 or close in their categories. The company added Kool-Aid, Oscar Mayer, Orowheat, and Entenmann’s Bakery to its portfolio. Known for innovation, General Foods created instant coffee, Tang (the drink that went to space), Cool Whip, and many other new products. General Foods spent up to $100 million a year on research and development.  

In 1958, revenues reached one billion dollars for the first time. The business expanded internationally in the 1950s and boomed in the 1960s. Above all else, General Foods was a prominent and successful marketer, by the late 1970s ranking as America’s second largest advertiser after Procter & Gamble. In 1983, the company opened a 500,000 square-foot headquarters complex, designed by top architects Roche/Dinkeloo, in Rye Brook, New York. General Foods was the world’s largest coffee producer, generating over a quarter of the company’s revenues. The company became #1 in coffee in Sweden, #1 in chewing gum in France. Old archrival Standard Brands was about half the size of General Foods. These numbers tell the growth story better than words can:

The Great Shuffling

Then, in the 1980s, the world changed. The 1980s were full of big deals in the food industry. Everyone seemed to be buying and selling companies. New names like Conagra and Sara Lee rose to prominence. 

Tobacco giants RJ Reynolds and Philip Morris shared several problems: public perception as being tobacco-only companies; a declining market for tobacco products; mountains of cash and available credit from their enormously profitable tobacco businesses; and no need to use that capital to invest in tobacco. In 1985, Reynolds bought Nabisco, which was about 75% the size of General Foods (Nabisco had acquired Standard Brands in 1981). 

That same year, Philip Morris made a surprise and plentiful offer for General Foods: $5.8 billion in cash, the largest non-oil merger in history up to that time. General Foods management and Board of Directors tried to find other buyers to bid up the price, but no one could beat the Philip Morris offer. Philip Morris had risen to be considered one of the best marketing companies in America due to its success in building Marlboro cigarettes (passing up old leaders Camel and Winston) and Miller Beer, a smaller brewer that Philip Morris converted into a leader.

In 1988, Philip Morris also bought the giant Kraft company. Twelve years later, in 2000, Philip Morris bought Nabisco (including Standard Brands) for $18.9 billion. Philip Morris – today named Altria – consolidated its giant food businesses under the Kraft Foods name. Philip Morris became the largest consumer products company in America, passing long-time leader Procter & Gamble. Kraft, Nabisco, Standard Brands, General Foods, Oscar Mayer, and hundreds of top brands were now part of the same company.

As is the case in many – perhaps most – mergers, anticipated “synergies” did not come about.  Great old brands got lost in the huge company. Layers of management piled up. New CEOs had new ideas. Leadership and the organizational structure changed frequently. Priorities shifted too often; innovation slowed. In the end, all these huge deals did not work, at least not for the brands and food companies (the deals may have worked fine for the brokers who put the deals together).

The net result today, the result of stories too long to tell here, is that the great products of General Foods (and of Nabisco, Kraft, and Standard Brands) are today scattered over the landscape, with many owners. The principle owner of the old General Foods brands is now Kraft Heinz, a public company that resulted from more mergers. Kraft Heinz, which has struggled in recent years, is controlled by Warren Buffett’s Berkshire Hathaway and Brazil’s 3G Capital group (who also control the world’s largest brewer, Anheuser-Busch Inbev). Many of the brands are also owned by international powerhouse Mondelez.

In studying this history, we cannot help but comment on brands and their management. General Foods was on top of the world. It has been said (by us), “If Kool-Aid had been well run, there might be no need for VitaminWater.” While any such statement is highly speculative, the reality is that many of those great brands have lost supermarket shelf space to upstarts. 

The last thirty years have not been pleasant for a lot of great old brands. Few companies or factories can remain focused when they have a new owner every few years. On the other hand, companies which love and nourish their brands have, overall, prospered. Church & Dwight (the maker of Arm & Hammer products), Procter & Gamble, Colgate-Palmolive, Hormel (with its trusty Spam), John Deere (since 1837, with only 9 or 10 leaders in 183 years), Mars, and others come to mind. 

We cannot help but wonder what the world would be like had General Foods continued its tradition of independence, innovation, and leadership. Perhaps we would still be seeing Jell-O ads on television every evening, even if the products were all new. Perhaps Procter & Gamble would not have purchased Folger’s Coffee and then succeeded in taking the coffee lead away from Maxwell House (Folger’s is now owned by the JM Smucker Company).

Please add your thoughts and comments below.

Gary Hoover

Executive Director

American Business History Center

This article just scratches the surface of these stories. Many books and articles can readily be found on Marjorie Merriweather Post and her homes and yachts, the deals of the 1980s, Post Texas, the battling Kellogg brothers, and many other elements of this article.?