Out of the Oven

Last week the U. S.'s biggest trademarked food company bought out the biggest-selling high-grade brand of coffee--paying for it the equivalent of 66 million dollars.

Postum Company, biggest trademarked food company, began at Battle Creek, Mich., 33 years ago when the late Charles W. Post pottered around an oven with wheat bran and molasses. By roasting them he sought a coffee substitute. He found the substitute and called it Postum Cereal.

People liked Postum cereal's morning brew, and their purchases gave Post enough money to continue pottering around the oven. Whole wheat and barley came out of the oven Grape Nuts. Later came thin, crisp Post Toasties, then Instant Postum powder. These four products were the foundation blocks of the great Postum business.

Two and a half years ago a great superstructure began. Postum Company, which had multiplied its 200,000 common shares to 2,000,000, began to buy allied but not competitive companies--and their trademarked advertised products. That is why the Postum Company now sells besides its first items this array of eatables:

Baker chocolate D-zerta

Baker cocoanut Swans-Down flour

Hellman mayonnaise Instant Swans-Down

Annis horseradish Minute tapioca

Log Cabin syrup Minute gelatine

Sanka coffee* Pearl tapioca

Jell-O Baker cocoa

Jell-O ice cream powder

To this unparalleled list of advertisingly famed eatables the Postum Company last week added Maxwell House coffee.

Cheek-Neal Co. of Nashville makes Maxwell coffee. Fifty-five years ago Joel O. Cheek and J. Will Neal worked for a wholesale grocer at Nashville. Mr. Cheek's job was to sell coffee to the general stores of Tennessee hill villages. He rode a saddle horse and carried coffee samples in his saddle bags. At that time he affected a pointed beard. When he came home from a trip he would potter around his kitchen oven roasting experimental blends of coffee. He used twelve-pint coffee pots for brewing his blends. His eight sons and one daughter guard those pots as heirlooms. Two of these sons sell Dodge cars in Tennessee. The other six are officers in the business. J. Will Neal and his son, J. Robert Neal, are vice presidents at Houston where the company has one of its seven coffee-blending factories and distributing plants. President is Joel O. Cheek, 75. For two years now his sons have managed to keep him from working hard. But he is at the Nashville offices almost every day.

In the Reconstruction 1870's, Joel O. Cheek and J. Will Neal quit their jobs to sell coffee for themselves. The Maxwell House (Hotel), now tattered, was just opened at Nashville. Young Mr. Cheek persuaded the managers to use his coffee and when Maxwell House guests demanded the blend, he used the hotel's name as his trademark.

President Roosevelt once stopped at Nashville at the Hermitage (Andrew Johnson's home) and had a cup of this coffee. He smacked his lips and demanded another. Cried he: "Good to the last drop."

Until 1921, when Cheek-Neal opened a factory in Brooklyn, it was a sectional brand, known little out of its own territory--the South.

Then Joel 0. Cheek did a very bold thing for a merchant. He started a national advertising campaign before he could supply the goods he advertised. But he created an insistent demand, and by the time his salesmen got to northern, midwestern, southwestern, northwestern and Pacific Coast jobbers they met very little sales-resistance.

That is how Maxwell House coffee became the biggest advertised brand of coffee and the biggest seller. It is beginning to sell in foreign markets. Postum's sales agencies abroad will hasten Maxwell House's further expansion.

Organization Problems. So many other food products companies has Postum Company absorbed recently that President Colby Mitchell Chester Jr. (son of the famed Rear Admiral) has found his greatest problem in integrating the several organizations. To get the correct solution he is not hurrying his staff. That policy Postum directors approve, and they have postponed the increase of Postum's dividend rate. It has been $5 a share (all common, no preferred) since August, 1926. There was one 100% stock dividend and a second is believed imminent.

Smart Selling. In April President Colby Mitchell Chester made a smart change in methods of selling the many Postum food products. He told all customers who bought directly from Postum's agencies that if they bought 10% more goods this year than last they would get a 1% "bonus" (rebate) on their total purchases. For 15% increase the "bonus" is 1.5%; for 20% increase, 2%. The company's net sales the first three months of this year were $21,139,535; last year $12,704,761. Net income those months this year $3,910,160; last year $3,345,134. Stock last week sold as high as $135.75 a share.

Beneficiary. The chief beneficiary of the great Postum Company's expansion is golden-haired Marjorie Post Close Hutton, whose father took roasted wheat bran and molasses out of the Battle Creek oven 33 years ago.

Where wealth is spent with decorous gorgeousness, there the Edward F. Huttons are--in Manhattan on Long Island, in the Adirondacks, at Palm Beach. The Palm Beach estate is so magnificent that the Huttons use wiles to keep intruders out. A sentry guards the gate. Once a brazen rich woman whom Mrs. Hutton refused to receive applied for a maid's job in the mansion. As inept as indelicate, she was quickly discovered. A private tunnel runs from the Hutton grounds to the famed Bath and Tennis Club of Palm Beach. Both Mr. and Mrs. Hutton like to entertain. She likes costume balls, appears frequently as a blonde princess. Mr. Hutton, banker as well as chairman of the Postum Company, has one of his four investment banking offices in Manhattan's Plaza Hotel.

*A true coffee from which heart-bothering caffein has been removed. Kaffee Hag, a similar decaffeinated coffee, is owned by the Kellogg Co. of Battle Creek.