Milk & Cheese

As sacred as the relationship between iron and steel is the bond between milk and cheese. For this reason Kraft-Phenix Cheese Corp. controls large dairy interests, also sells milk. And for this reason big dairy companies also sell cheese. Yet the first of recent Kraft-Phenix merger rumors concerned not a milk company, but Standard Brands, Inc., which sells yeast, coffee, baking powder. Although this report may have been without foundation, more definite was an announcement that the Reynolds-Hanes interests, which control Kraft-Phenix, and National City Co. had reached an agreement to form a great merger between Kraft-Phenix, Hershey Chocolate Co., and Colgate-Palmolive-Peet (TIME, Nov. 4). Although this cheese-candy-soap combine was even officially named "International Quality Products Corp.," National City Co. apparently withdrew after the market decline, leaving the Reynolds-Hanes group still in control of the largest U. S. package cheese company. Last week, a more logical purchaser was found in National Dairy Products Corp.

Behind National Dairy has always been one of its founders, Thomas H. Mclnnerney, a bull on dairying. Since its formation in 1923, National Dairy's assets have jumped from $11,000,000 to about $200,000,000; its sales from $13,000,000 per year to almost $300,000,000. Thus the company has more than shared in the growth of the $3,000,000,000 dairy indus-try which, according to President Mclnnerney, has seen U. S. per capita consumption increase 50% during the last ten years, will see it rise another 60%.

To National Dairy, the new acquisition is one of the most valuable it has made, although purchase of Sheffield Farms Co. of New York in 1925 was undoubtedly the most strategic. Large Kraft-Phenix dairying subsidiary is Southern Dairies, Inc., operating 48 plants between Maryland and Florida--a region not previously served by National Dairy. In addition to this, Kraft-Phenix has a world-wide distribution system which National Dairy can use for its non-fluid products, including sausages from the recently purchased Deerfoot Farms Co.

Kraft-Phenix will be acquired through an exchange of cash and securities, at a cost to National Dairy of about $73,000,000. Kraft-Phenix has an annual sales volume of around $85,000,000 which, together with other recent National Dairy acquisitions, will jump its sales to approximately $400,000,000 per year, by far the greatest in the dairying industry.

Kraft. James Louis Kraft began the Kraft business about 1906 when he drove a horse called "Paddy" and vended cheese to Chicago stores. Although the company has long passed that Arcadian state which "J. L." described as: "when everybody called everybody else by his first name-- even the stenographers," valiant attempts are made to keep the organization highly Kraft-conscious. Much of this is done through the organ, Cheesekraft. A typical Kraft-talk by "J. L.": "I do not suppose anyone else ever planned a cheese business to live through the ages . . . after we are gone, there will be Kraft salesmen trekking the veldt of Africa, braving the snows of Siberia and battling the superstitions of Mongolia--all earnestly striving to increase sales, which by that time will be far in excess of a hundred million.''

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