Billions in the Pantry

The food business is not only the nation's biggest ($80 billion this year), but its sales are steadily on the rise. Last week General Foods Corp., largest U.S. packaged-food processor, reported that its sales in the fiscal year ending March 31 topped $1 billion for the first time, its earnings jumped 10% to $48.4 million--and both are still climbing. President Charles Mortimer, 57, had only one minor complaint: "We spent $87 million in advertising last year, but not one penny to advertise the name of General Foods. Most of our customers do not even know that General Foods exists."

He was too modest. Hungry Americans are well acquainted with the company's pantry of 235 branded products, including the nation's best-selling coffee, Maxwell House; its biggest-selling frozen foods, Birds Eye; such old staples as Baker's cooking chocolate, Jell-O and Swans Down cake flour; and its top-selling dog meal, Gaines. General Foods' products go from breakfast (Post's cereals) to warm nightcaps (Postum, Sanka), also wash the pots and pans that its foods are cooked in (S.O.S. Scouring Pads).

From Bran to Bigness. This empire grew out of a coffee grinder, a gasoline stove and $11.95 worth of wheat and bran. In 1895, near Battle Creek, Mich., a health-foods fan named Charles William Post roasted the wheat and bran, ground them, added sweeteners. Result: Postum. Two years later, Post stirred up the same sort of mixture, produced one of the first cold cereals--Grape Nuts. He formed the Postum Cereal Co., plugged his two products as cure-alls for appendicitis, dyspepsia and other ailments. Some magazines balked at his flamboyant advertising, but Post became the foremost advertiser of his day, and the Postum Co. grew fat.

After Post died in 1914, the company went on a stock-swapping spree. Led by President Colby Chester and Chairman E. F. Hutton (who married Post's famed daughter Marjorie and is still a partner in the Wall Street brokerage firm carrying his name), the company from 1925 to 1929 picked up many of the best-known U.S. food processors. Among them: Baker's chocolate, founded in 1765, which Postum got for $9,000,000 in stock; Maxwell House (for $46 million); Jell-O ($44 million); Birds Eye ($22 million); Swans Down ($7.4 million); also Minute Tapioca, Log Cabin syrup, Calumet Baking Powder. Hutton and Chester renamed this big shopping bag General Foods.

Not only did General Foods grow big, but it became one of the nation's best-managed companies under two chief executives as famed for their public service as for their business savvy. Clarence Francis, president and later chairman between 1934 and 1954, has been a top food and foreign-trade adviser to Presidents Roosevelt, Truman and Eisenhower. His successor, Mortimer, was chairman of the star-studded Advertising Council from 1947 to 1950, headed the United Community Campaign fund last year. Under him, each General Foods' sales dollar has brought a pretax profit of 10-c- v. 7-c- for its chief competitor, Standard Brands (Chase & Sanborn coffee. Royal Gelatin, etc.), and General Foods' stock has risen from $30 in 1954 to $57 last week.

Changing Markets. Brooklyn-born Charles Mortimer joined the old Postum Cereal Co. in 1928, rose fast as adman and merchandiser. He needs both specialties now because the sweeping change in the U.S. food market has put almost 70% of grocery sales into the supermarkets, where General Foods must compete against the supermarkets' own private brands. To do it, General Foods beats the advertising drum heavily. Says Mortimer: "You have to sell your product before people get to the supermarket."

When they get there they are buying more and more foods with built-in maid service. This year housewives will buy about $350 million worth of General Foods products that were barely known or not even on the market 15 years ago, e.g., soluble coffee, frozen juices, cake mixes. "There was a 25% population increase from 1940 to 1955, but food sales rose 60% in terms of constant dollars," says Mortimer. "Americans are not eating more, but they are eating better."

To create such better foods, Mortimer this year will put $11 million into research. General Foods' 600 scientists and researchers are not only looking for better ways of preparing old food (e.g., packages in which the food can be cooked), but also for completely new protein foods that can be developed from inexpensive sources. Next big improvement: atom irradiated foods, which will keep for years.

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