General Foods - History

History

C. W. Post established his company in Battle Creek, Michigan, having lived there since 1891, when he was a patient at an holistic sanitarium operated by Dr. John Harvey Kellogg. Dr. Kellogg, with his brother W.K. Kellogg, had developed a dry corn flake cereal that was part of their patients’ diet. Post's first product, introduced in 1895, was not a cereal, however, but a roasted, cereal-based beverage, Postum. Having developed an aversion to coffee during his time in the sanitarium, Post positioned Postum as a healthy alternative. Its advertising slogan, which he coined himself, was "There's a Reason." Postum's main ingredients were naturally caffeine-free wheat grain, bran and molasses. Initially Postum had to be brewed like coffee, but in 1911 Post introduced a powdered, instant formulation. This version of the product was manufactured in Battle Creek until it was discontinued in 2007.

In 1897 Post introduced his first dry cereal, a crunchy blend of wheat and barley, which he called Grape Nuts. His first corn flake product, originally called "Elijah's Manna," appeared in 1904. Owing to consumer resistance to the biblical reference (even Great Britain flatly refused to register the name as a trademark), it was renamed Post Toasties in 1907. (Dr. Ashley Montagu, in The Prevalence Of Nonsense, also titled Is That A Fact? in paperback edition, noted that in the Old Testament, the prophet Elijah, or Elias, was fed bread and meat by ravens, not manna, which was described as being white in color, with a similar flavor to honey wafers of biblical times, and that during the Exodus, the Israelites found manna to be a poor substitute for the far richer foods they had enjoyed as Egyptian captives.)

C.W. Post was an astute businessman who believed that advertising and aggressive marketing were the keys to a successful enterprise. Within 10 years of its incorporation his Postum Cereal Company had more than $10 million in capital and was spending $400,000 a year on advertising, sums which were remarkable for the period. Although he vigorously opposed labor unions, his employees were the highest-paid in his industry and working conditions at the Post factory were exemplary. He even developed a factory town in which he sold homes to his workers at favorable rates.

Postum Cereal Company lost its founder in 1914. C. W. Post underwent an apparently successful appendectomy at the Mayo Clinic, but shortly after returning home to recuperate he died of a self-inflicted gunshot wound. Post had for years suffered from bouts of illness and depression. While his death was without warning, his company was not left rudderless. His daughter, Marjorie Merriweather Post, had been raised in the business and was familiar with virtually every aspect of its operations. She assumed control of the now $20 million Postum Company and managed its affairs for the next eight years. While she did not oversee major product innovations, she did have a good feel for business and for promoting talented managers. In addition, her second marriage, in 1920, was to Edward F. Hutton, the founder of a brokerage firm on Wall Street.

Gross revenues in 1921 were $17.75 million. In 1922 Hutton took the newly incorporated Postum Cereal Company public by issuing 200,000 common shares. The 1920s was a period in which common stock was still considered highly speculative, and consequently the newly issued shares carried a dividend at the rate of $5.00 per year.

Revenues in 1922 were essentially the same as in 1921, but in 1923 they were $22.25 million and a stock split, in the form of a 100% stock dividend, increased the authorized shares to 400,000. These shares also earned a $3.00 annual cash dividend, representing a 20% increase over the pre-split rate. In 1925, with revenues now at $27.4 million, the stock was split once again and the dividend was increased to $4.00 per new share.