Business & Finance: National City Foods

“I saw myself in 1906 again, driving Paddy from store to store, doing my level best to sell Cheese. The heartbreaks and disappointments all came back and were just as real as if they were just happening. Over again I ate my ten cent breakfast of coffee and rolls, and quietly slipped one into my pocket for lunch. I remembered the summer underwear and low shoes that I wore during that cold winter of 1907 … the past when the Kraft Company was small and everybody called everybody else by his first name—even the stenographers. . . .”

This glimpse into the early life of the president of his company would have been afforded a stockholder of Kraft Cheese Co. who in 1925 read an article entitled, “A Cheese Business for the Ages,” written by James Louis Kraft and printed in the monthly Kraft house-organ, Cheesekraft. If the stockholder had read further, past a reference to “dear old aunt Beckey. She has gone to her reward,” he would have come upon President Kraft’s prediction for the future: “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.”

Yet, however true were these predictions, there have happened since 1925 events that even visionary President Kraft could not have foreseen. In 1928 Kraft Cheese Co. acquired Phenix Cheese Corp., changed its name to Kraft-Phenix Cheese Co., became dominant in the U. S. More companies have been added constantly. Late this summer it became known that control of Kraft-Phenix had passed to Selected Industries, Inc., and affiliated investment groups. But bigger than any of these developments was an announcement last week that Kraft-Phenix would be a unit in a new food company sponsored by the National City Bank. Other companies included were Hershey Chocolate Corp. and Colgate-Palmolive-Peet Co. Combined assets of the three exceed $125,000,000, placing the new company ahead of J. P. Morgan’s Standard Brands, Inc.

In many ways the new holding company will resemble Standard Brands, which retains the identity of its units but profits through economy in distribution. Chief unit of Standard Brands was Fleish-mann Yeast Co. with a highly specialized, rapid system of distribution famed in fact and romance. Another was nationally sold Royal Baking Powder. To the new company Kraft-Phenix Cheese Corp. brings an international distribution system that embraces food stores, while the marketing systems of Hershey and Colgate include candy and drug stores. With this nucleus other companies can be added, swiftly expanded.

Hershey. After making $1,000,000:in candy, Milton Snavely Hershey resolved further expansion would not be for profit. In the model towns of Hershey, Pa., and Hershey, Cuba, he created model factories, homes, hospitals. Nevertheless huge profits were earned by the Hershey company, which now has assets in excess of $25,000,000 and daily consumes enough milk to supply a city of a million people. One of the Hershey philanthropic projects was an orphanage to which he gave $60,000,000 including a large block of stock in his company. Unconfirmed is the rumor that last week’s deal was made possible by the National City Bank’s purchase of this stock from the orphanage.

Colgate. Advocates of family-owned and managed companies were dismayed last year at the news that the Colgates, soapmakers for over 100 years, were merging with the mushroom-spreading Palm-olive-Peet Co. More dismal was last week’s news, for although the name of the new holding company was not announced it seemed certain that under some such title as Pure Products, Inc., would be buried the famed name of Colgate. Executives will still include S. M. Colgate, R. B. Colgate, S. B. Colgate, R. Colgate, G. Colgate, G. Colgate Jr., H. A. Colgate.

Kraft. Since James Louis Kraft drove “Paddy,” Kraft-Phenix Cheese Corp. has expanded rapidly, but still has room for growth. For while Kraft Cheesemen, including “J. L,” “J. H,” “C. H.,” “Fred,” and “Norman,”* are proud of their position in the U. S., they regretfully admit that in Switzerland per capita consumption of cheese is 26 lb., in England 12 lb., in the U. S. only about 4 lb. When the U. S. is cheese-educated, connoisseurs will be able to distinguish Caccio Cavallo, Provolona, Parmesan, Gorgonzola, Romano, Roquefort, Stilton, Limburger, Muenster, Brick, Liederkranz, Neufchatel, Cream, Camembert, Brie, Gjedost, Gam-melost, Myost, Appetitost, and Swiss, all described in the Kraft-distributed booklet, The Romance of Cheese.

* Of Norman Kraft Cheesekraft in January said, “You’ll find part of his heart and soul in every box of Kraft Cheese.”