Associated British Foods plc

1882–1948

With high-ranking positions in several categories of foodstuffs, Associated British Foods plc (ABF) stands as one of the United Kingdom's top producers of consumables. From its roots as a Canadian bakery, the company grew and evolved to become Britain's top manufacturer of bread, with over one-third of the U. K. market. By the early 1990s, the company had diversified within the food business into tea and coffee (sold under the Twinings and Jackson brands), biscuits and crispbread (marketed under the Burtons and Ryvita names, respectively), as well as frozen foods and edible oils. Its British Sugar subsidiary ranked as the country's dominant producer of sugar. The company's activities in Ireland, Australia, and the United States encompassed grocery retailing, milling and baking, and soft goods retailing. Notwithstanding its geographic diversity, the vast majority (over 89 percent) of its revenues continued to be generated in the United Kingdom and Ireland in the early 1990s.

ABF is a multibillion dollar international conglomerate that characterizes itself as a "family of businesses." ABF subsidiaries, whether self-developed or acquired through merger or acquisition, retain their individuality in name, operations, and clientele, yet maintain strong connections with the parent's central management core. Advertising and marketing of ABF's wide range of products and services--bakeries, supermarkets, restaurants, catering companies, and clothing stores&mdashe geared to the family as consumers. And for more than half a century one family has controlled ABF: the Westons. In the early 1990s, the Westons owned just over half of ABF's equity through Wittington Investments Ltd., which was controlled by then-Chairman G.H. Weston. About one-third of ABF's shares were traded publicly during this time.

The family saga began in Toronto, Canada, in 1882, when George Weston, then 18, bought a bread-delivery route. During the following 36 years, he built a number of successful bakeries in that area. George Weston Ltd., the Toronto-based chain of bakeries and supermarkets that resulted from that growth, consistently ranked among North America's top businesses throughout the 20th century.

When George Weston's son Garfield took over the bakery business at his father's death in 1924, he had much more in mind than simply maintaining or building up the chain of local bakeries his father had founded; he was determined that it grow into an international business. Eleven years later, in November 1935, he took a giant step toward that goal by purchasing seven bakeries in England, Scotland, and Wales and added them to his newly formed Food Investments Ltd., which was promptly renamed Allied Bakeries Limited. All seven bakeries remained in operation throughout the 20th century, three under their original names.

Within four years, Garfield had 18 bakeries and four biscuit factories throughout the British Isles, beginning decades of expansion into Europe, Africa, Australia, Asia, and North America. The expansion went beyond food products to encompass seed production, milling, canning, retail grocery and clothing outlets, restaurants, vehicle parts, fuel, and basic research.

The expansion was not always steady. At the onset of World War II, wartime restrictions and shortages of supplies began to slow production, while high taxes and voluntary defense contributions reduced profits. But expansion picked up again in the postwar period. A postwar excess-profits tax refund was wholly invested in expansion and equipment. In 1948 Garfield's son Garry joined the board of directors. The following year, the company purchased two Australian firms: Gold Crust Bakeries in Adelaide and Gartrell White in Sydney. By the end of the decade, profits had surpassed £2 million a year.

By the end of the decade, profits had surpassed £2 million a year.

1960–1983

A growth spurt in the 1950s added dozens of new bakeries, tea shops, restaurants, and catering businesses, many of them in newly constructed shopping centers, which provided one-stop convenience for consumers. Food stores purchased by the company were refashioned into supermarkets to suit new shopping habits. This diversification led to a name change in 1960, to Associated British Foods. By 1964, the company claimed to be the largest baker in the world and one of the largest millers, in addition to being one of the largest grocers in the United Kingdom.

Rapid growth continued during the 1960s, with the acquisition of A.B. Hemmings, Ltd., a chain of 230 bakery shops in the London area, the entire chain of Fine Fare food shops, and a 51 percent interest in the South African Premier Milling Company.

In 1970 ABF also opened the largest bakery in western Europe, in Glasgow, Scotland. A year later, ABF's Fine Fare opened its first two "superstores." As the 1970s progressed, the Stewart Cash Stores in Ireland, which ABF had acquired some 20 years before, followed suit, opening their first hypermarket. In 1978, ABF expanded into a new market--frozen foods--by buying an ice cream factory and a pizza bakery.

Garfield died in October 1978 and Garry advanced to the chairmanship of ABF. The family no longer sought the public eye, keeping a low profile since 1983, when an attempt by six Irish Republican gunmen to kidnap Galen was foiled.

Despite difficulties such as fluctuation of the pound and climatic conditions affecting crops, ABF has continued to expand and prosper. In 1980, a subsidiary, Twinings Tea, opened its first North American factory, in Greensboro, North Carolina, and also opened the Grosvenor Marketing Company in Paramus, New Jersey. Additional bakeries and other businesses have been acquired, and ABF's continual program of monitoring and modernizing has kept products and services up to date and operations efficient.

Some of ABF's subsidiaries are much older than their parent. The Twining Crosfield Group, for example, dates back to a coffee shop purchased by Thomas Twining in 1706, when coffee was the fashionable drink for men. Tea, introduced early in the 17th century, had been popularized as a drink for ladies by Queen Catherine, the wife of Charles II, at mid-century. But men usually drank it for medicinal purposes only (it was widely regarded as a remedy for headaches). When Twining introduced tea as a sideline, he found it was so popular that in 1717 he converted Tom's Coffee House into the Golden Lyon, London's first tea shop.

1949–1995

Twinings Tea, exported to 90 countries, may be ABF's most widely-known brand name. It has won the Queen's Award for export achievement, and consistently dominated its market. The tea was blended in several factories in the British Isles and one in the United States; ABF marketing companies in both countries manage distribution.

The Ryvita Company, purchased by ABF in 1949, also won the Queen's Award for export with the crispbread that has long been its principal product and probably ABF's second-best-known brand name. Increasing interest in health foods made Ryvita and the company's other main product, Crackerbread, popular in many countries in the 1980s. By the early 1990s, Ryvita eclipsed its competition with an 80 percent share of the market. ABF hoped to parlay the brand's strength into increased sales with the late 1988 introduction of a crossover product. Ryvita High Fibre Corn Flakes coupled the original product's reputation as a health food with a marketing emphasis on environmentalism; the product came in recycled packaging. Demand for high-fiber foods and the availability of new extrusion technology resulted in the development of Allinson's branded products, Croustipain, as well as other extruded breakfast cereals and cereal products.

Allied Bakeries, the group of bakeries Weston purchased at the time of its incorporation, continued to function as part of ABF's largest subsidiary. Over the course of the company's history, this segment grew to include some 40 wholesale bakeries and close to 1,200 retail bakery shops and restaurants throughout the British Isles. When the addition of in-house bakeries in many supermarkets put a slight crimp in the wholesale baked-goods business, Allied Bakeries countered this trend with a line of partially baked goods and a line of frozen bakery products, both of which could be completed at an in-house bakery or by the retail consumer at home. But by mid-1994, a string of losses in the Baker's Oven retail chain led to that operation's divestment. The sale, which encompassed two bakeries and over 400 retail locations, generated £18.95 million.

Cereal Industries, a holding company for six subsidiaries, also worked closely with Allied Foods Group. Fishers Agricultural Holdings, one of the six cereal industries subsidiaries, included Fishers Nutrition, which supplied animal feeds and livestock marketing services and Fishers Seed and Grain, which produced agricultural seeds. The Allied Grain Group, another of the six, marketed seeds and fertilizers. Mardorf, Peach and Company imported and exported cereals. ABR Foods supplied wheat by-products to several types of industry: baking and brewing, food and pharmaceutical manufacturers, animal feed, and packaging products. The Aughton Group, which, with ABR, comprised the fifth Cereal Industries group, supplied computerized process-control systems to a variety of industries. Finally, Westmill Foods and Alric Packing supplied retail grocers and caterers with Allinson's flour, yeast, bran, and wheatgerm, among other products.

ABF's Burtons Gold Medal Biscuits long ranked as one of the largest biscuit manufacturers in the United Kingdom. As it grew, rumors surfaced that it was planning to take over a competitor, such as United Biscuits. Burtons pursued an aggressive program of investment in new and modernized equipment and cost-effective production techniques in order to maintain its leadership in the market.

The Irish retail group was the largest supermarket chain in Ireland (Quinnsworth stores in the Irish Republic and Stewarts and Crazy Prices in Northern Ireland). This group also included retail clothing stores--Penneys in Ireland and Primark in the United Kingdom--focusing on fashions for young people. Many of these stores opened in the 1960s; although they continued to do a thriving business through the 1980s, they were battered by cutthroat price wars in the early 1990s. Early in 1995, markets were rife with speculation that the Stewarts chain was on the auction block.

1982–1994

AB Ingredients, formed in 1982, and AB Technology, formed in 1987, constituted new directions for ABF. AB Ingredients developed and manufactured new ingredients and additives for Allied Bakeries and for other independent companies. It also developed improved bakery processes. AB Technology specialized in high-tech improvements for several types of industry, including food production.

It took a strong central management, an efficient reporting system, and vigilant personnel and investment programs to hold together so many relatively independent companies of disparate size and design, in widely separated geographical locations. ABF's continual expansion testified to its strength, but its structure, marked by an intricate system of holding companies and representation, was difficult to penetrate and analyze.

An early 1990s recession put ABF in what an anonymous analyst with Charles Stanley & Co., Ltd. called "an unenviable situation." Cautious consumers and ready-to-please retailers squeezed profit margins on virtually all the company's products. Sales declined from £4.81 billion in 1991 to £3.95 billion in 1992, and pre-tax profits dropped from £332.3 million to £267 million during the same period. The company responded with a major reorganization encompassing the core bakery division as well as the British Sugar plc operations acquired in 1991, closing factories and eliminating a net of nearly 1,500 jobs from 1992 to 1994. Net results rebounded in 1993, when the company recorded £4.39 billion in revenues and £338 million in pre-tax profits. Financial performance continued to improve in 1994, as sales increased to £4.48 billion and pre-tax profits increased to £360 million.