The Birth of an American Food Empire
Jun 20th 2013 11:33AM
Updated Jun 20th 2013 12:25PM
On this day in economic and business history...
General Mills was formed on June 20, 1928 as a vehicle for the merger of successful Minnesota milling company Washburn-Crosby with more than two dozen smaller mills.
While originally a flour mill, Washburn-Crosby (and then General Mills) had shifted toward producing more finished consumer products, particularly cereal and baking mixes. As it entered its first full year of operation, General Mills had roughly $26 million in market capitalization and a total flour-milling capacity of 88,000 barrels per day across its 21 mills. Two years later, General Mills rolled out two of its earliest brands: Bisquick and the "Betty Crocker" coupon offerings that customers used for discounts on products featured in the catalog of the same name. Wheaties would follow with its "Breakfast of Champions" slogan in 1933.
The company continued to develop new consumer products throughout the postwar period, and it also began expanding into new categories, including some that had nothing to do with cereal or baked goods. In 1968, General Mills acquired Parker Brothers and remained the toymaker's owner until 1987, during which time it developed the Nerf line of soft toys and became a major developer of early console video games. General Mills is also largely responsible for the growth of Darden Restaurants . Darden was a mere five-restaurant chain of Red Lobsters when General Mills bought it out in 1970. By the time it was spun off as an independent company in 1995, Darden had grown to 1,250 locations across the United States and Canada. Many of these were Olive Gardens, which had taken off since its creation in 1982 to become the largest Italian sit-down chain in the country.
Throughout this time frame, one of General Mills' fiercest competitors also grew and diversified. Pillsbury, another Minnesota-based food company with milling origins, was already firmly established in baked goods by the by the time its Doughboy mascot debuted in 1965. It acquired Burger King two years later, roughly paralleling General Mills' path through diversification. Burger King remained part of Pillsbury through the latter's acquisition by Grand Metropolitan in 1989 until its divestiture in 2000. A year later, General Mills acquired Pillsbury but did not gain the latter's baking products; those brands are part of J.M. Smucker now.
Today, General Mills is one of the world's largest food-product companies. Eight decades after its creation (at the tail end of the worst crash since its creation), General Mills was worth roughly $20 billion, representing an annualized market-cap growth rate of 8.7%. Investors who held on throughout this entire time -- especially if they reinvested dividends -- have enjoyed an even better growth rate, as General Mills has been paying dividends without interruption or reduction since 1899, when it was still known as Washburn-Crosby.
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Can you read the dots and dashes above? They say, "Welcome to the Motley Fool" in Morse code, which was, in some ways, the world's first programming language, designed by Samuel Morse operate his newly invented telegraph. Two years after he first successfully tested the telegraph, on June 20, 1840, Morse received a patent for the innovation that made it so easy to use -- a system of dots and dashes that could be easily transmitted across thousands of miles of electrical wiring.
The first version of Morse code, like the software languages that followed more than a century later, had some key differences with the version popularized in later years. Today's Morse code is the internationalized variant that became popular after the 1850s, which streamlined the transmission of letters by eliminating the spaces originally found in five codes. However, even by the 1850s, Morse's invention and its attendant "software" were already well-established as the dominant system of telegraphy, spread by Western Union , the nation's leading telegraph operator.
Western Union became the first "technology" company on Charles Dow's earliest predecessor to the Dow Jones Industrial Average in 1884, thanks to its adoption of Morse's simple transmission standard and its aggressive expansion. It joined the index proper in 1916, but by then it was no longer the Dow's only technologically inclined component. Telegrams were a thing of the past long before Western Union stopped its service in 2006, but Morse code itself lives on here and there, wherever people have a need to communicate in a few quick taps.
The article The Birth of an American Food Empire originally appeared on Fool.com.Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide and Western Union. The Motley Fool owns shares of Darden Restaurants. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.