Quaker Oats Company

• 1. Introduction

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  The Quaker Oats Company, based in Chicago, Illinois, changed hands in August 2001 for 14 billion dollars. The buyer was PepsiCo, and its main target was not oatmeal. It wanted Gatorade. A maker of hot breakfast cereal had somehow become the owner of a sports drink worth that much. How did a small mill in Ohio grow into a company with that kind of reach? Why does a cereal box show a man in a Quaker hat, when the company says it has never had any link to the religious group? What else did the company put inside its boxes besides oats? And why did the same name later turn up in lawsuits and settlements? The answers start with a handful of rival millers, and a lot of advertising.

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• 2. Rival Millers

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  In the 1850s, two men began grinding oats for a living. Ferdinand Schumacher founded the German Mills American Oatmeal Company in Akron, Ohio. Robert Stuart founded North Star Mills in Hearst, Ontario, which was then part of Rupert's Land.

  In 1870, Schumacher placed his first known cereal advertisement in the Akron Beacon Journal. In 1879, John Stuart, his son Robert and George Douglas joined forces to form Imperial Mill.

  The Quaker Mill Company of Ravenna, Ohio, opened in 1877. Four years later, in 1881, Henry Parsons Crowell bought it. The following year he launched the first national magazine advertising campaign for a breakfast cereal. He also introduced a box that let shoppers buy oats in quantities other than bulk.

  Crowell also bought the bankrupt Quaker Oat Mill Company, also in Ravenna. From 1888 until late 1943 he held the key posts of general manager, president and chairman. He became known as the cereal tycoon.

  In 1888, seven major oat millers merged to form the American Cereal Company. Schumacher became its president, Crowell its general manager, and John Stuart its secretary-treasurer.

  The real consolidation came in 1901, when the Quaker Oats Company was founded in New Jersey with headquarters in Chicago. It merged four mills: the Quaker Mill Company, the Cedar Rapids, Iowa, mill of the Stuarts and Douglas, Schumacher's Akron company, and the Rob Lewis and Company American Oats and Barley Oatmeal Corporation. Crowell then acquired the merged company. In 1911 it bought the Great Western Cereal Company too.

  Crowell later gave away more than 70% of his wealth to the Crowell Trust.

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• 3. The Quaker Man

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  On the 4th of September 1877, in Ravenna, Ohio, Henry Seymour of the Quaker Mill Company applied for a trademark showing a man in Quaker clothing. It was the first trademark sought for a breakfast cereal. The same figure became the first registered cereal trademark in the United States.

  Accounts differ on who chose the name. By one story, Seymour read a reference article about Quakers. He wanted customers to link the product with integrity, honesty and purity. The company credits William Heston with the choice instead.

  The earliest logo showed the figure full-length, sometimes holding a scroll marked Pure. It echoed classic woodcuts of William Penn, the founder of the Province of Pennsylvania and an early Quaker.

  In 1946, graphic designer Jim Nash created a black-and-white head-and-shoulders portrait of a smiling Quaker Man. In 1957 came Haddon Sundblom's color version, now the familiar one. His model was Harold W. McCauley, a fellow Coca-Cola artist.

  In 1965, the company introduced a slogan in mock-Quaker speech: "Nothing is better for thee, than me".

  In 1970, Saul Bass, known for motion picture title sequences and corporate logos, produced a monochrome logo modeled on Sundblom's painting. In 2012, the firm Hornall Anderson gave the man a slimmer and somewhat younger look. Insiders sometimes call him "Larry".

  The company states that the figure "does not represent an actual person". It says the Quaker hat was chosen because the faith projected honesty, integrity, purity and strength. The company has never had ties to the Religious Society of Friends.

  Members of that society have occasionally voiced frustration at the confusion. In 1990, some began a letter-writing campaign after an advertisement showed Popeye as a Quaker using violence against aliens, sharks and Bluto. Later that decade, Power Rangers toys packed in Cap'n Crunch cereal sparked more letters.

  Those toys were part of a habit of putting gifts in cereal boxes that dated back to 1915.

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• 4. Boxes and Premiums

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  In 1889, the American Cereal Company launched a half-ounce trial size of oats. As a promotion, boys on bicycles delivered one to every home in Portland, Oregon. The scheme was later extended to other cities. A second promotion tucked dinner plates inside the boxes, which were then not round.

  In 1908, Quaker Oats printed the first in a series of cookie recipes on the box. The cylindrical package arrived in 1915. Later that year, Quaker made its first box premium offer. A customer who mailed one dollar and the cutout picture of the Quaker Man received a double boiler for cooking oatmeal.

  In the 1920s, the company introduced Quaker Quick Oats, an early convenience food. It also sold a crystal radio set built into the same cylindrical canister as Quick Oats, with the same label. The price was one dollar plus two trademarks cut from Quaker Oats packages.

  In the 1930s, Quaker was one of many companies that used the Dionne Quintuplets in promotions. During that decade, photographer Theodor Horydczak documented the Cedar Rapids mill, including the building, its operations and its factory workers.

  From 1987 through the 1990s, actor Wilford Brimley appeared in Quaker television commercials. He praised the healthfulness of eating oats, sometimes while talking to a young child. A frequent slogan in those commercials was "It's the right thing to do."

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• 5. Oatmeal Lots

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  Starting in 1902, a coupon in a Quaker oatmeal box could be redeemed for a legal deed to a tiny lot in Milford, Connecticut. Some lots measured as little as 10 feet by 10 feet. They were carved out of Liberty Park, a 15-acre subdivision that was never built.

  A small number of children or their parents, often people living near Milford, claimed the free deeds. They then began paying the extremely small property taxes on what became known as oatmeal lots.

  The subdivision's developer had a plan. He hoped the new landowners would hire him to build homes. Several tracts would have had to be combined first.

  The deeds were real, so they created a pile of paperwork for town tax collectors. The collectors frequently could not locate the owners and collected almost no revenue.

  In the mid-1970s, the town ended the arrangement with a general foreclosure that condemned nearly all of the property. The land is now part of a BiC Corporation plant.

  In 1955, Quaker tried land again. Tied to the television show Sergeant Preston of the Yukon, boxes of Puffed Wheat and Puffed Rice carried genuine deeds to land in the Klondike.

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• 6. Fire and Factories

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  On the 11th of December 1916, the Quaker factory in Peterborough, Ontario, burned almost completely to the ground. 23 people died. The company was left with 2,000,000 dollars in damages.

  The plant had been established in 1902 as the American Cereal Company, on the shore of the Otonabee River. At the time, Peterborough was known as the Electric City because of its hydropower, which drew many companies. The Trent-Severn Waterway also promised an alternate shipping route. After the fire, Quaker rebuilt the facility and incorporated the few areas the flames had spared.

  Once PepsiCo owned the company, brands from facilities around Canada were consolidated in Peterborough. The site took the nickname QTG, for Quaker Tropicana Gatorade. Local production now includes Quaker Oatmeal, Chewy bars, Cap'n Crunch, Pearl Milling Company pancake mixes and syrups, Oat Bran and Corn Bran cereals, Gatorade, Propel fitness water, Tropicana juices and various Frito-Lay snacks. The plant supplies most of Canada and exports limited amounts to the United States. It also sells cereal production byproducts to companies that make fire logs and pellets.

  During World War II, the Q. O. Ordnance Company, a Quaker subsidiary, ran the Cornhusker Ordnance Plant, six miles west of Grand Island. It was a government-owned, contractor-operated site covering 11,960 acres. Construction began in March 1942, and production ended in August 1945. The plant made millions of artillery munitions.

  In 1968, Quaker built a plant in Danville, Illinois. It now makes Pearl Milling Company pancake mixes, Oat Squares, Quaker Oh's, Quisp, Chewy granola bars and Puffed Rice used as an ingredient elsewhere.

  A research and development facility in Barrington, Illinois, operated until 2022. After numerous acquisitions the site had been renamed, but it kept its research focus.

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• 7. Acquisitions and Spin-offs

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  In 1969, Quaker acquired the toy company Fisher-Price, then spun that division off in 1991.

  In 1971, the company financed the film Willy Wonka and the Chocolate Factory, based on Roald Dahl's children's novel Charlie and the Chocolate Factory. In return, Quaker obtained a license to use product names from the film for candy bars. The film was a box office disappointment at release. Paramount, its original distributor, eventually sold the rights back to Quaker. Having no involvement in the film business, Quaker then sold them to Warner Bros. The film became extremely popular in the 1980s through repeated television airings and home video sales.

  In 1972, Quaker bought Louis Marx and Company, which had made one quarter of all toys and trains manufactured in the mid-1950s. It sold the business after four years. In 1982, it bought US Games, a maker of games for the Atari 2600, which went out of business after one year. That same year it acquired Ardmore Farms, a Florida orange juice plant, which it owned until selling to Country Pure Foods in 1998.

  In 1983, Quaker bought Stokely-Van Camp, the maker of Van Camp's and Gatorade.

  In 1994, Quaker bought Snapple for 1.7 billion dollars. It sold the brand to Triarc in 1997 for 300 million dollars. Triarc sold it to Cadbury Schweppes in September 2000 for 1.45 billion dollars. In May 2008, Snapple was spun off to its current owners, Dr Pepper Snapple Group.

  In 1996, Quaker sold its frozen food business to Aurora Foods, which Pinnacle Foods bought in 2004.

  The brand lineup kept shifting. In 2014, Quaker Oh's was sold to Post and renamed Honey Ohs. In 2021, the Aunt Jemima line was rebranded as Pearl Milling Company.

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• 8. Controversies and Recalls

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  From 1946 to 1953, researchers from Quaker Oats, MIT and Harvard University ran experiments at the Walter E. Fernald State School. The goal was to learn how the body metabolizes minerals from cereals. Fernald was a residential institution housing mostly boys with disabilities.

  The school asked parents for permission to let their children join a Science Club. Members would take part in research and receive special privileges, including trips to baseball games. Parents were told their children would eat a diet high in nutrients. They were not told that the food contained radioactive calcium and iron, and the consent form said nothing about it. The findings were meant to support an advertising campaign.

  The company was later sued. On the 31st of December 1997, the lawsuit was settled when MIT and Quaker Oats agreed to pay 1.85 million dollars to the children who had been subjected to the experiments.

  In 2010, two California consumers filed a class action lawsuit. They alleged that Quaker marketed Chewy Granola Bars, Instant Oatmeal and Oatmeal to Go Bars as healthy even though they contained trans fat. The packaging used phrases such as "heart healthy", "wholesome" and "smart choices made easy". The complaint cited scientific evidence linking trans fat to coronary heart disease. In 2014, Quaker agreed to remove trans fats from its products at a cost of 1.4 million dollars. It denied that its labelling was false or misleading.

  In 2023, levels of chlormequat in oat-based foods, including Cheerios and Quaker Oats, were notably higher than in earlier years. Chlormequat is a pesticide known to cause reproductive and developmental issues in animals.

  From the 15th of December 2023, Quaker recalled more than 60 products over potential salmonella contamination. They included Cap'n Crunch, Oatmeal Squares, Gatorade protein bars, Chewy granola bars and granola cereals. The latest recall, announced on the 31st of January 2024, covered Quaker Chewy Dipps Llama Rama bars.

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