Kraft Foods Inc. () was a multinational confectionery, food and beverage conglomerate. It marketed many brands in more than 170 countries. Twelve of its brands annually earned more than $1 billion worldwide: Cadbury, Jacobs, Kraft, LU, Maxwell House, Milka, Nabisco, Oreo, Oscar Mayer, Philadelphia, Trident, and Tang. Forty of its brands were at least a century old.
The company was headquartered in Northfield, Illinois, near Chicago.
Kraft was listed on the New York Stock Exchange and became a component of the Dow Jones Industrial Average on September 22, 2008, replacing the American International Group. In August 2011, the company announced plans to split into a North American grocery products business and a faster-growing global snacks company. The snacks company, Mondelez International Inc., is recognized as the legal successor to the old Kraft Foods Inc., while the grocery company took over the Kraft Foods name, and is now a part of Kraft Heinz.
History
Precursor Kraft Foods traced its roots to the National Dairy Products Corporation, formed on December 10, 1923, by Edward E. Rieck and Thomas H. McInerney. The firm was initially set up to execute on a rollup strategy in the fragmented United States ice cream industry. Through acquisitions it expanded into a full range of dairy products. By 1930 it was the largest dairy company in the United States and the world, exceeding Borden.
McInnerney operated the Hydrox Corporation, an ice cream company located in Chicago, Illinois. In 1923 he went to Wall Street to convince investment bankers there to finance his scheme for consolidating the United States ice cream industry. He initially found "hard sledding" with one banker saying the dairy industry "lacked dignity". He persevered and convinced a consortium including Goldman Sachs and Lehman Brothers to finance a roll-up strategy.
As a result of his efforts, National Dairy Products Corporation was formed in 1923 in a merger of McInnerney's Hydrox with Rieck McJunkin Dairy Co of Pittsburgh, Pennsylvania. The resulting firm was then listed on the New York Stock Exchange with the offer of 125,000 shares having been oversubscribed.
The firm grew quickly through a large number of acquisitions. As is typical in a roll-up strategy, acquisitions were primarily for stock in National rather than cash. National Dairy Products Corporation acquired more than 55 firms between 1923 and 1931, with a few notable entities among those being: Year Firm Sector Location 1924 W.E. Hoffman Ice cream Pennsylvania 1925 Dunkin Ice Cream Ice cream Illinois 1925 Sheffield Farms Fluid milk, ice cream, other New York 1926 Breyer's Ice Cream (dessert products currently owned by Unilever) Ice cream Pennsylvania 1928 Breakstone Brothers Fluid milk, cheese New York 1928 General Ice Cream Ice cream New York, East Coast 1929 Hiland Dairy Fluid milk, other Kentucky 1930 Kraft-Phenix Cheese, other US, international 1931 Consolidated Dairy Products Ice cream, other dairy New York, New Jersey
Beginning
Born in Stevensville, Ontario, Canada, in 1874, James L. Kraft immigrated to the United States in 1903 and started a wholesale door-to-door cheese business in Chicago; its first year of operations was "dismal", losing US$3,000 and a horse. It then took hold and Kraft was joined by his four brothers to form J.L. Kraft and Bros. Company in 1909. As early as 1911, circulars and advertisements were in use by the company.
In 1912, the company established its New York City headquarters to prepare for its international expansion. By 1914, 31 varieties of cheese were sold around the U.S. because of heavy product development, expansion by marketing, and opening a wholly owned cheese factory in Stockton, Illinois.
In 1915, the company invented pasteurized processed cheese that did not need refrigeration, thus giving a longer shelf life than conventional cheese. The process was patented in 1916 and about six million pounds of the product were sold to the U.S. Army for military rations during World War I.
In 1916, the company began national advertising and had made its first acquisition—a Canadian cheese company.
In 1924, the company changed its name to Kraft Cheese Company and listed on the Chicago Stock Exchange. In 1925, Marye Dahnke began her career at Kraft as the company home economist, the first woman for that sector of the food industry.
In 1926, Kraft was listed on the New York Stock Exchange. The listing strengthened the company’s national profile and provided additional capital for expanding its manufacturing and distribution network.
From the mid‑1920s through 1930, Kraft acquired a number of regional dairy and cheese firms as it expanded its national production network. The table below summarizes the acquisitions documented in a judicial document This citation refers to the accompanying materials (corporate acquisition list on p. 526)., official corporate announcements, and newspaper coverage. "The companies acquired are the Southern Dairies, Inc.; the Tuttle Cheese Company. the business and assets of John E. Cain, Crawford Farms, the Gelfand Manufacturing Company, the Henard Mayonnaise Company, the Missoula Creamery, Inc.; the Red Rock Dairy, the Sauquoit Vallet Dairy Company, Inc., and the Sentinel Creamery, Inc." "The companies acquired are the Tuttle Cheese company of Stockton, Cal., Southern Dairies, Inc.; John C. Cain [sic], Cambridge, Mass.: Crawford Farms, Millbrook, N.Y.; Gelfand Manufacturing company, Baltimore; Hennard [sic] Mayonnaise company of Nashville, Atlanta, and Dallas; Missoula Creamery, Inc., Missoula, Mont.; Red Rock Dairy, Portland, Ore.; Sauquoit Valley Dairy company, with properties in several cities and towns in New York state, and the Sentinel Creamery company of Missoula, Mont."