Lance, Inc. History
Charlotte, North Carolina 28273
Telephone: (704) 554-1421
Fax: (704) 554-5562
Incorporated: 1926 as Lance Packing Company
Sales: $576.3 million (2000)
Ticker Symbol: LNCE
NAIC: 311821 Cookie and Cracker Manufacturing; 311911 Roasted Nuts and Peanut Butter Manufacturing; 311919 Other Snack Food Manufacturing
Fresh, great-tasting snacks that are convenient to buy and easy to carry--these have been the keys to Lance's success since Philip Lance began the Company over eight decades ago. Now, with a renewed company-wide mission based on these founding principles, Lance continues to research and introduce new products, packaging, and distribution to make certain that customers are getting snacks that are always fresh, fast, filling, and satisfying. Today, whether you're at a grocery store or a downtown corner superette, you can enjoy the fresh taste of Lance, just as Philip Lance had intended back in 1913. Key Dates:
- Lance and his son-in-law, Salem A. Van Every, found Lance Packing Company.
- Mrs. Lance and daughter create peanut butter cracker sandwiches.
- Founder Lance dies in auto accident, and Van Every assumes control of the company; enterprise is incorporated as Lance Packing Company.
- Company reaches annual sales of $1 million.
- Lance begins baking its own crackers.
- Salem Van Every dies, and his son Philip takes over leadership of the company.
- Company introduces packaged saltine crackers for institutional use.
- The first Lance vending machine is placed on site.
- Annual sales reach $26 million.
- Company goes public.
- A new Lance vending machine accommodates entire line of Lance snacks.
- Philip Van Every retires as president and CEO and is succeeded by Glenn Rhodes, the first company head outside the family.
- Lance replaces the saturated fats in its products with vegetable oils.
- CEO Pete Sloan retires and is succeeded by J.W. 'Bill' Disher as chairman and president.
- Lance acquires Tamming Foods and Cape Cod Potato Chips.
Lance, Inc., headquartered in Charlotte, North Carolina, is one of the most profitable snack food makers in the United States. The company manufactures, markets, and distributes a variety of snack foods, including sandwich crackers, cookies, restaurant crackers and bread basket items, candy, chips, meat snacks, nuts, and cake items. These are packaged and sold in single, larger, and multi-pack servings under such brand names as Captain's Wafers and Toastchee. In addition to marketing products under its own brand names, Lance sells some of its snacks under private and third-party labels. The company makes about three-fourths of its products and purchases the remaining fourth from other manufacturers. It distributes its product line through a direct-store-delivery (DSD) system, third party carriers, and direct shipments via its own carriers. The company's larger customers include grocery chains and mass merchants, drug and convenience stores, food service brokers and institutions, vending operations, and government and military facilities. Lance markets its products across the United States as well as in Europe and parts of Canada. Although Lance is a public company, descendants of the founders hold about a 40 percent share of the business.
In 1913 Philip L. Lance and his son-in-law, Salem A. Van Every, founded the Lance Packing Company. They offered roasted peanuts to Charlotte, North Carolina, area merchants, as well as peanut butter, which they packed by hand. The business began when a customer asked Philip Lance, primarily a coffee dealer, to obtain 500 pounds of Virginia peanuts. The customer soon withdrew from the deal, but Lance was unwilling to disappoint the farmer who sold them to him. He roasted small quantities of the nuts himself on his kitchen stove and packaged them in brown paper bags which he sold for five cents a bag to passersby in downtown Charlotte.
Confident of providing a nutritious, profitable food, Lance bought a mechanical roaster and moved the business out of his home. A mill allowed him to supply merchants with both peanuts and peanut butter, which he spread on crackers for customers to sample. This led to an innovation: the first packaged peanut butter cracker sandwiches, reportedly invented by Lance's wife and his daughter, using Lance peanut butter and saltine crackers. At first the company sold their product door-to-door, but soon it gained an important client, a local grocery store. Demand steadily increased, necessitating a move to larger facilities in Charlotte. Soon the company's predilection for peanuts and for single-serving packages was well established. A soldier stationed at a nearby World War I training base provided the recipe for Lance's next snack food: peanut brittle.
1926--59: The Depression, World War II, and the Postwar Boom
After Philip Lance's death in an auto accident in 1926, Salem Van Every assumed control of the company and incorporated it. The company grew dramatically during this period, earning its first $1 million in sales in 1935 and the first $2 million in 1939. It began baking its own crackers in 1938, a change reflecting the increased scale of operations. Salem Van Every died that same year, and his son Phil became president.
While candy came to dominate the company's product line before World War II, wartime sugar rationing swayed Lance towards baked goods, specifically peanut butter sandwiches and cookies. The company's maintenance shop also helped the war effort by making certain tools, such as a wrench for attaching warheads to bombs. Phil Van Every's successor, his son, Philip Lance Van Every, brought a new management style to the company, hiring consultants and implementing a unique administration style called multiple management. However, the company reached a rare landmark in 1944, Lance's only year to date in which annual sales volume did not increase. This was undoubtedly precipitated by the austerity of wartime; postwar fortunes would rise again as new sales districts were organized and many operations were automated. Lance achieved an annual sales volume of $14 million in 1950, and the decade ended with annual sales at Lance of $26.5 million. A new line of packaged saltine crackers for institutional use introduced in 1953 proved an enduring success.
1960--80: Sustaining Growth and Diversification Despite Price Controls and Higher Operating Costs
The 1960s brought many changes. The company, which had been 80 percent owned by the Van Every family, made a large public share offering on December 7, 1961. In order to further diversify, a committee was formed to locate potential acquisitions, and Bullock Manufacturing Company in Conyers, Georgia, was acquired to produce potato chips. Although the unit posted a loss that year, it offered Lance an entrance into the chip business. A record 87,000 accounts were opened in 1962 through 96 sales headquarters. Lance operated in 23 states at this point and was prompted to move its plant to a new 231-acre site. The next year, Lance set its record for lowest cost of delivery.
The last half of the 1960s was particularly productive for Lance, as the company spent $2.5 million to expand its Charlotte plant. After Bullock Manufacturing became profitable in 1968, Lance acquired Food Processors, Inc., a Wilson, North Carolina, sweet potato plant. The next year a distribution center in Greenville, Texas, was completed to facilitate service to the southwestern sales territories. Revenues in 1969 were $57.8 million, up from $26.5 million in 1960, while earnings per share increased from $0.72 to $1.81.
Since the company's beginning, all of its individually-packaged products, including the very first roasted peanuts, had sold for five cents each. On March 6, 1970, the last of the nickel merchandise was produced, and henceforth the snacks would sell for a dime apiece. Nevertheless, the company continued to add new sales territories, totaling 1,111 in 1970.
The following year, a new vending machine was developed capable of carrying any item in the company's line of snacks. To meet the increase in demand, the manufacturing area of the company's plants was increased to 485,000 square feet with the addition of a 15,000-square-foot candy department. Plans were drawn for a new potato chip plant and a new baking plant in 1971. Over the next two years, the company sold Food Processors, Inc., and replaced the Georgia chip plant with a new 60,000-square-foot facility in Charlotte. Another 25,000 square feet of space was added for truck maintenance and shipping functions. The same year, Board Chairman Phil Van Every retired and was replaced by Glenn Rhodes.
The company was shaken in 1973 by high materials costs and federal price controls. Newly acquired Tri-Plas, Inc., a plastic food container manufacturer, performed poorly at first. Another major cost was the energy required by the new factory space. In 1974, federal price controls were removed and the escalation in raw materials prices slowed. The company acquired more manufacturing capabilities: a 23,600 square foot plant in Arlington, Texas, for potato chip production and Hancock's Old Fashion Country Ham of Franklinville, North Carolina. Although demand was so high that sales expansion was limited for part of the year, 75 new territories were created, down from 125 the previous year. This came in spite of a price increase of the snack line from ten cents to 15 cents, which also required retooling of the vending machines.
In the mid-1970s, concerns over energy availability prompted Lance to install propane gas storage in its plants, providing increased energy sources. In 1976, a development and exploration partnership was formed with C & K Petroleum Co., Inc. of Houston, Texas, in order to deal with the extreme shortage of natural gas that had developed by that time. The company also made efforts to conserve as much as possible. Although unprecedented pork prices hurt Hancock Ham, the Tri-Plas subsidiary continued to grow. A.F. 'Pete' Sloan succeeded the retiring Glenn Rhodes as chairman of the board.
Sales territory continued to grow in the late 1970s, expanding into New England and the Great Lakes region. The company bought a 44,431-square-foot factory 25 miles from Charlotte for its Tri-Plas subsidiary. Although rising energy costs remained a prime concern, increasingly expensive packing materials also spawned a major conservation effort. However, sales and earnings continued to rise, perhaps reflecting a new 20 cent snack price. Lance's Charlotte plant was expanded yet again, adding high-speed wrapping machines, and the Midwest Biscuit Company of Burlington, Iowa, was purchased. The new subsidiary supplied midwestern grocery stores with crackers and cookies, mostly under private labels. Lance also created an audiovisual studio dedicated to the production of training materials in 1979, and bought a new site for its Tri-Plas west coast operations in 1980.
1980--89: Facing Challenges
The 1980s proved a challenging period from the beginning. Due to a dismal domestic harvest, peanuts had to be imported for the first time. In response to the shortage, the company's packaged salted peanuts were diluted with sesame sticks, and its Peanut Bar and Redskins snacks were temporarily dropped from the product line. Even after the next year's improved harvest, government price supports kept prices high. In March 1980 the suggested retail price of Lance snack increased a nickel to 25 cents. However, the combination of all these factors resulted in net sales of $249.3 million for 1980.
The company concentrated on construction in 1981, completing or starting a vending machine repair shop, an efficient peanut roaster room, and 52,000 additional square feet of shipping space in Greenville, Texas. Lance modernized its fleet with more efficient tractors and larger (45 foot) trailers. A new convenience pack of 'Captain's Wafers,' salted crackers commonly found at restaurant salad bars, helped Lance break into supermarket sales. Soon the snacks were packaged in groups of eight, which became known as Home Paks, for this market, in spite of some reluctance by Pete Sloan, who believed 'a supermarket sale takes away a vending machine sale.' (In the 1990s, 'Club Paks' containing 18 snacks would be offered through mass merchandisers.) In spite of a lackluster economy, 1982 proved successful, owing partly to the sale of Hancock's Old Fashion Country Ham to Smithfield Packing Company.
In spite of increased competition, Lance continued to prosper for the rest of the 1980s. Net annual sales increased 9.4 percent in 1984 to $337.4 million, spurred by more generous incentives. New sales districts continued to be added, and several new snacks were developed. Lance did acquire a Melbane, North Carolina, granola producer, Nutrition-Pak Corporation, but by this time the market for granola bars had peaked, and the unit was closed in 1988. However, a taste for healthier snacks remained. A launch of reformulated snacks dubbed the 'Snack Right' program coincided, more or less, with Lance's 75th anniversary. Saturated fats and cholesterol were the targets of this campaign. The company even changed the way it labeled nutritional information to specify the different types of fat (saturated, polyunsaturated, etc.) that were included. Manufacturing capacity continued to be increased in the areas of peanuts and potato chips, which also began to be packaged in 'family size' bags.
1990--97: New Challenges and Opportunities
Like the preceding decade, the 1990s began with serious challenges which Lance met successfully. Its large number of customers provided some protection from the economic recession. Company social concerns were focused on recycling programs throughout its facilities and offices. After his retirement in April 1990, Chairman and CEO Pete Sloan was succeeded by J.W. 'Bill' Disher, who was elected chairman and president. Technological advances during this time included the successful implementation of automated route accounting, which, with the aid of hand-held computers, enhanced the productivity of sales representatives. Regional offices were consolidated into the central accounting department, and to remain competitive, new attention was given to marketing research and Leslie Advertising of Greenville, South Carolina, was retained to develop a new marketing plan. In 1990, chocolate bars, including some Mars brand products, were successfully tested in vending machines, and Lance began producing its own. Production capacity was increased with the purchase of a Columbia, South Carolina, plant, which began operations as Vista Bakery late in 1992.
Even with the employment of new marketing techniques, the individual serving sector of the market, Lance's home ground since the beginning, continued to enable the company to keep operations simple and provide a diversified clientele, tempering economic fluctuations. Moreover, the company managed to keep costs down, earning the loyalty of its many blue-collar consumers, in part by usually only introducing new products when similar ones proved successful for competitors. Although the company traditionally relied on availability, not advertising, as a main marketing tool, it rediscovered television and radio advertising in the mid-1990s and used these media to support its expansion into supermarkets.
The company also undertook some other promotional initiatives. For example, in the mid-1990s it began sponsoring race car drivers in the Busch Grand National Series, first sponsoring Bobby Hillin, Jr. Then, in 1996, along with stock-car racing great Richard Petty, Lance co-sponsored Rodney Combs in the same series. Later it would sponsor yet another driver, Shane Hall. Also in 1996, it sent some of its products (Toastchee and Van-O-Lunch) into the stratosphere aboard the space shuttle Columbia in a 6.5 million mile journey, orbiting the earth 252 times. Finally, Lance redesigned its logo and packaging, adding its tradition of 'freshness' motto to these items.
Despite all these measures, Lance had to weather a slump that had hit it fairly hard in 1995, when it ended the year with a decline in revenue from $488 million in 1994 to $477.5 million and reported a $6.9 million net income loss. In 1996, the company took some severe steps to correct the problem, shuttering two plants and laying off workers for the first time in its history. It also reshuffled its management. For the first time, in hiring Scott Lea as chairman, Lance employed an outsider to preside over the board. It also acquired new executives from Coca-Cola, Pepperidge Farms, Nabisco, and Tropicana. The strategy proved successful; in 1996 the company returned to profitability, which it maintained for the rest of the decade, despite the fact that sales remained sluggish through 1998.
Lance, in an effort to increase its sales, also looked to new markets. Notably, in 1997, it expanded its territory, extending its presence to the western United States as well as abroad&mdashø Puerto Rico, Aruba, Jamaica, Dominican Republic, England, China, and Western Europe. It also looked to increase sales by introducing new products, some of which were extensions or repackaging of existing lines.
1998 and Beyond: Continued Innovation and Expansion
In 1998, Lance, to achieve greater efficiency, implemented a new route management information system for its direct-store-delivery (DSD) operations. It also completed the distribution of new hand-held computers used by the DSD field sales personnel. Additional improvements were made to these systems in 1999. In that year, the company also streamlined the DSD organization by employing a segmented route structure, using metro distribution centers, and setting up a route alignment information system. These measures were undertaken in support of Lance's plan for increasing sales and profits.
Also in 1999, Lance made some significant purchases. First it acquired Tamming Foods Ltd., a Canadian sugar water manufacturer headquartered in Waterloo, Ontario. Tamming, selling its products in Canada, Mexico, and the United States, had reported annual sales of $20 million in 1998. Next, Lance acquired Cape Cod Potato Chip Company, Inc., based in Hyannis, Massachusetts. Lance bought Cape Cod, which specialized in making salty snacks, from SMS Brands LLC, a food product holding company. Cape Cod had generated about $30 million in sales in 1998. Additionally, Lance negotiated an agreement with China Peregrine (renamed China Premium Food Corp.) whereby Lance would export its private label snacks to China.
In addition to making acquisitions, Lance continued to seek ways of extending its business operations and thereby increasing its sales. For example, in 2000, it signed an agreement with Proctor & Gamble under which Lance became the distributor of P & G's Pringles brand potato chips in Lance's core market areas. By allowing P & G to utilize Lance's efficient DSD system, the arrangement benefitted both companies.
Although Lance would continue to face competition from industry heavies like Frito-Lay, Keebler, and Nabisco--and even makers of its signature sandwich crackers, Austin and Tom's--its main problem was actually tied to its long-standing success. A historically debt-free company, through the 1990s Lance was seen as an alluring buyout target, and would likely remain so in the first decade of the 21st century.
Principal Subsidiaries: Cape Cod Potato Chip Co.; Vista Bakery, Inc.
Principal Competitors: Frito-Lay, Inc.; Golden Enterprises, Inc.; Keebler Foods Company; Kraft Foods Inc.; Proctor & Gamble Company.
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Source: International Directory of Company Histories, Vol. 41. St. James Press, 2001.comments powered by Disqus