Rich Products Corporation History
Buffalo, New York 14213
Telephone: (716) 878-8000
Fax: (716) 878-8765
Sales: $1.5 billion (1999 est.)
NAIC: 311412 Frozen Specialty Food Manufacturing; 311514 Dry, Condensed, and Evaporated Dairy Product Manufacturing; 311612 Meat Processed from Carcasses; 311712 Fresh and Frozen Seafood Processing; 311813 Frozen Cakes, Pies, and Other Pastries Manufacturing; 311822 Flour Mixes and Dough Manufacturing from Purchased Flour; 711211 Sports Teams and Clubs
The Rich Mission strives to set new standards of excellence in customer satisfaction and to achieve new levels of competitive success in every category of business in which we operate. We will achieve this by working together as a team to: Impress Our Customers. Provide exceptional service to our external and internal customers the first time and every time. Improve, Improve, Improve! Continuously improve the quality and value of the goods we produce and services we provide. Empower People. Unleash the talents of all our Associates by creating an environment that is safe, that recognizes and rewards their achievements, and encourages their participation and growth. Work Smarter. Drive out all waste of time, effort and material--all the barriers and extra steps that keep us from doing our jobs right. Do The Right Thing! Maintain the highest standards of integrity and ethical conduct and behave as good citizens in our communities. Think Outside The Box. Challenge the status quo and look for opportunities to make breakthrough innovations in Products, Processes & Services. Key Dates:
- Robert E. Rich, Sr., makes the discovery that leads to the introduction of Rich's Whip Topping.
- Coffee Rich nondairy creamer is introduced.
- Rich Products Corporation is incorporated.
- Frozen baked goods are added to the product line.
- Company expands into frozen seafood with the acquisition of SeaPak Corporation.
- Company introduces Freeze Flo, a process that allows products to remain soft while frozen.
- Casa Di Bertacchi, producer of frozen Italian specialties, is acquired.
- Company expands outside food with the purchase of the Buffalo Bisons minor league baseball team.
- Company expands into barbecue and specialty meats through the purchase of Byron's, Inc.
- Rich swaps the rights to its retail nondairy product line for the Jon Donaire specialty dessert business of Suiza Foods.
- J.W. Allen, maker of frozen cakes, bakery mixes, and icings, is acquired.
Rich Products Corporation entered the 21st century as one of the leading frozen food manufacturers in the United States. Selling its more than 2,000 products largely to the foodservice and in-store bakery sectors, the company specializes in toppings, icings, desserts, cake mixes, breads, rolls, sweet goods, doughs, Italian specialties, seafood, and barbecue meats. Rich Products pioneered the nondairy industry with a soybean-based whipping cream, and later became known for Coffee Rich, a cream substitute used in coffee. The rights to these products have been licensed to Suiza Foods Corporation. Another alliance is with Sara Lee Corporation, whereby Rich provides sales, marketing, and distribution for all Sara Lee in-store bakery goods. The production facilities of Rich Products include ten plants in the United States and five located elsewhere, namely Canada, Mexico, South Africa, India, and China. Privately owned by the Rich family since its founding, Rich Products also owns a number of nonfood businesses, including three minor league baseball teams--the Buffalo Bisons, Wichita Wranglers, and Jamestown Jammers--and the Palm Beach National Golf and Country Club located in West Palm Beach, Florida.
Roots in Nondairy Innovation
Robert E. Rich, Sr., first learned about product substitution during World War II through the War Food Administration. After the war, he put that knowledge to use and directed a laboratory team to search for a vegetable-based replacement for whipped cream. His product was to be based on soybeans. In 1945 Rich was on his way to visit a distributor on Long Island and packed some of his soybean-based whipping cream in dry ice for the long train ride from Buffalo, New York. He had intended just to keep the cream cool, but it was frozen solid when he arrived in Long Island. When Rich mashed the frozen mass, he found that it still whipped up beautifully. The discovery launched the beginning of a frozen nondairy products industry.
Rich's innovation, named Rich's Whip Topping, was lauded as "the miracle cream from the soya bean." This was 1945, when the frozen food industry was burgeoning. Rather than marketing to supermarkets, Rich targeted his product to the foodservice sector, reasoning that restaurants, schools, hospitals, and other cost-conscious operators seemed a likely audience for the product. Rich quietly built solid markets, carving a niche that remains unchallenged.
During its early years, Rich continued to create variations on its Whip Topping. In the 1950s the company came out with the first commercial line of frozen cream puffs and eclairs. Its next innovation came in 1961 with the development of Coffee Rich, the nation's first frozen nondairy creamer. Since its introduction, Coffee Rich has dominated the market, claiming a 90 percent share into the 1980s. The product was also ahead of its time in health considerations: along with Whip Topping, Coffee Rich is the only 100 percent cholesterol-free, low-fat cream product distributed nationally. As soybean oil is low in saturated fats, Coffee Rich meets American Heart Association guidelines where most other nondairy creamers fail because they are made from high-fat tropical oils.
In the 1960s Rich Products began marketing frozen dough. While supermarkets wanted the aroma of fresh baked goods tempting shoppers, it was too much trouble for them to set up expensive bakeries on their facilities, and frozen dough met their needs perfectly. In the early 1960s, Rich began construction on a nondairy plant in Fort Erie, Ontario, just across the Niagara River from Rich's Buffalo headquarters. This plant is still in operation, producing both frozen dough and nondairy products. By the mid-1980s, Rich was operating what was the world's largest frozen dough plant in Murfreesboro, Tennessee. The dough--for breads, rolls, and pastries--was sold to supermarket chains throughout the country. Rich Products Corporation was incorporated in 1965. In 1969 Rich acquired Elm Tree Baking Company in Appleton, Wisconsin, adding frozen baked goods to its product line.
Aggressive Expansion in the 1970s and 1980s
The 1970s were marked by spurts of growth for Rich. To keep up with product demand, Rich had to expand its production capabilities rapidly. During this time, Rich acquired nine plants, including Federal Bakers Supply in Garfield, New Jersey, and L.K. Baker Company in Columbus, Ohio. Other operations were purchased in Winchester, Virginia, and Claremont and Fresno, California. Rich also purchased Palmer Frozen Foods, a regional frozen bakery goods producer and distributor in eastern Pennsylvania.
Rich also expanded its product line to seafood specialties, soup bases, and gravy mixes. As late as 1975, however, about 71 percent of Rich's revenues were still coming from nondairy replacement products. The expansion into seafood began in 1976 with the acquisition of SeaPak Corporation, which had plants in Brunswick, Georgia, and Brownsville, Texas.
Rich launched an aggressive campaign of growth through acquisition that saw its sales quadruple over the next eight years. Acquisitions included the H.J. Heinz Company's frozen dessert plant in Lake City, Pennsylvania, contributing cream pies and cakes to Rich's line, and PREAM, a nondairy coffee powder, from Early California Foods of Los Angeles. By 1982 company sales were at $400 million, and sales of nondairy replacement products accounted for about half of those revenues.
Succeeded by his son, Robert Rich, Jr., as president of the company, Rich, Sr., remained chairman. Together they developed an unusual acquisition strategy, giving preference to other father-and-son companies. Rich, Sr., contended that all the company's takeovers were friendly and that most of their acquisitions' owners stayed on afterward. Other acquisitions in the 1980s included the former Lloyd J. Harris plant, a Saugatuck, Michigan-based pie producer, and Casa Di Bertacchi Corporation of Vineland, New Jersey, a producer of frozen Italian pasta and meat specialties purchased in 1982.
In 1980 the company introduced a process, called Freeze Flo, that allowed products to remain soft while frozen, spurring the development of products such as frozen pie fillings that could be eaten right out of the freezer. The process took seven years and nearly $5 million to develop. By 1983 it held 39 patents and was bringing in $2.5 million a year in licensing to 50 companies, mostly overseas. Rich incorporated Freeze Flo into many of its own new products, such as Rich's Grand America Ice Cream, the only ice cream on the market that can be shipped and stored at zero degrees Fahrenheit.
In 1983 Rich acquired Nashville's Tennessee Doughnut Company and Antoinetta's Frozen Italian Specialties of Harleysville, Pennsylvania. The company also purchased the Class AAA Buffalo Bisons baseball franchise, based in Rich's headquarters city. The team went on to set new minor league attendance records into the 1990s, becoming the best-drawing minor league baseball team in the nation. In 1984 Rich acquired a second baseball franchise, the Class AA Wichita (Kansas) Wranglers.
In 1986 Rich entered into a joint venture with J.R. Wood Inc., of Atwater, California. Together they launched Rich Fruit Pak, a frozen fruit processing plant in Escalon, California. The company formed Rich Communications Corporation in 1987. This served as the parent company to a pair of Western New York radio stations: WGR-AM Newsradio 550 and WGR-FM "97 Rock." These stations supplied the area with broadcasts of the NFL Buffalo Bills, the NHL Buffalo Sabres, and the Bisons. In 1988 Rich's frozen food line added barbeque and specialty meats with the acquisition of Byron's, Inc., of Gallatin, Tennessee.
These additions notwithstanding, the company's plan to expand via acquisition of family-owned food companies was slowed when the numerous leveraged buyouts of the 1980s pushed prices too high. Rich avoided the large debts that were often necessary to complete such transactions. Acquisitions slowed, and Rich concentrated on in-house development of a technology to make cholesterol-free frozen foods.
Expanding Internationally in the 1990s
In 1990, in its 32nd acquisition since 1969, Rich acquired the Blue Bird Baking Company, a major producer of pies and cakes. Having virtually reached its operating capacity, Rich planned to increase the capacity in six of its nine bakery manufacturing plants by 35 percent in order to make room for new products. Rich launched a multimillion-dollar capital expenditure plan that included plant expansions and renovations in California, Ohio, Wisconsin, Pennsylvania, Tennessee, and Virginia. In the spring of 1990, Rich built a $17 million research and development center.
In 1992 Rich acquired the Seneau Baking Company of Marlborough, Massachusetts, which became Rich Marlborough, a state-of-the-art bakery products manufacturing plant. The company also acknowledged the strength of its Mexican market that year by opening a broker's office in Guadalajara, joining the Rich offices in Monterrey and Mexico City. Whipped toppings, fruit fillings, glazes, and Better Creme icings were some of the company's best-sellers in Mexico. By that time, Rich also had offices in Japan, Singapore, Australia, and the United Kingdom.
International expansion continued in 1993 with the establishment of Rich Products of South Africa, which began making and distributing frozen dough products. The following year the company purchased a manufacturing plant in Toluca, Mexico, in order to begin making frozen dough in that nation. Also in 1994 Rich Products formed a third baseball franchise in Jamestown, New York, the Jamestown Jammers, which became a Class A affiliate of the Detroit Tigers playing in the New York-Penn League.
The growth outside the United States was key to meeting a new company goal of increasing revenues by 25 percent per year. By 1995, the year the company celebrated its 50th year in business, sales had reached $1 billion. That year, Rich expanded its manufacturing capacity in the United States through the opening of a nondairy products plant in Niles, Illinois. The company also expanded into the Indian market that year through a joint venture with Kwality Foods, the largest maker of ice cream in India. Called Rich Kwality Products Ltd., the venture was established to make nondairy products for distribution in India. Rich Products also established a joint venture with UFM of Thailand called Rich Products Manufacturing (Thailand) Co., Ltd. for the manufacture of frozen dough products. Back home, Rich entered into an alliance with Sara Lee Corporation in 1997, whereby Rich began marketing Sara Lee frozen cake and dessert products to in-store bakeries.
During 1998 Rich expanded in China through the establishment of a wholly owned subsidiary that opened a new state-of-the-art nondairy facility in Suzhou, China. This plant was particularly important for increasing production, and distribution throughout Asia, of the newly introduced Rich's Gold Label Whip Topping, which quickly became the leading nondairy topping in the region. In mid-1998 Rich Products entered into an asset swap with Suiza Foods Corporation, a leading fresh milk and dairy food company based in Dallas. Rich granted Suiza the world rights (excepting India and Israel) to market and sell its retail refrigerated and frozen creamer lines, which included the Coffee Rich, Farm Rich, Poly Rich, and Rich Whip brands. Rich retained ownership of both the brands and the plants where the products were made. In return, Rich received from Suiza control of the Jon Donaire line of fully prepared frozen desserts. The Jon Donaire line was marketed to the foodservice and in-store bakery sectors, which fit in with Rich's strategic direction involving a de-emphasis of retail sales. Owing to the firm's product line expansion over the decades, less than five percent of Rich's sales were generated by its line of nondairy whipped toppings and creamers by the time of the asset swap.
William G. Gisel, Jr., was named to the new position of chief operating officer of Rich Products in 1999. Gisel had joined the company in 1982 with a position in the legal department, then eventually became a key player in Rich's international expansion. In 1996 he was named president of Rich Products Food Group. As COO, Gisel became the highest ranking nonfamily member in company history. Remaining chairman and president of the company were Robert Rich, Sr., and Robert Rich, Jr., respectively. Meanwhile, a third generation of Rich family members were reaching management positions at the family-controlled firm, including three children of Rich, Jr.
There were a number of additional developments in 1999 that also helped set the stage for the company at the dawn of the 21st century. The pie plant located in Saugatuck, Michigan, was sold. Major improvements were made to two company plants: the nondairy plant in Buffalo and a bakery facility in Hilliard, Ohio, where the industry's highest capacity donut production line was installed through a multimillion-dollar project. Then, in late 1999, Rich Products acquired J.W. Allen & Co., a family-owned firm based in Wheeling, Illinois. J.W. Allen produced about 400 products at its plants in Wheeling and in Morristown, Tennessee, including frozen cakes, bakery mixes, and icings. The products were primarily marketed to in-store bakeries. The addition of J.W. Allen's $110 million in annual sales would increase Rich Products' revenues to more than $1.5 billion. As it looked toward the new century with no intention of being acquired itself or of going public, Rich Products Corporation was seeking additional overseas expansion opportunities, venturing into e-commerce through an initiative where clients could purchase such products as Byron's barbecue sauce, and pursuing the development of new products, most notably a new line of specialty drinks, including fruit smoothies, nutritional drinks, and coffee-based concoctions.
Principal Subsidiaries: Rich-SeaPak Corporation; Casa Di Bertacchi Corporation; J.W. Allen & Co.; Byron's, Inc.
Principal Divisions: Food Service Division; Bakery/Deli Division; International Division.
Principal Competitors: Diageo plc; H.J. Heinz Company; Kraft Foods, Inc.; Nabisco Holdings Corp.; Nestlé S.A.; The Pillsbury Company; The Quaker Oats Company; Sara Lee Corporation; Unilever.
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Source: International Directory of Company Histories, Vol. 38. St. James Press, 2001.