Benjamin Franklin briefly tried to promote oatmeal as a healthy breakfast option, but that went about as well as his efforts to make the turkey America’s national symbol, instead of the bald eagle.
To understand how unlikely Quaker Oats’ success was, it’s best to start with a famous literary insult from the 18th century.
Scots and horses
“A grain, which in England is generally given to horses, but in Scotland supports the people,” is how Samuel Johnson defined oats in his A Dictionary of the English Language, published in 1755.
Johnson was rude, but he wasn’t wrong. Scotland was one of the few places on either side of the Atlantic where oats were a popular food, instead of fodder for livestock. Not much had changed when James Stuart and his son Robert arrived in Cedar Rapids from Canada in 1873, looking for the perfect site for to build a mill. Together with local businessman George Douglas, the Stuarts founded the North Star Oatmeal Mill.
John Stuart was born in Scotland. So was Douglas. Most of North Star’s earliest output was exported to Scotland.
But the early oatmeal business wasn’t exclusively Scottish. The biggest player was Ferdinand Schumacher, the self-proclaimed “Oatmeal King of Akron, Ohio.” Schumacher, a German immigrant who believed Americans would embrace oatmeal as an inexpensive health food, opened the country’s first oatmeal mill in 1856.
Schumacher improved methods for milling oats, creating something more like the oatmeal served today, instead the depressing, paste-like gruel Samuel Johnson knew.
The American Cereal Company
Oatmeal was a tough business in the 19th century, and in 1888, Robert Stuart joined with six other mill owners, who had survived price wars, economic collapses, mill fires and widespread public indifference to oatmeal, to create the American Cereal Company. By that time, the elder Stuart had retired and Douglas had sold his ownership stake.
The president of the new company was a less-regal Schumacher (his largest mill burned down in 1886, almost destroying his business). Stuart, whose Cedar Rapids mill was the company’s second largest production facility, was made secretary-treasurer. But the most powerful person at American Cereal was the general manager, Henry Parsons Crowell.
Henry Parsons Crowell and Quaker Oats
Seven years before American Cereal was founded, Crowell purchased the bankrupt Quaker Mill in Ravenna, Ohio, largely because it had trademarked the name “Quaker Oats.” Crowell wasn’t a Quaker, and neither were the two men he bought the mill from. But all three understood the power of reputation.
Quakers had a reputation dating back to colonial days for honesty and decency. Food manufacturers didn’t. Much of the food available for purchase in the 19th century was tainted, moldy and occasionally toxic, and the federal government didn’t even try to regulate food safety until 1906. Crowell had ideas about how to use the Quaker reputation to sell oatmeal.
Oats were then sold in bulk by grocers, who kept them in barrels. In 1882, Crowell began selling Quaker Oats in boxes, with the reassuring image of a Quaker printed on the front. It was a success, partly because of the imagery, and partly because people wanted an alternative to the oat barrels, which attracted rats and mice. Crowell also launched the first national advertising campaign for a breakfast cereal, buying ads in magazines with nationwide circulation.
American Cereal adopted Crowell’s strategies, and boxed and sold its oat using the name Quaker Oats. As general manager, Crowell continued to introduce new ideas, such as printing recipes on boxes, trial size packages and advertising blitzes focused on individual cities. The ideas worked, and oatmeal became more popular.
As American Cereal grew, so did Crowell’s ambition.
From cylindrical boxes to Wonka bars
Following years of brutal corporate in-fighting with Schumacher and Stuart, Crowell took complete control of American Cereal by 1901. He created a new parent company for the business, Quaker Oats. He continued to push for innovative marketing schemes.
In 1908, the company introduced oatmeal cookies to the general public, by printing a recipe on its boxes. In 1915, the boxes changed shape to its now familiar cylinder, to make them visually distinct on a shelf. Quaker Oats offered its customers premiums ranging from the practical (a double boiler for anyone who mailed in $1 and a box label) to the entertaining (toys in the box) to the odd but eye-catching (a coupon for a 10-ft. by 10-ft. plot of land in Darrien, Connecticut).
As the company grew, it also diversified. In 1926, it made its first non-oatmeal acquisition, buying the Aunt Jemima pancake flour company. Over the decades it’s bought and sold many other companies, mostly food and beverage businesses, and diversified its own lines of breakfast cereals, as anyone who’s ever been in Cedar Rapids on “Crunch Berry day” knows.
The company’s last act of truly innovate marketing came almost 30 years after Crowell died. Concerned about declining sales in the late 1960s, Quaker Oats decided to launch a new line of candy. It made a deal to obtain licensing rights for candy inspired by Roald Dahl’s book, Charlie and the Chocolate Factory, in return for providing financing to make a movie version of the story. The results were Willy Wonka and the Chocolate Factory, starring University of Iowa alum Gene Wilder, and instant demand for Wonka bars and Everlasting Gobstoppers. Both the studio and the company kept quiet about Quaker Oats’ involvement, and the film’s role as a marketing tool for candy.
Crowell would have been pleased.
After a century in business, Quaker Oats was purchased by PepsiCo in 2001. The sale price for the company that convinced Americans oats were more than livestock fodder was $13.8 billion.