GERBER PRODUCTS COMPANY

When Gerber's baby food was first introduced in 1928 the company was still known as the Fremont Canning Company. Based in rural Fremont, Michigan the company was started in 1901 by Frank Gerber and his father. The original idea of manufacturing and selling strained baby foods came from Dorothy Gerber, wife of Frank's son Daniel, who reasoned that such a product would help end the tedious chore of cooking, mashing, and preparing solid foods for infants.

Before launching the product Frank and Daniel Gerber undertook an extensive marketing research campaign. They tested the product, contacted nutrition experts, distributed samples, and conducted follow-up interviews. The Gerbers' careful implementation of the "baby food" concept laid a solid foundation for the company that would dominate baby products for the rest of the century.

The company's first-year sales of the baby food were boosted by an innovative coupon redemption program. The campaign resulted in national distribution of the product within six months, and first-year sales of 590,000 cans generated revenues of $345,000. The Gerbers created a new industry that had previously been served by pharmacists, and soon there were numerous competitors. By 1935 more than 60 other manufacturers had introduced their own baby food products.

Fremont Canning was able to hold its market lead because it had established the Gerber brand's reputation for quality and expert-backed research. The product's logo, the "Gerber Baby," was already famous and the company's research and education department flooded the market with useful pamphlets on parenting, feeding, and child psychology. Dorothy Gerber became a model spokesperson through her widely read newspaper column, "Bringing Up Baby."

The baby-food producer matured in the 1940s and in 1941 the company name was changed to Gerber Products Company. With the post-World War II baby boom, Gerber went from selling one million cans of baby food a week in 1941 to two million cans a day in 1948. It was during the 1940s that Gerber began packaging baby food in jars instead of in tin cans.

During the 1950s Gerber added three production plants. Frank Gerber died in 1952, and Daniel Gerber assumed leadership of the company. Under Daniel Gerber the company began advertising on television, launched a toy line in 1955, became listed on the New York Stock Exchange in 1956, opened a Mexican subsidiary in 1959, and introduced a line of baby-related products in 1965. In the 1960s Gerber introduced "safety button caps," the first tamper-evident caps of their kind. When Daniel Gerber died in 1974 the company was the world's largest baby-food manufacturer with sales of $278 million and a domestic market share of nearly 70 percent.

In the late 1970s the company successfully defended itself against a hostile takeover. In 1979, with birth rates declining, it launched a major diversification campaign acquiring freight carrier, furniture, toy, and other subsidiaries. By 1989, however, Gerber had divested most of these fringe ventures to refocus on its core business: baby food, baby care, and baby clothing.

Perhaps the biggest threats to Gerber during the 1980s were two public relations crises in 1984 and in 1986, both involving allegations of the presence of glass fragments in jars of baby food. In the first instance Gerber regained public confidence by recalling 550,000 jars in a 15-state region as a cautionary action. In the second instance the company chose the less popular tactic of cooperating with investigators, but otherwise remaining silent. As a result, profits dropped from $69 million in 1985 to $54 million in 1987.

During this time the company's leadership changed hands several times with former Carnation senior vice president Alfred A. Piergallini eventually taking over as chief executive officer (CEO) in 1988. He sustained Gerber's reorientation through a "superbrand" marketing strategy. A new Tropical line of baby foods was introduced in 1991, and the Gerber Graduates line for children past 15 months of age was introduced in 1992. Gerber also entered international markets in the early 1990s, noting that 98 percent of the world's births took place outside the United States.

By 1994, after struggling with severe price-cutting by its competitors and unprofitable sidelines, Gerber was ready for a takeover. After seeking a suitable buyer, Gerber announced that it would be purchased by Sandoz Ltd., a Swiss pharmaceutical giant, for $3.7 billion. Gerber was sold for a high premium, with Sandoz paying more than 50 percent above the going price for the company's stock.

In 1995 Gerber entered the adult nutrition market with a nutritional supplement drink called Resource. The product had originally been marketed by Sandoz to hospitals and nursing homes. In 1996 Gerber's sterling reputation was challenged by the Center for Science in the Public Interest, which disputed some of Gerber's health claims. As a result, Gerber announced it would reformulate its recipes taking out starch and sugar. In 1997 Gerber updated its labels and introduced a new organic line of baby food. A 1998 survey commissioned by the WPP Group concluded that Gerber had the highest consumer loyalty rating in the United States. At the end of 1998 Gerber announced it was moving its corporate headquarters from Fremont to Summit, New Jersey, as part of a reorganization by its parent company, Novartis AS.

GERBER PRODUCTS COMPANY

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