HISTORY OF THE GERBER COMPANY

Prepared for

Ms. Judith A. Scharle

July 19, 2004

E. Pearson * S. Beachum * V. Passaris * B. Reaser * J. Virden * C. Watson

COMPANY B

MEMORANDUM

TO: Ms. Judith A. Scharle, Vice President of Research

FROM: Group B Research Department

DATE: July 19, 2004

SUBJECT: History of the Gerber Company.

We are pleased to submit the report on the history of the Gerber Company that you requested on July 4, 2004. The purpose of this report is to inform you on the past and present evolutions of the company. The content of this report concentrates on the significant products and services of Gerber.

Gerber is a leading producer and marketer of infant products in the United States. Though Gerber is best known for baby food products, they expanded their market to include a baby care line, life insurance and children’s clothing. Their food products are labeled in 16 different languages and distributed to 80 countries. Their products are known for their high quality and its name is well known to most consumers for the past seventy-six years.

1928-1950

The baby food concept began in the kitchen of Dorothy and Daniel Gerber in 1927. The Gerber’s owned the Fremont Canning Company that produced a line of canned fruits and vegetables. So by 1928, the small kitchen operation moved to the canning company and the Gerber Baby Food Company was formed.

1951-1970

Gerber began using a flavor enhancer in their baby food line called monosodium glutamate (MSG). Though not known at the time, studies were later released stating that MSG was dangerous for infant consumption causing Gerber to ban its use in all products. Gerber expanded into the baby care line with basic products such as powders and lotion. In 1967 the Gerber Life Insurance Company was formed.

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1971-1990

During the 1980s, the company experienced rapid expansion and growth that was attributed to their food ingredients business. The different types of infant food products increased tremendously in order to keep up with increasing demand for a greater number of foods and a greater variety of products. The mid 1980’s was also a time of controversy when Gerber voluntarily recalled baby juice when glass was found in the jars. Both times an investigation by the FDA proved to find nothing wrong with Gerber’s production standards.

1991-Present

In 1994, Gerber merged with Sandoz, Ltd. a shipper of pharmaceuticals and in 1996 became a member of Novartis Consumer Health Group, a world leader in research and development products to protect and improve health and well being. Gerber continued their commitment to the well-being of children and in 1997 introduced a select line for organic fruits, vegetables and grains called Tender Harvest ^TM. In 1999, Gerber was busy introducing a complete line of skincare and healthcare products using NaturelockŠ a new cooking process. Also in 1999, Gerber launched Childrenswear and became a leader in children’s clothing which was acquired by Kellwood Company in 2002 and later was sold to Delta Galil Industries. In 2002, Gerber launched an education program called “Start Healthy” to educate parents on children obesity.

We hope that we have provided you the background information that you were seeking regarding the history of Gerber Company. We have also included a Power Point presentation that anyone in the research group can give at your request.

Page

List of Illustrations…………………..………………………………….ii

Introduction………………………………………………….…...……..1

Purpose, Scope, and Limitations...…………………………..….1

Sources and Methods…..……………………………..………...1

Report Organization…………………………………………….1

1927-1950…………………………………………………………...….1

1951-1970………………………………………………………………3

1971-1990………………………………………………………….…...4

1991 to Present…………………………………………………….……4

Conclusion……………………………………………………….……...6

References..….…………………………………………………………..7

LIST OF ILLUSTRATIONS

Figure Page

1. Gerber Baby Ann Turner Now and Then…………………………………………….3

2. Past Four Years of Total Sales for Novartis Corp……………………………………5

3. Gerber Dominates with Over Two-Thirds of Baby Food Market……………………6

Table

1. Five Affordable Gerber Life Insurance Plans………………………………………...4

HISTORY OF THE GERBER COMPANY

INTRODUCTION

Company B is always concerned with constant growth and is never satisfied with status quo. Valuable information can be learned from researching established companies and their plight to becoming top competitors in any industry. Gerber’s strength was recognized by filling a needed niche. They diversified their products over the years but always focused on childhood essentials. A strong customer service policy and high quality products keeps Gerber a trusted brand at the top of its market.

Purpose, Scope, and Limitations

The purpose of this report is to research every aspect of the Gerber Product Company’s background. It will not focus on any one historical issue but will instead provide a general background as to how the company started and how Gerber earned the trust and loyalty of its customers for three quarters of a century.

Source and Methods

In preparing this report the group exhaustedly researched the Internet, company records, and library sources in order to accurately outline Gerber’s 77 year history. Gerber’s own website was invaluable to our research; however, non-affiliated sites and references were important in the research of negative publicity and/or complaints.

Report Organization

This report is organized in chronological order and will begin in 1927 and end in 2004.

GERBER HISTORY

COMPANY B

1927-1950

The Gerber Baby Food Company is celebrating their 76^th year anniversary in business which started in the Fremont, Michigan kitchen of Dorothy and Daniel Gerber. In 1927, following the advice of her pediatrician Dorothy began straining solid foods for her sickly seven-month-old daughter Sally. After several nights of hand straining foods, Dorothy solicited her husband, Daniel’s assistance. After watching him make several attempts she pointed out that the work could be easily done at the family owned Fremont Canning Company. Fremont produced a line of canned fruits, and vegetables. Daniel, covered in strained peas, thought his wife had a good point.

Experiments with strained baby foods began shortly thereafter with Sally Gerber becoming the company’s first baby food analyst. Plant workers soon began to request samples for their own babies. Nearby stores who sold the strained peas, prunes, carrots, spinach, and beef vegetable soup experienced promising sales. By late 1928, five varieties of the strained foods were ready for a national market. With the public success of the baby foods, the Fremont Canning Company was soon renamed Gerber Baby Foods and began concentrating most of their production on the Gerber’s recipes (“Frank Gerber”, 2004). In addition, the Gerber’s decided to launch an advertising campaign and put out a call for images that could be used in ads and coupons for its new baby-food products.

An artist from Westport, Connecticut named Dorothy Hope Smith sketched a charcoal image using a neighbor’s baby as a model. Nobody thought much about the picture, including the baby’s father who for 27 years wrote and drew Wash Tubbs and Captain Easy, a daily comic strip that ran in 500 newspapers. Figure 1 shows the face of Ann Turner Cook in 1928 and what she looks like today. She started appearing on Gerber products and became the company’s trademark in 1931. The identity (and even the sex) of the Gerber Baby has been the subject of much speculation over the years. One rumor identified the baby as Humphrey Bogart and more than a few woman have come forward and claimed to be "the" Gerber baby (or the mother of said baby) over the years as well. To settle any lingering identity and ownership issues, Gerber paid Cook a one-time cash settlement of $5,000 in 1951.

Figure 1

Gerber Baby Ann Turner Cook Now and Then.

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Dorothy Hope Smith was originally paid $300 for the rights to her drawing; neither she nor Cook were paid royalties for the use of the image. "The logo is the essence of who we are," said David Yates, vice president for Gerber's North America operations. "It is the epitome of a happy, healthy baby and the symbol of trust we have with parents. It's everything to our company."

Sally Gerber took it upon herself to answer each customer’s letter when she was barely ten years old, writing an average of 800,000 letters a year since 1938. Later on, she became company president, and kept on answering customer’s mail herself.

1951-1970

Gerber’s baby food production line maintained high standards by using only the freshest healthiest fruits and vegetables from reliable produce industries. Trust, commitment, quality, consistency and reliability—from both Gerber production plants as well as suppliers--kept Gerber at the top of the baby food market (“Six Good Reasons”, 2001). From the early1950’s peach processing plants in Michigan have produced Gerber’s main baby food ingredient, soft sweet clingstone peaches (“History of Processing”, n.d.).

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In 1951 Gerber began using a flavor enhancer called MSG (monosodium glutamate) in the production of its baby food line (Rich, 2002). The toxicity and side-effects of MSG were not studied during this particular decade, however, in the 1970’s a published study showed possible dangers associated with infant consumption of MSG (“The Most Amazing Twinkie”, n.d.). Gerber immediately halted the use of MSG in their baby food production. Gerber has and always will be devoted to the health and well being of children

A baby care line was introduced in 1960 to address issues of a baby’s sensitive skin (“The Gerber History”, 2004). The Gerber Baby Care line initially consisted of the basics including powder and lotion but with time Gerber’s line of baby care products has rapidly grown to include a broad range of baby supplies. Gerber did not stop at nutritious foods and sensitive bath products. In 1967 they created Gerber Life Insurance Company, a subsidiary of Gerber Products Company, in order to further protect Gerber babies (“A Plan for All Ages”, 2004). Table 1 outlines each of Gerber’s five affordable life insurance plans covering infancy to retirement years.

Plan Name	Age Qualification
Grow Up Plan	14 days to 12 Years
Young Adult Whole Life	13 to 17 years
10 Year Term Life	18 to 59 Years
20 Year Term Life	18 to 49 Years
Guaranteed Life Burial Plan	50 to 75 years

Table 1

Five Affordable Gerber Life Insurance Plans

1971- 1990

Much of Gerber’s growth is attributed to their food ingredients business, which began in 1979 when Gerber Ingredients was created in response to the changing market conditions for processed bananas and other tropical fruits. Not only does Gerber Ingredients produce banana puree for baby food, but also aseptic concentrate, frozen puree, frozen puree concentrate, banana flakes and organic banana puree for other food industries. Gerber’s San Jose facility is the largest single banana processing plant in the world. Thriving on a desire for nutritious high-quality tropical fruit products, Gerber Ingredients has grown into the largest supplier of banana puree in the United States and Europe (“We’ve Been Making”, 2001).

In 1984, glass was found in some of Gerber baby juices, and the company recalled over 500,000 jars. Local grocers were blamed when neither Gerber nor the FDA was able to find a flaw in the manufacturing process. In 1986 it happened again, this time amid numerous cases of product tampering within the U.S. Again the

COMPANY B

FDA could not find anything that would justify a recall, and Gerber held to their high manufacturing standards. They would eagerly correct a problem if one could be found, but none could. Gerber quietly downplayed the subject, and tried to avoid additional negative press. The company appeared to be a victim of fabricated lawsuits and publicity seekers (Dietz, 1993).

1991 to Present

In 1994, The Gerber Company merged with Sandoz Ltd., a global shipper of pharmaceuticals, bio pharmaceuticals and industrial products (“Geigy, Ciba”, 2004). In 1996 they became part of the Novartis group, a world leader in research and development of products to protect and improve health and well being. The division which includes Sandoz generics, OTC self-medication, Animal Health, Medical Nutrition (including Nutrition & Santé franchise), Infant & Baby, and CIBA Vision business units, places considerable emphasis on the development of strong, consumer oriented and trustworthy brands. Each business unit has a leading marketing position in growth oriented healthcare segments beyond the core pharmaceuticals business, providing essential, high quality health-related products. Figure 2 shows the total revenue of Gerber’s parent company Novartis.

Figure 2

Past Four Years of Total Sales for Novartis Corp. Source Novartis Corp Annual Report.

Gerber introduced its Tender Harvest ™, a line of foods with specially selected organic fruits, vegetables and grains, in 1997. Tender Harvest ™ included stages 1^st, 2^nd, and 3^rd to address the changing food needs of infants through toddlers. Then in 1999 a Naturelock cooking process to Gerber foods was introduced to help retain "more of a fresh picked taste nature intended

Also in 1999, Gerber introduced skin care products that included a full line of washes, lotions and tear-free shampoos called Gerber SkinNutrients. A healthcare line including Liquilytes an oral maintenance solution, tooth & gum cleansers,

COMPANY B

diaper rash ointment, gas relief drops and vitamin drops was introduced at this time as well.

Always striving to meet the public’s needs, Gerber successfully joined the children’s clothing market with the creation of Gerber Childrenswear, Inc. Gerber’s clothing line consisted of licensed name brands such as Gerber, Rudolph the Red-Nosed Reindeer, Curiosity and Little Suzy’s Zoo which were sold nationally to specialty retailers, department stores and volume retailers. Day time, night time, bath time, feeding time, a preemie collection, and Onesies ® are all a part of Gerber’s Childrenswear line. In June of 2002 Gerber’s successful Childrenswear line was bought by the Kellwood Company, a billion-dollar marketer of apparel and soft goods, for an estimated $135.7 million.

With a 2002 reporting that childhood obesity was an epidemic, Gerber, being a leader in children’s nutrition, launched a consumer education program called “Start Healthy”. This program sought to enhance awareness among parents and health professionals about the importance and consequences of a childhood diet. The success of this campaign spread throughout the United States and expanded into Mexico. Start Healthy was endorsed by Tommy G. Thompson, the Secretary of Health and Human Services (“Gerber is Celebrating”, 2004).

In 2003, the Gerber Company created 2nd Foods Fruits in easy to go packages to fulfill a need for busy parents. Later that year a new line of breast therapy

products was introduced with the idea of making breast-feeding a better experience. Beginnings, which is sold exclusively at Sears. The Beginnings line consists of clothing for the newborn phase. It uses calming pastel colors with sweet prints, embroideries and delicate trims with a variety of coordinating pieces to suit both day and night time wear

Figure 3

Gerber Dominates with Over Two-Thirds of Baby Food Market.

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Conclusion

Gerber has shown itself to be a progressive and highly ethical company, which has not sat on it laurels. In the face of an ever-changing marketplace, they have risen to new heights and have raised the bar of quality for other to follow. Throughout its inception, Gerber has and will continuously strive to create quality foods, durable clothing and other essentials to cover all phases of childhood. This drive has put Gerber at the top of its market in all areas with distribution in 80 different countries. Expect to see more of Gerber’s innovative, high quality products in the future. In addition, Gerber’s many successful advertising campaigns have highlighted the companies care for the world’s children and summarized by with their classic advertisement slogan “Shouldn’t your baby be a Gerber Baby”?

COMPANY B

REFERENCES

A Plan for All Ages. (2004). Retrieved July 11, 2004 from http://www.gerberlife.com/

Dietz, P. (1993). The Proliferation of Product Tampering. Retrieved July 15, 2004 from:

       http://www.facsnet.org/report_tools/guides_primers/tampering/perspct3.html

Frank Gerber. (2004). Retrieved July 15, 2004 from the Cool Quiz website:

http://www.uselessknowledge.com/trivia/names/names.asp?name=gerber

Geigy, Ciba and Sandoz (1758-1970). (2004). Retrieved from the Novartis website:

http://www.novartis.com/about_novartis/en/3companies.shtml

Gerber is Celebrating its 75^th Birthday. (2004). Retrieved from the Novartis website:

http://www.novartis.com/special/75_years_gerber.shtml

History of Processing Peach Industry in Michigan. (n.d.). Retrieved July 15, 2004 from

the Michigan Peach Sponsors website:

http://www.michiganpeach.org/procpea1.htm

Rich, C. (2002, April 8). Retrieved July 11, 2004 from The Fifties Web:

http://www.fiftiesweb.com/pop/1951.htm

Six Good Reasons to Choose Gerber® Ingredients for Your Food Products. (2001).

Retrieved July 15, 2004 from the Gerber Ingredients website:

http://www.gerberingredients.com

Standard & Poor’s Register of Corporations, Directors and Executives. (2004).

(Vol. 1, p 1204). Charlottesville, VA: Mcgraw-Hill Companies, Inc.

The Gerber History. (2004). Retrieved July 11, 2004 from the Gerber website:

http://www.gerber.com/history

MEMORANDUM

CONTENTS

Page

LIST OF ILLUSTRATIONS

REFERENCES

REFERENCES