At the American Business History Center, we are always looking for ways to connect the present to the past. And hopefully learn some lessons along the way.
May is a critical month in the world of sports. The first Saturday in May brought the 145th running of the Kentucky Derby. And around Memorial Day, the Indianapolis 500 comes along….historically the most attended single-day event in sports. Three years ago, the 100th running brought out about 500,000 people. The bleachers and grandstands alone seat about 250,000! Both races are great American traditions.
But how many know their connection to an everyday kitchen product, baking powder?
During and immediately after the Civil War, New Englander Eben Horsford’s Rumford Baking Powder pioneered the industry, making it easier to bake bread.
In 1873, another company, the Royal Baking Powder Company, was set up in Manhattan. Royal began to advertise heavily and create recipes and cookbooks. Under the Hoagland brothers, Royal’s sales rose from $350,000 in 1876 to $3 million in 1888, at which time the company was spending the huge sum of $300,000 per year on advertising. By 1917, the Royal Company had $30 million in assets, bigger than Coca-Cola, H.J. Heinz, or Campbell Soup. The company was phenomenally profitable and led the industry, which drew many competitors.
With his new, “better,” formula, William Wright entered the fray with his Calumet Baking Powder in 1889. With colorful packaging and even more aggressive advertising, Calumet passed Royal in sales by the early 1920s, and in profits in 1927.
The 1920s were an era of corporate mergers and acquisitions. With support from big New York banking houses including J.P. Morgan and E.F. Hutton, two “food conglomerates” were created: General Foods (from the Postum cereal empire) and Standard Brands (formed around Fleischmann’s yeast). In 1928, Wright sold Calumet to Postum, soon renamed General Foods, America’s largest food company after the big meatpackers like Swift and Armour and National Dairy Products (later renamed Kraft). In 1929, Standard Brands bought Royal. The competition was now turned over to deep-pocketed giants. The owners who sold out were rich.
Calumet’s William Wright had bought a Kentucky horse farm in 1924 and renamed it Calumet Farm. When he died in 1931, he left $55 million to his son Warren, who threw his full energies into thoroughbred racing. Between 1941 and 1991, Calumet-bred horses won a record nine Kentucky Derbies, including Triple Crown winners Whirlaway and Citation. Calumet Farm was later sold and went into decline but is on the comeback and remains one of the most famous names in racing.
Meanwhile, giants General Foods and Standard Brands ran big ad campaigns for Calumet and Royal baking powders. They thought they “owned the market.” But there was a thorn in their side.
For years, Terre Haute, Indiana’s regional wholesale grocery firm Hulman & Company had marketed Clabber Girl baking powder in Indiana and neighboring states. By the 1930s, the founder’s grandson, Anton “Tony” Hulman, Jr., was out of college and helping run the business. Tony thought Clabber Girl had no future as a regional product….he needed to “go national.” While the New York behemoths General Foods and Standard Brands were distracted by their big product assortments, Tony focused on baking powder. Over time, he won. Today, Clabber Girl has about two-thirds of the U.S. market, and now also owns the Royal brand in America.
But Tony Hulman, like his father, also loved speed and racing. In 1945, he bought the Indianapolis Motor Speedway for $750,000. The historic but dilapidated facility had not been used during the War. His advisors told him not to buy it, or, if he did, to tear it down and put the huge tract of land to better use. Tony didn’t listen. Today both the track and the entire growing IndyCar racing series are owned by the Hulman company and his heirs. The upcoming 103rd running promises to be one of the most competitive ever. We suggest you watch it, at Noon EDT on NBC on Sunday, May 27.
Who would’ve guessed that those little cans of baking powder would propel so many cars and horses to record speeds? History is made in strange ways!
(For the complete details about the baking powder wars that shaped American consumer marketing and advertising, see the great book Baking Powder Wars: The Cutthroat Food Fight that Revolutionized Cooking, by Linda Civitello.)