Domino Sugar Corporation

Domino Sugar Corporation

1114 Avenue of the Americas
New York, New York 10036-7783
U.S.A.
(212) 789-9700
Fax:(212) 789-9747
Web site:http://www.tate-lyle.co.uk

Wholly Owned Subsidiary of Tate & Lyle plc
Incorporated: 1891 as The American Sugar Refining Company
Employees: 330
Sales: $340 million (1997 est.)
SICs: 2062 Cane Sugar Refining

Domino Sugar Corporation is the leading sugar refining firm in the United States, and produces one of the world’s most popular and well-known brands of sugar, namely, Domino sugar. One of the oldest companies started in the United States, with a rich historical background of continuous expansion and increasing sales, Domino Sugar Corporation has faced intense competition in the recent past. Although the company’s market share is not threatened by competitors who produce refined sugar, such as C&H and Dixie Chrystals, the trend toward non-caloric artificial sweeteners has started to cut into the firm’s profits. Moreover, as refined sugar comes under more scrutiny and attack from health food advocates, consumers have become more and more persuaded by negative press reports that a person’s weight and general health are affected by eating refined sugar. When Tate & Lyle plc, the large British-owned and operated firm focusing on sugar production, cereal sweeteners, and starch processing, purchased Domino Sugar Company in 1988, Domino used an infusion of cash from its new parent company to undertake not only a comprehensive reorganization but to revitalize a public relations and marketing strategy in order to fight off the threat posed by the growing popularity of artificial sweeteners.

Early History

Domino Sugar Corporation traces its roots back to William Havemeyer, an enterprising English immigrant who had worked as a supervisor in a cane sugar refinery and arrived in New York in 1799. When his brother Frederick, a former sugar boiler, joined him three years later, the two young men saved their money from a baking business they operated together, and then established a sugar refinery on Vandam Street in 1807. The land on which the firm was situated had been leased from Trinity Church and, over the next few years, the Havemeyer brothers were able to purchase the land and expand their business. Named W. & F.C. Havemeyer Company, William and Frederick boiled and refined raw sugar cane in a small one-room building. Yet by 1816, the Havemeyer Company had expanded its operations to such an extent that it was able to produce nearly nine million pounds of sugar annually.

The business the Havemeyer brothers had established could not have started at a more opportune time. During his second voyage, Christopher Columbus brought sugarcane from the Canary Islands to the Caribbean, most probably the present nation of the Dominican Republic. The growing sugar trade in the Americas had a significant impact on the development of the colonies established by the British along the Atlantic coast, and one of the earliest sugar refineries was built in New York in 1689. At the time of the American Revolution against King George III and the armies of England in 1776, there already were numerous sugar refining businesses owned and operated by well-known New York entrepreneurs and families.

By the time the Havemeyer brothers opened their own business during the early part of the 19th century, New York was one of the leading centers in North America for sugar refining and production. Since the dawn of recorded history, all foods had been traditionally sweetened with the addition of either honey or molasses. Refined cane or beet sugar was considered a luxury, too difficult and time-consuming to produce and, consequently, much too expensive for the average American to purchase on a regular basis. When it was refined, the method involved boiling raw sugar in an open vessel, and then straining the product through blankets or cleansing it with bull’s blood. Sold in large loaf or piece form, the product was laden with many impurities. However, as refined sugar became more popular, especially as a food staple, the process of sugar refining developed into a major business activity.

The Havemeyer brothers devoted themselves to improving and mechanizing the sugar refining process. At the forefront of modernization within the industry, the two men installed the most sophisticated technologies of the time to help expand their business. No longer boiling raw sugar in an open, cast-iron kettle, they instead used a vacuum pan; and rather than filtering the product with blankets or bull’s blood, a new substance known as boneblack was used to clean the sugar. Finally, the Havemeyer brothers thought it most important to provide their customers with the highest quality product possible, so they tested the end product for its purity. With these technological advances in sugar refining, the Havemeyer Corporation grew steadily and, in 1828, the sons of Frederick and William, named Frederick C., Jr., and William F. Havemeyer, followed their fathers’ footsteps and assumed management and control of the family firm.

The Late 19th and Early 20th Centuries

Handed down from brother to brother and from father to son, the W. & F.C. Havemeyer Company continued to expand its operations throughout the mid- and latter half of the 19th century. Realizing the need for quick and efficient transportation of the firm’s product, the managing members of the family decided to relocate to a new site and build a state-of-the-art sugar refinery on the waterfront in Williamsburg, Brooklyn. When the facility burned to the ground in 1882, a new expanded factory was built on the same site. The rebuilt refinery stood 10 stories high, while its adjacent filter house was a huge building of 13 stories. By the 1890s, the company was producing 1,200 tons of sugar each day, and was widely regarded within the industry as operating the largest sugar refinery in the world. Confident of its future success, the managing family members decided to rename the company in order to reflect its growing reputation and position within the sugar industry. The newly chosen name was simple—the American Sugar Refining Company.

Always at the forefront of technological developments in sugar refining, the company grew larger and larger, forcing many smaller competitors out of business. In fact, by the mid-1890s the American Sugar Refining Company was providing almost 100 percent of the refined sugar purchased by consumers across the United States. Yet when Theodore “Teddy” Roosevelt became president of the country after the assassination of William McKinley in the year 1901, Roosevelt used his “bully pulpit” and the growing public sentiment against monopolies to enact legislation limiting the control of tobacco, sugar, petroleum, railroad, and steel manufacturing companies engaged in practices that eliminated competition within the marketplace. Suddenly, the prospect of future competition from other sugar refiners became imminent.

The astute leadership of Henry Havemeyer, however, sidestepped the problem. Henry came up with the idea of labeling the company’s sugar products with a brand name, and thus Domino sugar was born when the name was applied to sugar cubes that resembled dominoes. Having a trademark name assured the company of an increased awareness in the public eye, and the company continued to maintain a stranglehold on the sugar refining business in the United States. Proof of the brand name visibility and popularity of Domino sugar was evident when, in spite of being sued by the U.S. government for monopolistic practices within the sugar industry in 1907, the company’s sugar products continued to sell best with American consumers.

By the beginning of World War I, however, there were over 100 sweeteners that customers could choose from as an alternative to Domino. The company’s marketing strategy grew more aggressive as a result, focusing on convincing grocers to purchase its product in packages rather than ladling it to customers from a bulk container. Most importantly, the ladling of sugar from bulk containers kept customers in the dark about the brand of the sugar. Having convinced grocers to change their traditional method of selling sugar, Domino reaped the success of having greater brand name recognition and the demand that the nameless bulk sugar lacked. By the close of the 1920s, sales of Domino sugar had climbed to its highest level ever.

The 1930s and 1940s

Almost every individual and business was affected during the economic troubles of the 1930s that came to be described in the United States as the Great Depression, except perhaps for the fortunes of the American Sugar Refining Company. At the height of the Depression in 1932 and 1933, the company reported profits of over $5 million for both years. With over 5,000 men and women on its payroll, and five plants located in Boston, Brooklyn, Philadelphia, Baltimore, and New Orleans, the American Sugar Refining Company was regarded by most businessmen as one of the luckiest, and also one of the most well-managed companies in the United States. By the end of the 1930s, sugar consumption was at an all-time high, largely due to the perception that it was nutritious, good for one’s health, and had become one of the staples in the American diet.

America’s entry into World War II in December 1941 changed the good fortune of the company. The war disrupted the transportation of sugar cane from places such as Cuba and Central America to the company’s refineries within the United States. In addition, some of the firm’s cargo ships were conscripted by the U.S. Navy for use as war material and troop transports, thus reducing the amount of sugar cane the company was able to bring to its plants. The company’s fortunes grew even worse in 1942, when the United States government imposed sugar rationing. From that time onward, until the end of the war in 1945, the American Sugar Refining Company barely made enough money to keep its administrative office and a few of its refineries in operation.

The Postwar Era and Prosperity

When the war ended, the American public’s demand for consumer items exploded. For years the average citizen that lived through the war in the United States had gone without any luxuries and endured the time with the basic necessities of life. Now companies that manufactured such items as household appliances, automobiles, and electronic devices were overwhelmed by the public’s demand for these products. New foodstuffs were also in great demand, such as soda in a bottle, a wide variety of candy and pastries, and sweeteners for baking and cooking. Of course, the mass production of soda in bottles and candy for the grocery and drugstore shelf required huge amounts of refined sugar. And the American Sugar Refining Company had the sugar cane fields, transportation system, and refineries to meet the ever-growing demand from manufacturers. By the end of the 1950s, the American Sugar Refining Company reported annual sales of over $180 million, and by 1964 annual sales had skyrocketed to $437 million.

In 1970, the board of directors at the company decided to change its name from the American Sugar Refining Company to Amstar Sugar Corporation in order to reflect the growing diversification of the firm into activities other than refining. None of these activities was more important that the firm’s entry into the nutritive sweetener market. The company made a major commitment during the early 1970s to produce a new kind of corn syrup called high-fructose corn syrup. Part of this commitment involved a plant expansion at a facility in Dimmitt, Texas, at a cost of over $22 million. The expansion resulted in boosting capacity to produce high-fructose corn syrup to more than 300 million pounds annually. Since the company had been unable to meet the ever-increasing demand from food and drink manufacturers for this sweetener, the cost of the expansion was well worth it. Used in presweetened food and drink products such as cereals, candies, cakes, and soft drinks, the increased capacity for producing high-fructose corn syrup enabled the company to increase its sales to over $1 billion for the first time in its history.

During the 1980s, however, the use of refined sugar came under increasing hostile attack from food advocates and consumer groups. These groups argued that refined sugar was not as healthy as sugar substitutes and artificial sweeteners and, as a result of the negative publicity and increased competition from firms that produced non-caloric, artificial sweeteners, Amstar Sugar Corporation began to lose its market share and experience a loss of revenue. As the company continued to lose its market share, and suffered a continuing decline in revenue, Tate & Lyle plc purchased Amstar Sugar Corporation at a bargain price.

The 1990s and Beyond

As an operating subsidiary of Tate & Lyle, the firm renamed itself Domino Sugar Corporation in 1991, and began to reap the rewards of its rich parent company. During the mid-1990s, the company embarked on an intensive research and development program to develop non-sweet sugar for different food applications. For example, the company’s development of such a product, which combined Lactisole, a sweetness inhibitor, with sucrose, enabled it to tone down the sweetness in sports drinks and energy boosting beverages. Another application involved using non-sweet sugar as a fat substitute for frostings, icings, and a variety of frozen desserts. By 1995, the company had received approval for 18 food applications for its non-sweet sugar, including use in low-oil salad dressings.

Under the direction of management at Tate & Lyle, the Domino Sugar Corporation has benefited from increased funding for research and development into artificial sweeteners, and has also modernized its attitude concerning the use of such ingredients in food production. Since sugar is an essential ingredient to the American food processing industry, and since the company has finally jumped into the artificial sweetener market with a splash, Domino Sugar Corporation will remain one of the most visible and enduring companies in American business.

Further Reading

“American Sugar Refining Corporation,” Fortune, February 1933, pp. 59-65, 115.

“Amstar: Two Parts Sucrose, One Part Fructose and a Heap Of Money,” Financial World, September 1, 1976, p. 23.

“A History of Domino Sugar Corporation in New York City: 1807 to the Present,” New York: Domino Sugar Corporation, 1995.

Holleran, Joan, “Sweet Success,” Beverage Industry, April 1996, pp.50-51.

LaBell, Fran, “Sugar Sans Sweetness,” Prepared Foods, May 1995, p. 123.

“Mixed Picture in the Sugar Group,” Financial World, February 20,1963, pp. 9-23.

“A Rose by Any Other Name,” Financial World, October 1974, p. 28.

—Thomas Derdak