Associated British Foods PLC

Weston Centre
Bowater House
68 Knightsbridge
London, SW1X 7LR
United Kingdom
(1) 589-6363

Public Company
Incorporated: 1935
Employees: 54,100
Sales: £2.5 billion (US$4.52 billion)
Stock Index: London

A multibillion-dollar international conglomerate that characterizes itself as a “family of businesses” may seem ironic or unduly modest in calling up so cozy an image, but in some ways it is an appropriate description of Associated British Foods (ABF). ABF subsidiaries, whether self-developed or acquired through merger or acquisition, retain their individuality in name, operations, and clientele, yet maintain strong connections with the parent’s central management core. Advertising and marketing of ABF’s wide range of products and services—bakeries, supermarkets, restaurants, catering companies, and clothing stores—are geared to the family as consumers. And for more than half a century one family has controlled ABF: the Westons.

The family saga began in Toronto, Canada, in 1882, when George Weston, then 18, bought a bread-delivery route. During the following 36 years, he built a number of successful bakeries in that area. Today George Weston Ltd., a Toronto-based chain of bakeries and supermarkets, consistently ranks among North America’s top businesses.

When George Weston’s son Garfield took over the bakery business at his father’s death in 1924, he had much more in mind than simply maintaining or building up the chain of local bakeries his father had founded—he was determined that it grow into an international business. Eleven years later, in November, 1935, he took a giant step toward that goal by purchasing seven bakeries in England, Scotland, and Wales for his newly formed Food Investments Ltd., quickly renamed Allied Bakeries Limited. All seven are still in operation today, three under their original names.

Within four years, Garfield had 18 bakeries and four biscuit factories throughout the British Isles, beginning decades of expansion into Europe, Africa, Australia, Asia, and North America. The expansion went beyond food products to encompass seed production, milling, canning, retail grocery and clothing outlets, restaurants, vehicle parts, fuel, and basic research.

The expansion has not always been steady. At the onset of World War II, wartime restrictions and shortages of supplies began to slow production, while high taxes and voluntary defense contributions reduced profits.

But expansion picked up again in the postwar period. A postwar excess-profits tax refund was wholly invested in expansion and equipment. In 1948 Garfield’s son Garry joined the board of directors. The following year, the company purchased two Australian firms: Gold Crust Bakeries in Adelaide and Gartrell White in Sydney. By the end of the decade, profits had surpassed £2 million a year.

A growth spurt in the 1950s added dozens of new bakeries, tea shops, restaurants, and catering businesses, many of them in newly constructed shopping centers, where, with gas rationing at an end, consumers could drive to one location to purchase may different products. Food stores purchased by the company were refashioned into supermarkets to suit new shopping habits. This diversification led to a name change in 1960, to Associated British Foods. By 1964, the company claimed to be the largest baker in the world and one of the largest millers, in addition to being one of the largest grocers in the United Kingdom.

Rapid growth continued during the 1960s, with the acquisition of A.B. Hemmings, Ltd., a chain of 230 bakery shops in the London area, the entire chain of Fine Fare food shops, and a 51% interest in the South African Premier Milling Company.

In 1970 ABF also opened the largest bakery in western Europe, in Glasgow, Scotland. A year later, ABF’s Fine Fare opened its first two “superstores.” As the 1970s progressed, the Stewart Cash Stores in Ireland, which ABF had acquired some twenty years before, followed suit, opening their first hypermarket. In 1978, ABF expanded into a new market—frozen foods—by buying an ice cream factory and a pizza bakery.

Garfield died in October 1978 and Garry is now the chairman of ABF. The family no longer seeks the public eye—they have kept a low profile since 1983, when an attempt by six Irish Republican gunmen to kidnap Galen was foiled.

Despite difficulties such as fluctuation of the pound and climatic conditions affecting crops, ABF has continued to expand and prosper. In 1980, a subsidiary, Twinings Tea, opened its first North American factory, in Greensboro, North Carolina, and also opened the Grosvenor Marketing Company in Paramus, New Jersey. Additional bakeries and other businesses have been acquired, and ABF’s continual program of monitoring and modernizing keeps products and services up to date and operations efficient.

Some of ABF’s subsidiaries are much older than their parent. The Twining Crosfield Group, for example, dates back to a coffee shop purchased by Thomas Twining in 1706, when coffee was the fashionable drink for men. Tea, introduced early in the 17th century, had been popularized as a drink for ladies by Queen Catherine, the wife of Charles II, at mid-century, but men usually drank it for medicinal purposes only (it was widely regarded as a remedy for headaches). When Twining introduced tea as a sideline, he found it was so popular that in 1717 he converted Tom’s Coffee House into the Golden Lyon, London’s first tea shop.

Twinings tea, exported to 90 countries, may be ABF’s best-known brand name. It has won the Queen’s Award for export achievement, and consistently dominates its market. The tea is blended in several factories in the British Isles and one in the United States; ABF marketing companies in both countries manage distribution.

The Ryvita Company, purchased by ABF in 1949, has won the Queen’s Award for export twice with the crispbread that has long been its principal product—and probably ABF’s second-best-known brand name. The steady growth of interest in health foods has made Ryvita and the company’s other main product, Crackerbread, popular in many countries. Demand for high-fiber foods and the availability of a new extrusion technology have resulted in the development of Allinson’s products, Croustipain, and other extruded breakfast cereals and cereal products.

Allied Bakeries, the group of bakeries Weston purchased at the time of incorporation, still functions as part of ABF’s largest subsidiary. It has grown to include some 40 wholesale bakeries and close to 1,200 retail bakery shops and restaurants throughout the British Isles. The addition of in-house bakeries in many supermarkets has put a slight crimp in the wholesale baked-goods business, but Allied Bakeries has added a line of partially baked goods (to be completed at an in-house bakery or by the retail consumer at home) and a line of frozen bakery products to counter this trend.

Cereal Industries, a holding company for six subsidiaries, also works closely with Allied Foods Group. Fishers Agricultural Holdings, one of the six cereal industries subsidiaries, includes Fishers Nutrition, which supplies animal feeds and livestock marketing services, and Fishers Seed and Grain, which produces agricultural seeds. The Allied Grain Group, another of the six, markets seeds and fertilizers. Mardorf, Peach and Company imports and exports cereals. ABR Foods supplies wheat by-products to several types of industry: baking and brewing, food and pharmaceutical manufacturers, animal feed, and packaging products. The Aughton Group, which, with ABR, constitutes the fifth Cereal Industries group, supplies computerized process-control systems to a variety of industries. Westmill Foods, with Alric Packing, is the sixth. Westmill supplies retail grocers and caterers with Allinson’s flour, yeast, bran, and wheatgerm, among other products.

ABF’s Burton’s Gold Medal Biscuits is one of the largest biscuit manufacturers in the United Kingdom; as it has grown, there have been occasional rumors that it plans to take over a competitor, such as United Biscuits. Burton’s is pursuing an aggressive program of investment in new and modernized equipment and cost-effective production techniques in order to maintain its leadership in the market.

The Irish retail group is the largest supermarket chain in Ireland (Quinnsworth stores in the Irish Republic and Stewarts and Crazy Prices in Northern Ireland). Many of these stores opened in the 1960s; they continue to do a thriving business. This group also includes retail clothing stores that emphasize fashions for young people: Penneys in Ireland and Primark in the United Kingdom. Business has been brisk enough to warrant plans for further expansion.

AB Ingredients, formed in 1982, and AB Technology, formed in 1987, constitute ABF’s newest division. AB Ingredients develops and manufactures new ingredients and additives for Allied Bakeries and for other independent companies. It also develops improved bakery processes. AB Technology specializes in high-tech improvements for several types of industry, including food production.

It takes a strong central management, an efficient reporting system, and vigilant personnel and investment programs to hold together so many relatively independent companies of disparate size and design, in widely separated geographical locations. ABF’s continual expansion testifies to its strength, but its structure, marked by an intricate system of holding companies and representation, is difficult to penetrate and analyze.

The lifting of the trade barriers among the 12 countries of the European Common Market in 1992 will offer ABF further opportunities to expand. ABF already has a foothold on the continent through Twinings’ Foods International S.A. If the Westons continue to exercise firm control of ABF, further expansion should be expected for a long time to come.

Principal Subsidiaries:

Allied Bakeries (N.I.) Ltd.; Sunblest Bakeries Ltd.; Allied Foods Ltd.; ABR Foods Ltd.; Allied Grain Ltd.; Allied Grain (North East) Ltd.; Allied Grain (Scotland) Ltd.; Allied-Love Adhesives Ltd. (89%); Allied Mills Ltd.; Chancelot Mill Ltd.; Cranfield Brothers Ltd.; Fishers Agricultural Holdings Ltd.; James Neill Ltd.; George Weston Foods Ltd. (Australia); N.B. Love Industries Pty. Ltd. (Australia); Allied Foods (N.Z.) Ltd. (New Zealand); R. Twining and Company Ltd.; Namosa Ltd.; Walter Williams & Co. (London) Ltd. (55.6%); Foods International S. A. (France); R. Twining & Co., Ltd.. (USA); Grosvenor Marketing Ltd. (USA); AB Ingredients Ltd. (94%); AB Technology Ltd.; Burton’s Gold Medal Biscuits Ltd.; Crazy Prices; C.W.I.I. Ltd.; Eastbow Securities Ltd.; Koters (Liverpool) Ltd.; Lax and Shaw Ltd.; Mardorf, Peach & Co., Ltd.; Mauri Products Ltd. (50.1%); Power Supermarkets Ltd.; Primark Ltd.; Primark Stores Ltd.; The Ryvita Company Ltd.; Stewarts Supermarkets Ltd.; Serpentine Securities Ltd. (Pref. nil); Walmsley Ltd.; Weston Research Ltd.; Wilsdon & Company Ltd.