George Weston Limited

22 St. Clair Avenue East, Suite 1901
Toronto, Ontario M4T 2S7
Canada
(416) 922–2500

Public Company
Incorporated: 1928
Employees: 67,300
Sales: C$10.8 billion (US$9.05 billion)
Stock Index: Toronto Montreal Vancouver

George Weston Limited, a diversified food processor and distributor, carries the name of the baker’s apprentice who started this family-run business in 1882 with two bread routes. It has since grown, mainly by acquisition, to become one of the largest companies in Canada.

George Weston’s early success selling bread led to a rapid increase in the number of routes he managed, and soon encouraged him to establish a bread and cake bakery in Toronto, in 1897. At George Weston’s death in 1924 his son Garfield Weston took over a growing business. In 1928 he incorporated George Weston Ltd.

Under Garfield’s leadership, the firm built its bread and biscuit businesses in Canada and the United States. Weathering the Depression without major problems, the company was able to take advantage of its position as a low-cost producer to overtake other competitors in the baking industry. Its 1938 acquisitions of the Inter-City Western Bakeries, Ltd. and the Associated Biscuit Company, for example, provided Weston with the facilities and resources to produce 370 varieties of candy and 100 types of biscuits, in addition to its breads and cakes.

Despite World War II, expansion continued smoothly throughout the 1940s. In 1944 the company bought the Southern Biscuit Company, and the acquisition of Western Grocers marked the firm’s initial entry into food distribution. This growth was strengthened by purchases of the Edmonton City Bakery in 1945 and Dietrich’s Bakeries in 1946. After the war, the company acquired William Neilson, a major Canadian producer of chocolate, cocoa, milk, and dairy specialty products. In the 1980s Neilson acquired licenses to produce Haagen-Dazs ice cream and Danone yogurt in Canada. This subsidiary’s 1987 acquisition of the confectionery operations of Cadbury Schweppes Canada Inc. gave Weston a commanding one-third share of the Canadian chocolate bar market and made it Canada’s largest chocolate manufacturer.

During the 1940s and early 1950s, Weston began buying shares of Loblaw Groceterias, a food distributor, as part of a strategy designed to reach consumers directly with its products. By 1953, the firm had acquired a majority interest in Loblaw, a position that made possible Loblaw’s subsequent acquisitions of other food distributors across Canada and the midwestern United States, including National Grocers of Ontario in 1955; National Tea, a U.S.–based retailer, in 1956; Kelly, Douglas and Company, a British Columbia wholesaler, in 1958; the Maritime-based Atlantic Wholesalers in 1960; and the Zehrmart supermarket chain in 1963.

During the 1960s the company pursued further diversification in an attempt to improve its value to shareholders by expanding into the natural resources area. Weston bought Eddy Paper Company in 1962, and five years later, British Columbia Packers, a salmon processor, and Connors Brothers, the largest herring and sardine processor in Canada.

Growth was temporarily curtailed in the 1970s as management focused on reorganizing the company’s activities and operations to achieve greater control and efficiency. W. Galen Weston, one of Garfield’s sons, had become president in 1970, and the firm began to refocus on food as its primary area of emphasis. By the next decade, Weston had successfully consolidated its many businesses into three major groups which manage daily operations autonomously within the framework of defined corporate goals and objectives.

Weston Foods Ltd., the food processing group, was formed in 1986. Its operations include baking and milling, biscuits, chocolate, dairy, and specialty products, providing food and ingredients both to intermediate processors and directly to consumers all over North America. This group employs more than 12,000 workers and accounts for 11% of the company’s total sales.

The food processing group includes Weston Bakeries, Canada’s largest baker of fresh bread, buns, and cake products (distributed under a variety of brands and private labels), Neilson/Cadbury, and the Stroehmann Bakeries. Stroehmann was acquired in 1980 and today is one of the largest wholesale baked goods producers in the northeastern United States. Another member of the food processing group is the Interbake Foods specialty biscuit division, which consists of the cookie and cracker businesses acquired between 1928 and 1960, including the Southern Biscuit Company, the focus of operations in the United States. This group also includes the Soo Line Mills and McCarthy Milling, which manufacture and distribute various types of flour inside Canada and abroad, and Bowes Company, a food specialties supplier.

Weston Resources, divided into two areas, accounts for 11% of Weston’s total sales. Operations of the Forest Products division are handled primarily by the Ontario-based E.B. Eddy Forest Products, established in the mid-1800s. Today this company mills and processes pulp, lumber, and paper products for North American distribution. The Fisheries division, comprised of British Columbia Packers and Connors Brothers, markets canned, fresh, frozen, and processed fish and herring products throughout the world.

Loblaw Companies, Weston’s food distribution group, is the largest wholesale and retail food distributor in Canada, and has a sizeable retail business in the United States as well. Staffed by more than 46,000 employees and representing 78% of total company sales, the group’s aim is to customize its stores to meet the needs of specific markets and to develop a large number of products under the private labels of “no name” and “President’s Choice.”

In 1986 Weston’s National Tea subsidiary acquired 26 stores in St. Louis owned by the Kroger Company. Ten years earlier, however, National Tea had encountered serious financial problems in its food distribution area, forcing it to sell 75% of its supermarkets. This set the stage for a period of consolidation which lasted into the 1980s.

The firm also faced major labor problems in the early 1980s involving the unionized employees of its Super Valu stores in Manitoba. These difficulties resulted from Weston’s aggressive penetration of the Winnipeg retail food market. In order to convert its existing Loblaw stores in the area to larger-scale supermarkets and hire away experienced employees from other retailers, Weston offered to recognize the Manitoba Food and Commercial Workers Union and to match its current contract with Safeway Foods in return for a six-year, no-strike, no lockout agreement which effectively eliminated the union’s contract negotiation rights. Shortly after consummating this arrangement, Super Valu was accused by its employees of violating a number of contract provisions related to seniority, scheduling, and full-time employment, but a compromise was eventually worked out.

Today, George Weston is a dominant force in its three business segments. Guided by a corporate philosophy that positions the company as a low-cost supplier of superior products, the firm continues to be managed by Galen Weston, who assumed the additional position of chairman in the mid-1970s. Galen Weston has earned a reputation as a turnaround specialist and expert retailer. He maintains a very private lifestyle, particularly after a foiled kidnap attempt by the Irish Republican Army in 1983.

In recent years the company has slowed its growth in favor of improving the profitability of its current activities. Loblaw Companies is once again focusing on consolidation and on maximizing the returns on its recent investments in capital improvements and new stores. Strict control of capital, material, and labor costs will be required for Weston Resources to improve productivity and overcome the business risks involved in matching unpredictable supplies with the peaks and valleys of customer demand. The group’s formation of a salmon farming operation and its entry into additional foreign markets should provide major opportunities.

George Weston faces many challenges in the years ahead, as political, social, and regulatory changes occur both domestically and abroad. Although each of its groups of businesses operates independently, they share the need to balance new growth with selective upgrading or divestiture in response to changing conditions.

With a renewed emphasis on product superiority and low-cost production, Weston is positioned to remain a leader in its industry.

Principal Subsidiaries

Weston Bakeries Ltd.; Stroehmann Bakeries, Inc.; Soo Line Mills Ltd.; McCarthy Milling Ltd.; Interbake Foods Inc. (U.S.); William Neilson Ltd.; Cadbury Canada Marketing Inc.; Bowes Co. Ltd.; Atlantic Wholesalers Ltd.; IPCF Properties Inc.; Loblaws Supermarkets Ltd.; National Grocers Co. Ltd.; Zehrmart Ltd.; Kelly, Douglas & Co. Ltd.; Westfair Foods Ltd.; National Tea Co. (U.S.); E.B. Eddy Forest Products Ltd.; E.B. Eddy Paper, Inc.; British Columbia Packers Ltd.; Nelbro Packing Company Ltd.; Connors Bros., Ltd.; Connors Seafoods Ltd.; Connors Bros., Inc.; Port Clyde Canning Co.