White Lily Foods Company

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White Lily Foods Company

218 East Depot Avenue
Knoxville, Tennessee 37917
U.S.A.
Telephone: (865) 546-5511
Fax: (865) 521-7725
Web site:http://www.whitelily.com

Wholly Owned Subsidiary of The J.M. Smucker Company
Incorporated: 1888 as J. Allen Smith & Company
Employees: 112
Sales: $33 million (2006 est.)
NAIC: 311211 Flour Milling; 311822 Flour Mixes and Dough Manufacturing from Purchased Flour

A subsidiary of The J.M. Smucker Company, White Lily Foods Company is the Knoxville, Tennessee, miller of White Lily flour, one of the most popular flours in the southern United States. White Lily is made from lowprotein soft red winter wheat, as opposed to the hard wheat found in most commercial flours. White Lily flour is not as dense, creating more surface area to facilitate the absorption of liquid and air. As a result, it produces extremely flaky pie crusts and biscuits.

White Lily flour products include plain flour; selfrising flour (which incorporates baking powder and salt); white cornmeal mix; and self-rising buttermilk white cornmeal mix. White Lily mixes include buttermilk biscuits, cornbread, blueberry pancakes, banana nut bread, cinnamon raisin muffins, and chocolate cookies. The products are found in supermarkets throughout the South and are available for purchase through the Smucker online store. White Lily’s former corporate owner, C.H. Guenther & Son Inc., continues to make the products for Smucker at plants in Knoxville and South Carolina.

POST–CIVIL WAR ORIGINS

The man responsible for the Lily White brand was James Allen Smith, born in Elberton, Georgia, in 1850, the youngest of ten children. Due to his young age, Smith did not fight in the Civil War, although he lost two brothers to the war. After the war Smith moved to Atlanta to attend Eastman Business College. While there he was able to save up enough money to go into business for himself when he relocated to Knoxville in 1873. He established J. Allen Smith Wholesale Grain Company, trading in grain and provisions. The business prospered and in 1881 he added a small mill to his operations. A year later he became partners with four other Knoxville businessmen, together raising $30,000 to start Knoxville City Mills. The company opened a large flouring mill in 1885, capable of producing 150 barrels a day. In 1888 Smith merged Knoxville City Mills with his grain company to create J. Allen Smith & Company and assumed the presidency.

The son of a minister, Smith was known to be scrupulously honest both with his customers and his employees, and obsessed with selling the highest quality product available. At the time, finding good baking flour was difficult. Farmers harvested their own wheat, which was then ground into a coarse flour at the local grist mill, with variable, and generally poor, results. After the forming of Knoxville City Mills, Smith charged his millers to develop a light flour. After a year of effort, according to the oft-told story, the mill foreman presented Smith with a sample of flour made from soft Southern red winter wheat, exclaiming, “Mr. Smith, you’ve been wanting a flour that’s whiter than snow and smoother than silk. Well, I think you’ve finally got it.” When used in baking, the best of this “Fancy Patent Flour” produced biscuits and pastries that were far lighter and fluffier than those that relied on the usual hard winter or spring wheat, or even a blend of soft and hard wheat.

As a name for this new flour, Smith chose White Lily. According to some accounts, he named it after his wife, Lillie Powell Smith. Possibly, the name was a gentle pun, the white flour being represented by a “white flower,” the White Lily. During this period, in fact, many mills chose a white flower, such as a white tulip or white rose, to represent their product. No matter what the name Smith chose to adorn his new flour, it quickly caught the attention of Southern housewives and bakers who soon became devoted customers.

The popularity of White Lily made it impossible for the mill’s needs to be met by the small local wheat crop. As a result, the company became dependent on the East Tennessee, Virginia and Georgia Railway, later known as Southern Railway, to deposit at its siding wheat from Kentucky, Indiana, Illinois, Missouri, Kansas, and Minnesota. The railroad also received shipments of bagged flour, cars of bulk flour, and feed that was then shipped throughout the South. By 1905, J. Allen Smith & Company was one of the largest milling operations in all of the South, generating about $2 million in annual sales.

SMITH DIES: 1920

Smith ran the mill that produced White Lily flour until his death in 1920, and along the way he also served as the president or director of banks and other concerns. Upon his death, his son, C. Powell Smith, took the reins of the milling company and continued to grow the business. By the time of C. Powell Smith’s death in 1944, the company flour mill was able to produce more than 300,000 pounds of flour a day, a far cry from the early days when daily production fell short of 20,000 pounds. The younger Smith had no sons to succeed him, and control of the business was spread among a number of stockholders. Nevertheless, White Lily was an entrenched brand and the company continued to expand, especially after the economy soared in the postwar years.

To keep up with demand, the company opened a new facility in Knoxville in 1952. Five stories high, the new mill doubled the production capacity of the old one, and was able to grind 600,000 pounds of flour, 250,000 pounds of mill feed, and 120,000 pounds of corn meal each day. Not only did the company’s products continue to be sold throughout the South, but they were also shipped to Latin America, Europe, and Asia.

In 1953 Kansas-born Willard Francis Toevs, a General Mills veteran, joined J. Allen Smith as an assistant sales manager for the White Lily brand and began to work his way up through the ranks. By 1965 he became president and for the next fifteen years he led the company through a period of transition while continuing to add product lines and maintaining the reputation of White Lily flour in the South. In 1972 he helped to engineer the sale of J. Allen Smith to the Flour and Bakery Supplies Group of Holly Farms Corporation for $3.3 million. Four years earlier Holly Farms had itself been purchased by Federal Compress and Warehouse Company, a cotton warehousing firm which in 1959 began collecting milling operations by acquiring Dixie Portland Flour Company. Based in Memphis and operating mills in Arkansas City, Kansas; Chattanooga, Tennessee; and Chicago, Dixie-Portland was the South’s largest distributor of family flour. Hence, adding the popular White Lily brand was a major coup for the company. With Holly Farms’ backing Toevs was then able to afford a $6.5 million modernization program in the late 1970s, before retiring from the company. In the mid-1980s White Lily installed another chief executive, Ted Pedras, who also guided the company for an extended period. Pedras had previous worked for Pillsbury in Minneapolis and then served as general manager for Pillsbury de Mexico in Mexico City before joining Holly Farms and taking over the Knoxville operation.

COMPANY PERSPECTIVES

A Southern tradition since 1883.

J. Allen Smith became the White Lily Foods Company under Holly Farms ownership, which lasted until 1989, at which point the Knoxville company found itself caught up in the merger mania that swept the United States at the time. In July 1989, following a prolonged hostile takeover bid, chicken processor Tyson Foods, Inc., acquired Holly Farms. Rapidly growing its fast-food chicken business, Tyson was desperate for Holly Farms’ chicken supply. The milling operations, on the other hand, were expendable and were quickly put up for sale in order to raise money to pay down Tyson’s debt of more than $1 billion. In September 1989 a buyer was found in ADM Milling Company, a division of Archer Daniels Midland Company. In addition to White Lily Foods, ADM Milling acquired Dixie Portland Flour Mill Inc. and Dixie Portland of Georgia.

White Lily’s tenure with ADM Milling was short lived, however. About six months later a deal was struck to sell the company to San Francisco-based Windmill Corporation, but because of Federal Trade Commission concerns the sale was not completed until March 1991. Windmill had been assembled in late 1989 by a group of equity investors. Its assets included Martha White Foods, Inc., a Nashville, Tennessee, maker of flours and mixes, and Roush Products Company, an Iowa producer of private label mixes for bread and other baked goods.

Because Windmill was essentially an equity growth company, set up to buy and sell companies, it was only a matter of time before ownership of White Lily once again changed hands. In early 1995 the company found a new corporate home when it was bought by Pioneer Flour Mills of San Antonio, known legally as C.H. Guenther & Sons, which boasted a heritage even older than White Lily. Its founder, Carl Hilmar Guenther, was an immigrant who had been an apprentice millwright in his native Germany before coming to America and eventually to San Antonio in 1851, just fifteen years after the fall of the Alamo. His sons joined the business in 1878, and when Guenther died in 1902 the company did not change its name but began doing business as Pioneer Flour Mills, drawing on the name of its most important brand. Like J. Allen Smith, Pioneer took advantage of the railroad to become a major brand in its region. Over the years the company also added consumer convenience foods, such as breakfast cereals, and biscuit, cornbread, cake, and pancake mixes. In the 1980s Pioneer introduced a popular line of gravy mixes and through acquisitions became involved in frozen baked goods and biscuits.

Pioneer executives expressed no interested in making wholesale changes to the White Lily operations. “We think they’re doing a good job,” Pioneer chief executive Richard DeGregorio told the press. “That’s one of the reasons we were interested in the acquisition. We don’t plan to make any changes of consequence to what they’re already doing or whom they doing it with. We see it as an opportunity for White Lily and Pioneer to extend themselves, matter of fact, and to extend their product lines.” White Lily was especially hopeful about taking advantage of Pioneer’s research and development capabilities to add new products. For several years White Lily had been in a holding pattern because none of its owners planned to keep the business for very long and had little incentive to invest in product launches or future growth of any kind. The short-term plan was to maximize profits and sell the property. In a matter of months under Pioneer’s ownership, White Lily introduced the first packaged gravy mix in its history. Made available in the South, it came in three varieties: country gravy, pepper gravy, and biscuit gravy. In the meantime, the company’s flagship product, White Lily flour, continued to thrive. Despite being sold in only 15 percent of the United States, its share of the packaged flour market trailed only national brands Gold Medal and Pillsbury.

KEY DATES

1882:: J. Allen Smith and partners start Knoxville City Mills.
1883:: White Lily brand flour is introduced.
1888:: Smith merges Knoxville City Mills with his grain company to create J. Allen Smith & Company.
1920:: Smith dies and his son, C. Powell Smith, assumes control of the company.
1944:: C. Powell Smith dies, and control of the company passes to stockholders.
1972:: Holly Farms Corporation acquires White Lily.
1989:: Tyson Foods acquires Holly Farms and then sells White Lily.
1995:: C. H. Guenther & Son, Inc., acquires the company.
2006:: The J.M. Smucker Company acquires the White Lily brand.

PEDRAS RETIRES: 1996

Pedras had led White Lily through an extended period of revolving-door ownership, and remained to guide the company as it made the transition to Pioneer’s control. Then, in August 1996, he retired at the age of 60, after serving 19 years as White Lily’s chief executive. He agreed to serve as a consultant to the company for another two years. Three months later his successor was named, Ken K. Danton, who had joined the company only the prior year. He was a well-seasoned executive, however. After graduating from the University of Georgia, Danton worked as a sales representative for General Foods before going to Martha White in 1974. He held a number of posts, eventually becoming vice president of operations for Martha White in 1994, before coming to White Lily.

In the late 1990s White Lily turned to television advertising for the first time in nearly a decade. In December 2002 the brand received for free the kind of advertising it could not buy, when the Food Network broadcast a “holiday tree trimming party,” cohosted by executive chef of Gourmet Magazine, Sara Moulton, and well-known pastry chef Nancy Silverton. In preparing a tart, they used White Lily all-purpose flour, raved about the flaky crust it produced, and took the time to explain why a low-protein flour like White Lily was important in pastry making. Even though the Food Network posted the wrong phone number, providing that of a rival flour company, White Lily was besieged by calls from interested new customers.

A year later, in 2003, White Lily received the kind of publicity it could do without, however. In July of that year the company locked out workers who belonged to the Bakery, Confectionery, Tobacco and Grain Millers International Union after the two sides failed to reach an agreement on a new labor contract. The dispute lasted for 14 weeks, marked by round-the-clock picketing by workers and nasty accusations traded between the two sides. Two union representatives, including the president, were arrested for criminal trespassing.

Pioneer decided in 2006 that it was no longer interested in the family flour business and put White Lily up for sale. In the fall of 2006 The J.M. Smucker Company agreed to buy the brand. Two years earlier, Smucker had acquired the Martha White brand of baking mixes. Under the terms of the agreement, Pioneer agreed to continue making the White Lily products at the Knoxville plant and a facility in Prosperity, South Carolina. Given Smucker’s marketing prowess, White Lily hoped to increase its visibility beyond the South, where it remained a cultural icon.

Ed Dinger