Gerber Products Company

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Gerber Products Company

founded: 1901

Contact Information:

headquarters: 445 state st. fremont, mi 49413 phone: (616)928-2000 fax: (616)928-2408 toll free: (800)4-gerber url: http://www.gerber.com

OVERVIEW

Since 1928 Gerber Products Company has been a major developer, manufacturer, and marketer of baby food. In the United States, it is the leading baby food manufacturer with more than 70 percent of the market. Gerber also has a strong presence in Mexico, Costa Rico, Venezuela, and Poland.

More than 190 varieties of fruits, vegetables, juices, cereals, meats, snacks, and main meals are manufactured by the company. Gerber also sells baby care products in 80 nations.

COMPANY FINANCES

Since Gerber Products Company is a wholly owned subsidiary of Novartis, separate financial statements are not published for the company. However, the 1997 Novartis annual report states that overall sales for Gerber increased 6 percent. Outside the United States the company experienced "double-digit" growth, according to Novartis, through launches of infant formula and cereals.

ANALYSTS' OPINIONS

Environmental groups issued a report in 1997 charging that pesticide residues in baby food brands pose a possible health risk to children. Although the levels of pesticide were below government limits, the groups' report claimed the level of pesticide residues was unsafe for infants.

The Environmental Working Group and the National Campaign for Pesticide Policy Reform reported that 16 pesticides were found in 8 different baby foods from Gerber and its competitors, Heinz and Beech-Nut.

In an Associated Press article, a Gerber spokesman said the company's baby foods were safe, and defended its pesticide elimination program. Gerber and its competitors also disputed the environmental groups' claim that federal pesticide standards didn't adequately protect children.

Meanwhile, a nutrition advocate with the Center for Science in the Public Interest blasted Gerber Products Company's baby food. In March 1997 Michael Jacobson accused the company of exaggerating its baby foods' nutritional quality. He charged that Gerber diluted products with starch, sugar, and water—nearly a year after the company introduced products with no added starch or sugar. A Gerber Products Company spokesman called the claims irresponsible and inaccurate.

HISTORY

In 1927 Dorothy Gerber's pediatrician recommended that she introduce her two young daughters to strained fruits and vegetables. Months after taking her doctor's advice, Gerber had grown tired of peeling, scraping, and straining food. Why, she asked husband Dan, couldn't infant foods be strained and canned at the Fre-mont Canning Company? Her father-in-law, Frank Gerber, was president of the 26-year-old cannery. Eventually, Dorothy Gerber's conversation with her husband led to talks with Frank Gerber. One year after Dorothy Gerber began the arduous task of straining her daughters' fruits and vegetables, five varieties of Gerber baby food—vegetable soup, carrots, spinach, peas, and prunes—had been created. Six months later the company's baby foods were being sold in grocery stores throughout the United States.

In 1938 Dorothy Gerber started personally answering letters received by the company. In the late 1990s more than 45,000 letters were answered annually by trained correspondence specialists. In May 1986 Gerber began its toll-free information service (1-800-4-GERBER) and in 1991 made that service available 24-hours a day, 7-days a week in the United States and Canada. This information service handles more than 803,000 calls a year about infant feeding and care.

Building on the success of its baby food business, Gerber started making baby care products in 1960. Those products numbered 350 in the late 1990s and include Gerber and NUK brand products such as bottle feeding systems, nipples, pacifiers, teethers, eating utensils, breast-feeding accessories, safety items, and toys.

In 1967 Gerber Life Insurance Company was formed as a subsidiary of Gerber Products Company. It is a direct response marketing insurance company and a producer of juvenile life insurance. Gerber Life Insurance Company has more than $9 billion of life insurance in force and insures more than 2 million people throughout the United States and Puerto Rico.

In August 1994 Gerber was acquired by Sandoz Ltd. and in the late 1990s was a part of the Novartis group of companies formed in December 1996 by the merger with Ciba-Ceigy Ltd. Novartis is a leading life science company with core businesses in health care, agriculture, and nutrition.

STRATEGY

Gerber Products Company has maintained its commitment to research and development (R&D)—perhaps the single reason for the company's dominance of the baby food market. Gerber says it has the world's largest private research facility dedicated to infant nutrition. Its baby-focused R&D staff of 80 constantly studies young consumers, whose responses help the staff refine the company's products.

FAST FACTS: About Gerber Products Company

Ownership: Gerber Products Company is a wholly owned subsidiary of Novartis AG, which is a publicly owned company traded over-the-counter.

Ticker symbol: NVTSY

Officers: Alfred A. Piergallini, VChmn., Pres., & CEO; Kurt Furger, Exec. VP & CFO; Mike Lawton, Senior VP & COO

Employees: 4,500

Principal Subsidiary Companies: Gerber Life Insurance Company was formed as a subsidiary of Gerber Products Company in 1967.

Chief Competitors: Chief competitors of Gerber Products Company are manufacturers of baby food and baby care products. They include: Beech-Nut; Heinz; and Playtex.

Gerber Products Company's redesign of its Table Teaching 3rd Foods Baby Foods line illustrates just how baby-focused its product development process is. The line of foods was originally developed for older babies. Its larger jar sizes contained thicker, chunkier food textures. Though the line eventually offered more varieties, it evolved into a product not much different from the Variety Building 2nd Foods Baby Foods line and was redesigned.

INFLUENCES

In 1994 Gerber Products Company began redesigning the Table Teaching 3rd Foods Baby Foods line. Its research showed a need for more variety, thicker and chunkier textures, and more interesting flavors than those consumed by younger babies. Identifying and combining the right tastes and textures became a crucial part of the reformulation. To accomplish it, researchers used a computerized mathematical model to find the right mixture of taste and texture in each product. Once optimal formulations were created, consumer testing commenced.

Consumer testing centered on interpreting and evaluating sensory perceptions. The company used a panel of 8,000 parents and babies to evaluate and help develop the product. In the first stage of testing, adult panelists evaluated sample formulas. Their responses to questions about the samples were incorporated into the mathematical model for analysis. Then a computer generated an equation for the optimal product that yielded the highest liking score. Next, researchers generated several prototype formulas. Finally child panelists tasted the formulas and their parents provided evaluations based on the babies' responses to the foods. Scientists also studied the young consumers' nonverbal clues. Turning away from the product, spitting it out, or pushing it off the tray indicated that something was wrong with the food.

The redesign of Table Teaching 3rd Foods Baby Foods produced foods with textures ranging from slightly coarser than pureed to small, tender pieces. The company also added five products to the line. Two years after redesigning its 3rd Foods Baby Foods, Gerber responded to adult customers' demands for baby food with no added starch or sugar by reformulating its core line of products without these two ingredients.

CURRENT TRENDS

In 1997 Gerber designed and implemented various restructuring programs to increase efficiency and profit. The company closed its plant in Asheville, North Carolina, to streamline production capacities. The company also revamped its headquarters/sales organization in Fre-mont, Michigan, in order to improve operations. The company plans to introduce a new manufacturing technology for jarred baby food designed to improve quality and taste in 1998.

A national trend of lower birth rates translated into a slightly reduced market for Gerber in 1997. However, Novartis claims in its annual report, that Gerber increased its share of this market despite the trend.

PRODUCTS

Juice, cereal, 1st Foods, 2nd Foods, 3rd Foods, and Graduates make up the six principal Gerber baby foods. The entire line of Gerber Products Company's baby foods includes: Gerber Formula, in low-iron, iron, and soy form; "Single Beginnings" 1st Foods Baby Foods, featuring dry cereals, juices, fruits, and vegetables.

CHRONOLOGY: Key Dates for Gerber Products Company

1901:: Founded as an adult food cannery
1928:: Begins canning five varieties of baby food
1931:: Adopts the Gerber Baby sketch as the company's trademark
1938:: Dorothy Gerber starts answering letters from consumers personally
1941:: Company is renamed the Gerber Products Company
1956:: Gerber is listed on the New York Stock Exchange
1960:: Gerber starts making baby care products
1967:: Gerber Life Insurance Policy is formed
1977:: The company survives a hostile takeover attempt by Anderson, Clayton, and Company
1986:: Begins toll-free information phone line: 1-800-4-GERBER
1994:: Is Acquired by Sandoz Ltd.; redesigns 3rd Foods product line
1996:: Becomes part of Novartis group of companies; begins removing starch and sugar from baby food

"Variety Building" 2nd Foods Baby Foods, feature dry cereals, juices, cereals with fruit, fruit juice with yogurt, fruits, vegetables, dinners, Simple Recipe Dinners,Veggie Recipe Dinners, meats, and desserts.

"Table Teaching" 3rd Foods Baby Foods include desserts, sauces, and bakery products such as biscuits and Zwieback toast. The Tropical Baby Foods category offers juices such as mango with mixed fruit, and tropical fruits such as papaya with tapioca.

Gerber Graduates Foods for toddlers range from instant oatmeal to meat sticks, microwavable dinners, and fruit snacks.

In October 1997 Gerber introduced a new line of baby food called Tender Harvest. The line features commercially produced organic baby food with approximately 20 products. Initially 10 products were available when the line was introduced, including Apple Mango Kiwi, Chicken & Wild Rice, and Spring Garden Vegetable.

In addition to food Gerber offers a comprehensive line of products to clothe and care for babies. Disposable and reusable nursing systems, nipples, pacifiers, teethers, sterilizers, bottle warmers, feeding dishes, cups, utensils, breast pumps, and safety items such as the bi-fold door lock, auto mirror, and drawer and cabinet latches are carried under the Nuk and Gerber brand names.

CORPORATE CITIZENSHIP

Beginning in June 1997 Gerber's cereal boxes displayed a message to adults about the dangers of allowing babies to sleep on their stomachs. The goal of the national Back to Sleep campaign is to reduce the number of infant deaths caused by SIDS, or Sudden Infant Death Syndrome. SIDS, also called crib death, kills 4,000 babies in the United States each year. Though the causes of SIDS are unclear, the American Academy of Pediatrics recommends that, to lessen the chance of SIDS, babies should be placed on their backs when they sleep.

Tipper Gore, wife of Vice President Al Gore, led the public education effort to reduce SIDS deaths. "Placing babies on their backs to sleep is one of the most important steps that caregivers can take to reduce the risk of Sudden Infant Death Syndrome, but too many people still don't know this important, simple message," Gore was quoted as saying in a U.S. Department of Health and Human Services press release.

A 70-YEAR-OLD BABY

On July 28, 1998, Gerber celebrated its 70th birthday, as well as the anniversary of when the company chose the now famous "baby face" for its symbol. Gerber was looking for a baby face for their ad campaign, and they invited leading artists to submit entries. Artist Dorothy Hope Smith sent in a charcoal sketch of her neighbor's five-month-old-baby, inquiring if she was the right age and size of the baby they were seeking. The executives at Gerber thought the sketch was perfect and accepted it as it was. The image was so popular that the company adopted it as its trademark. It is now recognized all over the world and has appeared on every Gerber advertisement and package since 1931.

Over the years the public has pondered over the identity of this famous baby. One of the most circulated rumors was that the baby was Humphrey Bogart. The rumor started because his mother was an accomplished artist and sold drawings for commercial use. However, Humphrey Bogart would have been 29 years old in 1928. There have been speculations that Elizabeth Taylor or Bob Dole were the model, yet the real model was Ann Turner Cook, who turned 72 in 1998; she was two years old when Gerber chose the sketch.

Cook had to defend her Gerber baby identity when a lawsuit was filed challenging the baby's identity. She agreed to appear in court, but that proved unnecessary once the judge saw her baby picture and automatically recognized her from the jars. Cook is not employed by Gerber and receives no royalties for her image, but she does make public appearances for the company and welcomes the semi-celebrity status. A retired English teacher and mystery novel writer, she says, "if you're going to be a symbol for something, what could be more pleasant than a symbol for baby food?"

In December 1996, Gerber unveiled its first new label in more than 40 years. Ann Turner Cook was present for the ceremony, and though the label had changed, her face still remains. "The CEO of the company has assured me they'll never change that part of the label," said Cook in the Chicago Sun-Times. She has only seen the original drawing once, but the company gave her a reproduction that hangs in her living room. The original remains locked in a vault at the company's headquarters in Fremont, Michigan, to preserve it for posterity.

Gerber displayed the message about SIDS and the Back to Sleep campaign on 3 million of its cereal boxes. The company also included the message in mailings to 2.7 million mothers of newborns over a year. A message recorded by Tipper Gore has played on the Gerber toll-free information number (1-800-4-GERBER) 7-days a week, 24-hours a day, for a year. The company estimated it would reach 80 percent of parents with infants across the country.

GLOBAL PRESENCE

Gerber Products Company's production facilities are located throughout the United States, Mexico, Costa Rica, Venezuela, and Poland. According to Gerber's parent company's annual report, Gerber launched its infant formula and cereals in eastern Europe, Latin America, and the Far East in 1997. The labels on its products are printed in 16 languages.

SOURCES OF INFORMATION

Bibliography

"clinton administration announces expanded back to sleep campaign, tipper gore to lead new effort," 19 may 1997. available at http://www.gerber.com.

gerber corporate background, 19 may 1997. available at http://www.gerber.com/corpback.html.

"gerber products company announces major move: new formulations free of starch and sugar introduced to core line of baby food," 19 may 1997. available at http://www.gerber.com/starchfree.html.

"gerber, tipper gore say babies should sleep on backs." usa today, 1 april 1997.

novartis home page, 14 may 1998. available at http://www.novartis.com/textsite/nutrition/gerber/t-corporate.html.

"pesticides common in baby food, report says." usa today, 1 april 1997.