Quaker Oats Company

Date Founded: 1901

Industry: Food

Corporate Headquarters: Chicago, Illinois

Type: Public

The Quaker Oats Company is an American food conglomerate based in Chicago, Illinois. Quaker was acquired by PepsiCo in 2001 and operates as a subsidiary of the food giant. Quaker Oats manufactures a wide range of breakfast cereals, breakfast foods, snacks, mixes, and drinks. Quaker's brands include a line of Quaker oatmeal products; Cap’n Crunch and Life cereals; Quaker rice cakes and Quaker Chewy granola bars; Rice-A-Roni, Quaker Cereal Puffed Rice, Quaker Cereal Puffed Wheat; The Pearl Milling Company mixes and syrups; and Gatorade sports drinks, among others.

Quaker competes with a number of companies, including the Campbell Soup Company, the Coca-Cola Company, ConAgraFoods, the Hain Celestial Group, the Kraft Heinz Company, the Kellogg Company, McKee Foods, Nabisco, Nestlé, Unilever, and others.

History

Quaker Oats traces its origins to four oat mills—namely, the Quaker Mill Company of Ravenna, Ohio; a cereal mill in Cedar Rapids, Iowa, owned by John Stuart, his son Robert, and their partner, George Douglas; the German Mills American Oatmeal Company; and the American Oats and Barley Oatmeal Corporation. In 1877, the Quaker Oats name was trademarked as a breakfast cereal, the first such product to be registered with the US Patent Office. In 1881 the brand name and the Quaker Mill were bought by Henry Parsons Crowell, who launched a national advertising campaign for the cereal the next year. The American Cereal Corporation was formed in 1888 out of a merger of the major US oat milling companies.

In 1901, the American Cereal Corporation changed its name to the Quaker Oats Company. That year the company reported sales of $16 million, a total that steadily increased over the next twenty years, hitting a wartime peak of $123 million in 1918. In 1911, when Quaker Oats acquired Mother’s Oats, it emerged from the deal as the owner of half of all milling operations east of the Rocky Mountains. A chemical division was set up in 1921 to find a use for discarded oat hulls—that is, the outer covering of the harvested oat. But a profitable use for furfural (a chemical produced from oat hulls) had to wait until World War II. Once the company perfected this process, however, the postwar sales of the product surpassed oatmeal sales well into the 1970s.

In December 1901, Minnesota botanist Alexander Pierce Anderson created puffed rice while experimenting with a process that used starch crystals. Anderson was able to get a group of twenty Minneapolis businesspeople to offer support to his process for making a usable product; however, the Minneapolis backers sold their shares of the process to Quaker Oats Company. Quaker gave Anderson a Chicago laboratory but seemed rather uninterested in the process. Anderson finally won the attention of his bosses at the 1904 St. Louis World’s Fair; it was here that he dramatically demonstrated the process by creating a blizzard of puffed rice after loading eight, 20"-long cylinders that looked like small cannons. In 1905, Quaker Oats sold his new product as a breakfast cereal called Puffed Rice. Quaker went on to add Puffed Wheat to its line, touting the ready-to-eat cereal as The Eighth Wonder of the World.

Quaker established self-supporting overseas subsidiaries early in the twentieth century. The company operated mills in Europe and sold oats in Asia and Latin America. By the early twenties, overseas sales accounted for around 25 percent of the company’s total sales revenue. In 1925, the company sought to diversify by purchasing such established brands as The Pearl Milling Company (known as Aunt Jemima from 1889 to 2021), which made pancake mixes and syrups. Quaker ventured into the pet food market with the purchase of Ken-L-Ration in 1942; eight years later, in 1950, it followed up that deal with the purchase of the Puss’ n Boots brand cat food.

In 1968, Quaker set up a plant in Danville, Illinois, to make ready-to-eat breakfast cereals, pancake mixes, and granola snacks. This plant also produced Puffed Rice, which is used as an ingredient for other products in other plants.

In 1983, Quaker bought Stokely-Van Camp, Inc., makers of Van Camp’s canned beans and the sports drink Gatorade. Quaker undertook a drive to aggressively market Gatorade internationally, and by 1994, the company had made the beverage available in twenty-five countries across Latin America, Asia, and Europe. In the same year, Quaker consolidated its presence in the Latin American food products market with the acquisition of Adria Produtos Alimenticos Ltd., Brazil’s top pasta manufacturer.

Quaker sought to complement its acquisition efforts by expanding its product offerings, and between 1992 and 1995, the addition of Quaker chewy granola bars and flavored rice cakes led to a tripling of volumes in the rice and grains category. The company’s sales in 1994 hit $5.95 billion, a record high for the nineteenth consecutive year. In 1997 the company was subject to negative publicity in light of a lawsuit over its alleged secretive administration of radioactive calcium and iron to children in Massachusetts as part of nutritional research in the 1940s and 1950s. It agreed to settle the case for over $1 million.

In August 2001, PepsiCo acquired Quaker, primarily in order to add Gatorade to its beverage offerings and so gain entry into the sports beverage market. The $13.8 billion all-stock deal created the fourth-largest consumer goods company in the world and instantly made PepsiCo the undisputed leader in the fast-growing sports-drink market.

In 2012, Quaker Oats gave its iconic Quaker man (known as Larry) a minor makeover, with a trimmed down hairstyle, more radiant skin, and a general back-in-shape appearance. With the global food industry increasingly turning nutrition conscience by offering diet sodas, low-carb protein bars, zero trans fat cookies and crackers, and other allegedly more healthful products in the market, Quaker’s health and wellness marketing approach was expected to appeal to consumers. In 2014, in response to a lawsuit, the company agreed to remove trans-fats in the form of partially hydrogenated oils (PHOs) from its products. In 2022, the company aimed to increase the number of whole grains in their products.

Impact

Quaker Oats is widely recognized as a leading breakfast foods brand, and through PepsiCo it is part of one of the largest food companies in the world. Over an existence spanning three different centuries, the Quaker brand has found a place in the everyday lives of many consumers in the United States and around the world.

The precursor of the modern Quaker Oats Company made history in 1877, when it registered its now iconic trademark for its breakfast cereal—the figure of a man in Quaker clothing. According to former owners Henry Seymour and William Heston, the company adopted this first trademark for a breakfast cereal as a symbol of good quality and honest value. While actual Quakers (members of the Religious Society of Friends) have expressed dismay at being associated with the brand, over the years the Quaker company's advertising has sought to underline these supposed twin virtues of its offerings.

Quaker achieved several other notable firsts in its long history. In 1886 it became the first brand to include a recipe on its packaging, and it was the first to introduce the now-standard round canister packaging in 1915. In 1997, the Food and Drug Administration (FDA) approved the first food-specific health claim, for oatmeal, and the company included it on its oatmeal products. The claim reads, "Soluble fiber from oatmeal as part of a low saturated fat, low cholesterol diet, may reduce the risk of heart disease." This was also the year Quaker kicked off its Smart Heart Challenge, "a 30-day cholesterol-reducing program based on the simple dietary change of eating a bowl of oatmeal daily."

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