this video is sponsored by stamps. com I've been using them to print postage right from my home for everything I send in the mail and I'll tell you I can't even imagine going back to doing it any other way to get a four week trial of free postage and a free digital scale all you have to do is go to stamps. com company man [Music] Quaker Oats is it safe to say that most of us associate them with oats and oatmeal I mean it's in the name you may be surprised to learn that in the 1990s they used to be a Fortune 500 company with sales of over 5 billion dollars a year most of it coming from things other than oatmeal in December of 2000 after over 100 Years of operating as their own company it was announced that Quaker Oats was going to be acquired by Pepsi in a stock deal worth 13 billion dollars now what made this company worth 13 billion dollars is a question that I will answer throughout this video over the years Quaker Oats has been behind hundreds of brands in multiple Industries many of which you probably wouldn't expect so for this video I'm going to talk about the evolution of this company while highlighting seven major or unexpected sales categories of theirs over that 100 plus year time span starting off with the most obvious one consumer foods for decades Quaker Oats has been the provider of many of the major brands you see at the supermarket back in the 1800s oats were becoming more popular in America they were previously thought to be only for horses but people started eating them more and more and since oats were cheap enough to make it motivated many people to start oat milling companies there was so much happening between them Acquisitions bankruptcies a major fire it was a crazy industry at the time in 1877 one of these companies registered Quaker Oats as the first trademark for a breakfast cereal and that mostly established the brand as we know it today the Quakers are a religious segment mostly known for their Devotion to peace though they have no actual connection to this company the Quaker name and the Quaker Oats guy mascot was chosen simply because they felt it represented honesty Integrity Purity and strength I suppose giving them a wholesome positive image and many of the early advertisements that Quaker Oats guy is actually holding a scroll that says the word pure 11 years later that company merged with six of the other largest oat Millers in the country to create the American cereal company who 13 years after that in 1901 it changed their name to the Quaker Oats company in 1950 15 they started selling their oats in that cylindrical container that I think we all recognize and that's a basic overview of the creation of their oatmeal business but they've been involved in so many other consumer food brands and Jemima pancake mix for example was among their first ever Acquisitions in 1925 and one of their first major Ventures outside of Oats I do want to mention that the Aunt Jemima Syrup wasn't introduced until the 1960s which I personally think is probably their best product of any of these but the Aunt Jemima brand name was discontinued in 2020 due to being racially insensitive and renamed a pearl Milling Company breakfast cereals have been big for them notably cat and crunch and Life cereal both being introduced in the early 1960s Life cereal actually gained a lot of popularity in the following decade because of this advertising campaign where everyone is shocked that this picky kid named Mikey actually likes the cereal I mean the cereal must be really good if Mikey likes it there are so many others that could be mentioned here but for now I'll just add that in the 1980s they introduced a chewy granola bars and bought the company that made rice around the San Francisco treat alright that was the longest category but the remaining six have been significant as well for over 60 years Quaker Oats operated a chemical division it was originally established in the 1920s to make a multi-purpose chemical called ferferal out of the hulls of the old oats it was a division that did very well following World War II but by the 1970s there was a substitute for it on the market that was gaining popularity causing sales of it to fall and the entire division was sold in the 1980s but hey I can't imagine anyone here Associates Quaker Oats with chemicals the next category is pet food which may sound shocking at first but if you watch my videos you'll know that this is actually very common among food companies but Quaker Oats was selling it for a long time and in a big way their first major involvement was during World War II when they bought the brand Ken L ration and followed it up with the purchase and sale of multiple other brands in the following decades by 1997 they were selling over 1 billion dollars worth of pet food every year and accounted for 17 percent of the entire higher U.
S dry dog food market but that year they sold their European pet food operations for about 700 million dollars and their U. S pet food operations and a deal with Heinz the following week for a similar amount Heinz was already the owner of the cat food brand nine lives so this was a deal that really strengthened their presence in that market the next category for Quaker Oats is retail chains in 1981 almost all at once a Quaker Oats decided that they wanted to get involved in that industry in a big Way by acquiring some sizable retailers they bought Joseph A Bank the company that made clothes at their manufacturing facilities and then sold them at their 11 stores they were purchased for 20 million dollars and over the next five years they grew the chain to over 30 stores allowing them to sell it for five times what they bought it for for Brookstone it was a very similar story that's a company that sold specialty tools primarily through mail order catalogs but also through seven physical locations again they operated Brookstone for five years before selling its iLab is another one at the chain of 27 optical stores was bought in 1981 and sold five years later the reason they sold all of them to different buyers by the way it was to lower their debt into better focus on their core food operations another category for Quaker Oats would be restaurants there were a few smaller Endeavors that most people wouldn't recognize but the biggest one was a chain called Magic Pan I think it's a cool name it's a restaurant that's specialized in making Crepes it started in San Francisco but once Quaker Oats became the new owner they had the resources to expand it to over 100 locations it was starting to become a big deal in the 1970s but by the 1980s sales were falling Quaker Oats sold it and the chain ended up closing altogether in the 1990s but hey I think that's a cool fact Quaker Oats built up a crepe restaurant to over 100 locations who would possibly guess something like that another unexpected category for Quaker Oats would be toys in 1969 they bought the brand Fisher Price a well-known toy company that makes products for younger children and notably my personal favorite the Chatter Telephone I say they are a well-known company but not nearly as much at the time of the deal in fact Quaker Oats is a big part of the reason they are so well known today they bought Fisher Price when they had sales of about 30 million dollars a year and divested them over 20 years later when sales were nearing 800 million meaning Quaker Oats grew them to be about 25 times larger during that time Fisher Price was then spun off into its own publicly traded company before being bought by the giant toymaker Mattel only two years later where they have remained ever since also a much smaller one but in the 1970s a Quaker Oats was getting really aggressive with their acquisition strategy and one of those was a lesser-known toy company called Louis Mark's toys for 54 million dollars that didn't complement the Fisher-Price sales in the way that they were hoping they ended up selling the company after only four years because of low sales the Quaker Oats category that I saved for last is beverages Because by the 1990s it was consistently their biggest category well above the oatmeal and everything else I've talked about but it is a peculiar category because it's mainly made up of 2 two separate Brands one of them being their most successful product of all time and the other one arguably being their least successful starting off with the happy one Gatorade in 1983 Quaker Oats bought Stokely Van Camp but by the name you would associate them with the Republican beans but more importantly they were the owners of Gatorade that was pretty much the reason Quaker Oats wanted it they ultimately won a bidding war against Pillsbury to acquire it and once they took control it they spent the next 17 years aggressively growing it into the dominant sports drink that we know it as today they introduced it to New Markets around the world they started advertising it toward the general public whether they were athletes or not and they had some memorable commercials like their be like Mike campaign in the early 1990s featuring Michael Jordan all of these efforts quickly made Gatorade their best selling product accounting for 40 of their total sales by the year 2000. they literally grew the product to be 20 times larger 100 million dollars in sales when they acquired it increased to about 2 billion so believe it or not Gatorade would likely not be as big as they are today if it wasn't for Quaker Oats that was a remarkable success but we can't say the same for their other major beverage brand Snapple in 1994 Snapple was a quickly emerging brand controlling almost 40 percent of the promising iced tea markets Quaker Oats us so much potential in it that they were willing to pay 1.
7 billion dollars to acquire it their largest ever acquisition that is generally considered to be one of the worst ever even at that point people were saying that the price was too high now I do have a video about all this if you want to hear it in more detail but basically as soon as Quaker Oats took over everything went bad for Snapple they started selling it in grocery stores rather than convenience stores and gas stations where it was much less desirable competing iced tea brands were introduced from Coke and Pepsi the Arizona brand was gaining traction and was actually inspired by Snapple and used tactics specifically designed to compete with them all of these new options for customers cause Snapples market share to fall from that 40 percent down to 15 percent within just a few years they even struggled with their marketing I don't know if you're familiar with the Snapple Lady it's in the other video but Quaker Oats stopped using her in their commercials and replaced her with much less memorable campaigns in 1997 Quaker Oats sold Snapple for 300 million dollars meaning they lost 1. 4 billion dollars on the deal over the course of only three years clearly their experience would Snapple it was not quite as successful as the one they had with Gatorade so there you have it I hope I've proven that anyone who thinks Quaker Oats just sells oats is greatly overlooking this company they spent over a century as their own company that got involved in so many more areas that you probably wouldn't expect to finish things up Quaker Oats was worth 13 billion dollars to PepsiCo because of all the successful brands that they still possessed mainly Gatorade the non-carbonated beverage category was thought to be the fastest growing segment in the industry so the major soft drink Brands like Coke and Pepsi were aggressive in trying to control that market Pepsi already owned multiple brands in the category like Lipton and Tropicana all the exist ones amounted to 18 percent of the market while Coca-Cola was beating them at 21 but with the acquisition of Quaker Oats and the Gatorade brand that came along with it Pepsi pulled way ahead with a 33 share let me know in the comments what do you think about Quaker Oats I imagine you probably knew they were associated with some of the products I talked about here but I can't imagine you knew about all of them so which ones were you most surprised to hear about also what is your favorite product that has been sold by Quaker Oats like I already said it's hard to do much better than the Pearl Milling Company syrup but poured on top of the waffles that is quite a breakfast right there but enough about waffles any thoughts you have about Quaker Oats or any of their products or waffles I guess leave them in the comments I'd like to hear what you have to say today's sponsor is stamps. com look this year has been passing pipe pretty fast sometimes it feels like too fast it's a reminder of how time is valuable and how we need to make the most of it I mean do you really want to spend your precious time going to the post office well with stamps.
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