OVERVIEW OF THE QUAKER OATS COMPANYTABLE OF CONTENTSLIST OF FIGURESPurpose of ReportCurrent StandingOutlookLeadershipGoal and Guiding PrinciplesPRODUCTSBeveragesHot CerealsGrain-Based SnacksGolden GrainReady-to-Eat CerealsOther U.S. and Canadian FoodsWorldwide SalesSOCIAL RESPONSIBILITYValue-Added FormulaOVERVIEW OF THE QUAKER OATS COMPANYPresented toDr. Jie WangDepartment of Managerial StudiesUniversity of Illinois at ChicagoSubmitted byMaria CabarrusScott HolmesRichard RamosDavid SeidManagerial CommunicationsNovember 28, 2001TABLE OF CONTENTSEXECUTIVE SUMMARY.................................................................................................... iiiINTRODUCTION................................................................................................................. 4PRODUCTS........................................................................................................................... 7FINANCIAL REVIEW.......................................................................................................... 9SOCIAL RESPONSIBILITY................................................................................................11CONCLUSIONS....................................................................................................................13REFERENCES......................................................................................................................14LIST OF FIGURES Figure 1: 2000 Financial Highlights................................................................................... 9 Figure 2: Sales by Product Line..........................................................................................10 Figure 3: International Sales...............................................................................................112EXECUTIVE SUMMARYPurpose of ReportThe purpose of this report is to present an overview of The Quaker Oats Company. In addition to providing a general view of where the company stands today in comparison to its own past performance and to its main competition, we discuss where we think the company is headed. Current StandingCurrently Quaker Oats is ranked 19th in terms of annual sales compared to other food and beverage companies. In 2000, it achieved a 7% sales increase and 14% growth in operating income. This was the third consecutive year Quaker posted a 20%-plus increase in earnings. International sales were up in Latin America and Asia-Pacific. Sales grew in Europe but were down in U.S.-dollar terms due to negative currency effects.OutlookQuaker Oats looks to keep its brand names strong while expanding into more foreign markets. The company continues to come up with new marketing strategies as well as new products. Its successful merger with PepsiCo Inc. creates the potential for additional growth.3INTRODUCTIONOfficially formed in 1901, The Quaker Oats Company and its subsidiaries manufactureand market food and beverage products. Quaker is a major participant in the highly competitivepackaged food industry in the U.S. and Canada, and it also manufactures hot and ready-to-eatcereals, pancake syrups, grain-based snacks, and flavored rice and pasta products. Led by itsGatorade thirst quencher products, which had sales of $2.1 billion in 2000, The Quaker OatsCompany is the worldwide leader in sports beverages.Internationally, the company makes and markets a widely diversified product linethroughout Latin America. In Europe and Asia-Pacific, Quaker diversifies geographically andprimarily focuses on cereal and grain products. HistoryA rocky reunion among three independent milling companieswas the catalyst for The Quaker Oats Company. The oat millingindustry began in America in 1856, when Ferdinand Schumacherestablished German Mills American Oatmeal Factory in Akron, Ohio.His mission was to introduce oats to American consumers. At the time,oats were only appropriate for horses.Initially, his customers were mainly German and Irish immigrants, for they wereaccustomed to oats as meats were too expensive. Schumacher quickly became a success and wasdubbed the “Oatmeal King.” Oatmeal gained wide acceptance within the American culture andcompetitors followed, making way for Henry Parsons Crowell, the second link of the Quakerempire.4FerdinandSchumacherCrowell established Quaker Mill Company in Ravenna, Ohio, near Schumacher’s area.Marketing was Crowell’s niche. He packed his Quaker oats in sanitary two-pound paperpackages along with directions printed on the back. Crowell was the first to register a trademarkfor a cereal in 1877. Consumers started asking for the Quaker Oats brand, and Schumacher wasunhappy.The third (and final) link to Quaker was Robert Stuart. He came from Embro, Ontario, toestablish a mill in Cedar Rapids, Iowa, in 1873 and eventually built another one in Chicago,where The Quaker Oats Company headquarters is currently located. Stuart’s company held themarkets in Chicago, Milwaukee, and Detroit, away from the competitive tension betweenSchumacher and Crowell in Ohio.In 1885, Crowell and Stuart joined forces and tried to get Schumacher to do the same, butthe latter refused. A year later, Schumacher’s largest and uninsured mill accidentally burned tothe ground, and he was forced to succumb to Crowell and Stuart’s proposal.The new company’s name was Consolidated Oatmeal Company. Crowell anointedhimself the president; Stuart was vice president, and the former “Oatmeal King” becametreasurer. Incidentally, having the word “consolidated” in the company’s new name was ironicsince the three owners had always been at each other’s throats, mainly Stuart and Crowell againstSchumacher.From 1886 to 1899, the company took many turns because of its unstable foundation. Itwent through various changes, including its name. Finally in 1901, it becamewhat we now know as The Quaker Oats Company, with Robert Stuartprevailing as the CEO. Generation after generation of the Stuart family ranQuaker Oats until outsider William Smithburg took over in 1979.5By the late 1970s, Quaker expanded into the pet food, convenience foods, ready-to-eatfoods, and even toy markets. In the 1990s, the company divested from all non-food products.L eadershipSince 1997, chairman