Ore-Ida Foods Incorporated
Address:
P.O. Box 10
Boise, Idaho 83707
U.S.A.
Telephone: (208) 383-6100
Fax: (208) 383-6100
Statistics:
Wholly Owned Subsidiary of Heinz
Incorporated: 1951 as Oregon Frozen Foods Company
Employees: 4,500
Sales: $1 billion
SICs: 2037 Frozen Foods & Vegetables; 2038 Frozen Specialties Nec
Company History:
Best known for its Tater Tots, Ore-Ida Foods Incorporated is the leading retail brand of frozen potato products in the United States and the world's largest processor of diversified frozen foods.
The company was founded in the early 1920s by F. Nephi and Golden T. Grigg, brothers in a small town in eastern Oregon who were peddling fresh sweet corn in their early teens. Going door-to-door in a horse-drawn wagon, they learned that people wanted sweet corn fresh from the field, as corn loses its sugar and moisture content quickly. The brothers discovered that by picking the corn around midnight--a cool and dewy hour--they caught the kernels at their peak of freshness. At first they tended their own small plot of produce, but before long they had to buy vegetables from others. They began shipping corn by railroad to other cities, packing their sweet corn in crushed ice to keep it fresh on its way to kitchens up to 600 miles away. Customers as far away as Portland, Salt Lake City, and Butte, Montana, were loyal to the Griggs' sweet corn.
By 1942 growing demand forced the brothers to modernize their packing methods. Corn that had been pre-cooled in ice water was packed into crates, then more ice was loaded on top as the corn traveled in trucks and railroad cars to its destination. In 1943 a new quick-freeze factory was built in their town of Ontario, Oregon, by the Bridgford Company of California. Beginning in 1947 the brothers began sending much of their sweet corn to the factory. Within a year, they were shipping their fresh frozen sweet corn as far away as Washington, D.C., and Los Angeles. Production and sales tripled. They expanded their sweet corn acreage to 2,000 for the 1949 season.
However, problems were brewing at the Bridgford plant, which had evidently been designed without consideration of the area's climate and agricultural conditions--or even its employees: the plant had no heat, parking lots, or lunchroom. The plant closed down in September 1948 and was in bankruptcy court by early 1950. Realizing that frozen foods were the wave of the future, the Grigg brothers--whose operation became the Oregon Frozen Foods Company in 1951--set their sights on purchasing the bankrupt plant. When the foreclosure sale was held in 1952 the Griggs were prepared with money they had raised by mortgaging their homes and property, but the bidding drove the plant's price up to nearly twice what they had expected. The Griggs had inspired much confidence over the years, though, and soon other investors were flocking to join the venture. One man even sold his farm to help secure the plant.
After the purchase, the Griggs realized that their processing season would have to expand to justify the expense of the plant. They initially tried small amounts of seasonal fruits and vegetables, but they needed more volume. In eastern Oregon and southwestern Idaho there was one big money crop that seemed to vie with the brother's sweet corn: potatoes. So in 1952, Ore-Ida Potato Products Incorporated was created as another operating company, leasing the plant for use when season's corn processing was done.
Oregon Frozen Foods still had hurdles ahead. Having mortgaged everything they owned, the Griggs had to make the round of banks to secure operating capital. It soon became clear that not everyone shared their vision. Many lenders balked at the idea of frozen potatoes. Wouldn't the potatoes turn black? Frozen food wouldn't sell. What folks wanted was fresh. The young company ended up using raw potatoes as collateral for the loans it needed. With the loans in place, about 100 employees began running the potatoes through a carrot peeler. The company's first French fried potato was processed in 1952. The following year, Tater Tots were born.
Part of the genius of Tater Tots was the fact that it made a by-product into a top-selling product. Nephi Grigg took the potato slivers left over from shaving potatoes into French fries--which ordinarily were sold for a pittance and used for livestock feed--ground them together, added flour and spices, and pushed the mix through holes cut into plywood. Then he cooked the results in hot oil. The brothers were so enthusiastic about the future of frozen foods that they traveled to woo potential customers themselves, with briefcases filled with samples of their products in dry ice.
The company's main business was soon the processing and sale of frozen potato products. From 1951 to 1960 the company expanded dramatically. It was producing about 300,000 pounds of saleable potatoes a day, which requires twice that amount in raw potatoes, creating a serious storage problem. Plants processing potatoes could only run from August through April until long-haul storage was born in the 1960s, after which the company could receive shipments from California throughout the year to keep the potato processing running year-round. In 1960, with the company's products selling throughout the United States and into parts of Canada, a second factory was built in Burley, Idaho, to meet production demands. The new $3 million plant produced 500,000 pounds of potatoes a day.
Until this point, Ore-Ida had been a web of small companies, many run by friends and family of the Grigg brothers. In 1961 these entities were merged, becoming Ore-Ida Foods, Inc, and the company went public, raising almost $2.5 million. With the fresh funds, another facility was purchased in Burley; later another plant was built in Greenville, Michigan.
In 1962 Ore-Ida began processing and marketing French fried onion rings and fresh frozen chopped onions, made from sweet Spanish onions. These, and fresh frozen corn, quickly became high-volume items. Although depressed potato prices and other factors generated a net operating loss for the six-month period that ended in April, sales were still increasing and a new onion processing addition was completed to meet the demand for French fried onion rings. Sales grew from more than $24 million in 1963 to nearly $31 million in 1964, and the company's plants were transforming one million pounds of raw produce into packaged products every day. Between 1964 and 1965 the company doubled its capacity again, and the Griggs brothers, who found the sudden growth dizzying, decided to sell.
Ore-Ida was purchased by H. J. Heinz Company, which was also going through growing pains in 1965 as it evaluated its potential for becoming a giant in the frozen food industry, which appeared to be poised for explosive growth. Ore-Ida provided a perfect opportunity for Heinz to diversify and to expand its position in frozen foods. In a stock swap worth about $27 million, Ore-Ida became a division of Heinz, under the name Ore-Ida Foods, Inc.
Not long after the acquisition, Ore-Ida began losing money, which was a shock to everyone familiar with the company. When Heinz dispatched a team to investigate, they discovered a system of mismanagement that included contracting from farms that company executives had a stake in at inflated prices. Despite Heinz's reputation for having a hands-off policies with subsidiaries, it axed virtually all of Ore-Ida's senior management in a single bloody Monday in August 1967.
Nephi Grigg, who had been the company's president since 1951 and had served on the Heinz's board of directors since the merger, left Ore-Ida in 1969 to pursue other interests. Grigg went on to spend much time in the service of his Mormon faith, serving as a bishop, a Stake High Council member, and a mission president. Robert K. Pedersen became president and CEO of Ore-Ida. Pedersen invested in new products, new facilities, new packaging, and extensive market research. The company gained market share, moving from a roughly 20 to 50 percent share of the frozen potato business between 1971 and 1982, and plants continued to be built, expanded, and upgraded. In 1975 Ore-Ida unveiled its first national network television campaign, which marked the first time any frozen potato brand had appeared on television.
In 1977 Paul Corddry became president. That year, Ore-Ida purchased Baltino Foods, an Ohio-based company that manufactured frozen and refrigerated pizza products, and changed its name to Massilon. Corddry continued the company's efforts to build brand recognition; in 1978 alone, $15 million was spent for ads on television and in women's magazines.
Heinz acquired Foodways National, Inc., that same year and made Foodways a subsidiary of Ore-Ida. Operating two factories in Connecticut and New York, Foodways produced Weight Watchers frozen entrees. At the time, Foodways was considered "the Listerine of frozen dinners," as Corddry put it, featuring "lousy food, medicinal-looking packaging." Ore-Ida spent more than a year repackaging and improving the product line before developing new products. Competition between Weight Watchers and Lean Cuisine helped build the category, and Foodways eventually overtook Lean Cuisine to bring a steady stream of profits to Ore-Ida.
In 1980 Ore-Ida purchased Gagliardi Brothers, which produced a regional line of Steak-umm products. Although sales of Ore-Ida's frozen potato product line did not increase, profits doubled between 1982 and 1987, largely because of Foodways' success. In 1987 Foodways' momentum dropped, and a huge potato crop depressed prices--in fact, the crop was so huge that supermarkets were giving away free bags of potatoes. Ore-Ida recovered in the following years, though, with market share going from 44 to back up to 50 percent between 1988 and 1991.
Meanwhile, the company continued to expand its product line, both through acquisition and in-house product development. Bavarian Specialty Foods was purchased by Heinz and added to Ore-Ida's family in 1989, as was Celestial Farms in 1990. The following year Heinz formed Weight Watchers Food Company, which included Foodways. Ore-Ida also developed new lines of twice-baked potatoes, microwave potatoes, and battered fries.
In 1991 Heinz also acquired JL Foods, a major supplier of frozen foods to the food-service industry. Three of JL's six subsidiaries--Delicious Foods, Oregon Farms, and Chef Francisco--were integrated into Ore-Ida. At the same time, 1991 was another rough year for the company, as economic recession combined with another boom crop. Ore-Ida lost three to four share points and profits sagged. Between 1992 and 1993 Ore-Ida closed plants, consolidated operations, and sold interests.
Ore-Ida became the number one seller of frozen appetizers overnight through Heinz's $90 million acquisition of Moore's and Domani brands from Clorox's Food Service Products Division. In 1994 Ore-Ida sold its Steak-umm business in order to expand its production of pasta and sandwich lines. Microwaveable mashed potatoes were introduced, as were Fast Fries, the first retail oven-baked product to replicate the taste and texture of fast-food restaurant French fries.
In 1995 Nephi Grigg died. The Tater Tots he invented some forty years earlier still sell like mad.
Further Reading:
Foa Dienstag, Eleanor, In Good Company: 125 Years at the Heinz Table, Warner Books, 1994.
"H.J. Heinz Agrees to Buy Ore-Ida for $30 Million," Wall Street Journal, May 21, 1965, p. 5.
"The Ore-Ida Story," Sunday Argus Observer, June 5, 1983, Sec. E.
Source: International Directory of Company Histories, Vol. 13. St. James Press, 1996.
