Mott’s Inc.

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Mott’s Inc.

6 High Ridge Park
Stamford, Connecticut 06905
U.S.A.
Telephone: (203) 329-0911
Fax: (203) 968-5689

Web site: http://www.motts.com

Wholly Owned Subsidiary of Cadbury Schweppes PLC
Incorporated: 1914 as Duffy-Mott
Employees: 1,300
Sales: $488 million (2001 est.)
NAIC: 312100 Beverage Manufacturing; 311991 Perishable Prepared Food Manufacturing

Mott’s Inc. produces and markets a host of top-selling brands, operating as the only division within Cadbury Schweppes PLC responsible for its own processing. The company’s brands include a variety of apple beverages and other fruit drinks marketed under the Mott’s label. Mott’s also produces and markets products under the names Clamato, Hawaiian Punch, Mr. & Mrs. T, Rose’s, Holland House, ReaLemon, and ReaLime. Mott’s operates ten production facilities, five of which are responsible for production of products marketed by Snapple Beverage Corp., a Cadbury Schweppes subsidiary.

19th-Century Origins

Mott’s Inc.’s lengthy involvement in the beverage industry began with the decision of a Quaker to start his own cider and vinegar business. In 1842, Samuel R. Mott, a resident of Bouckville, New York, first hitched his horse to a “sweep” and began crushing apples. The production technique was centuries old, involving two large stone drums located at the center of the sweep. As Mott’s horse plodded repeatedly in a circle, the apples were crushed beneath the revolving stone drums. Next, the crushed apples were shoveled into a pen with slatted sides and packed with straw. A jack screw was fitted above the apple bits and, with the weight of three men leaning on a level, the jack screw pressed downward, creating apple juice that ran off into a tank beneath the pressing pen. The cider-making technique was not innovative. Instead, Mott’s drew its strength from the commitment to expansion displayed by Samuel Mott and the drive toward diversification demonstrated by his successors. The former became a hallmark of the company shortly after its inception. The latter took nearly a century before it became a defining characteristic of the Mott’s enterprise.

Initially, Mott’s market was restricted to Bouckville, to Mott’s neighbors, who enjoyed his cider and vinegar. As word of mouth spread and demand grew, the size and reach of the company grew. Once Mott was able to rely on the help of his son, distribution of the company’s cider and vinegar reached well beyond the confines of Bouckville. Along the way, the horse-powered enterprise adopted more modern production methods, using water power and steam to operate the mill’s presses. With the technological advancements and a dedication to widening distribution guiding the company forward, Mott’s cider, vinegar, and champagne cider—a rare diversification during the company’s first century of business—appeared in markets far removed from Bouckville. Clipper ships transported the company’s products to California. Mott’s products appeared at Philadelphia’s centennial celebration in 1876. The company’s offerings were on display at the Chicago Columbian Exposition of 1893. The Bouckville-made products even graced international markets, appearing at world fairs in Paris and Brussels before the end of the century.

As the Mott Company entered the 20th century, it enjoyed widespread recognition, its reputation built upon nearly 60 years of business. The company also was set to embark on a new era, one that began with a merger completed at the start of the new century. In 1900, the Mott Company merged with the W.B. Duffy Cider Company. Based in Rochester, New York, Duffy was the first company to perfect a method for preserving apple cider in wood, an achievement registered by the company’s namesake founder, who started the company in 1842, the year Samuel R. Mott made his first batch of cider and vinegar. The merger created Duffy-Mott, which was incorporated in New York in 1914. The company’s first president was Harry Meinhold, who entered the cider and vinegar business as an entrepreneur at the age of 18. Eventually, Meinhold became co-manager of the New York office of the American Fruit Product Co., the position he held before being tapped as Duffy-Mott’s president.

Diversification During the Great Depression

The next notable period in the development of Mott’s occurred at a time of profound despair for nearly every company in the United States. The Great Depression caused financial ruin for scores of commercial entities, having such a deleterious impact on industries of all sorts that survival represented a laudable achievement. Duffy-Mott not only survived during the 1930s, but thrived, registering perhaps the most successful decade of the company’s existence. For the first time, the company diversified meaningfully beyond the cider and vinegar business, essentially the sole means of support for the first 90 years of the company’s history. Duffy-Mott’s decade of diversification began after the company acquired the Standard Apple Products Company and its plant in Hamlin, New York, in 1929. A slew of new product introductions followed the acquisition, beginning in 1930 when Duffy-Mott introduced apple sauce, the product most closely associated with the Mott’s label at the end of the 20th century.

Next, the company sought to combat the seasonality of its business. Duffy-Mott’s plants, which by this point were located in Hamlin, Holley, Voorheesville, and Rabena—all in New York—were only in operation during part of the year, remaining idle during the off-season. The solution to the problem was entering a non-apple business, a foray the company made by forging an agreement in 1933 with the California Prune and Apricot Growers Association, later to become Sunsweet Growers, Inc. California Prune, a prune growing and processing cooperative, was seeking to broaden its distribution, particularly to the East Coast, where Duffy-Mott maintained a nearly century-old presence. Under the terms of the agreement, the two organizations began producing prune juice, a product entirely new to consumers. The response from the public provided a new revenue stream to Duffy-Mott and offset the seasonality of the company’s mainstay apple-processing business, as consumers embraced the new product introduction. The success of the diversification led to the perpetuation of the joint venture for more than 40 years, until Duffy-Mott eventually introduced its own product, dubbed Super Mott’s Prune Juice.

Product expansion continued, as the economic climate blackened. In 1936, Duffy-Mott started making jellies, a product category that found a receptive audience during the bleak years of the decade. The company began producing pure apple jelly, orange marmalade, as well as a number of hybrid fruit flavors, including apple-raspberry, apple-strawberry, apple currant, and apple-orange. Although the line of jellies was discontinued once economic conditions improved, the initial success of the products provided a valuable source of income at a time of widespread financial crisis. In 1938, Duffy-Mott further offset the seasonality of its cider business by introducing Mott’s Apple Juice, a production process that required the development of innovative filtering and pasteurizing techniques.

Duffy-Mott’s diversification program resumed in the 1950s, fleshing out the company’s selection of products. In 1953, the company acquired Clapp’s Baby Foods, giving it an industry pioneer. Clapp’s Baby Foods was founded in 1921 by Harold Clapp, who launched his business and a new U.S. industry when his wife fell ill. Clapp assumed responsibility for taking care of his young son, a duty that included the concoction of a special diet comprising beef broth, vegetables, and cereal. Clapp was impressed by the effect his formula had on his son, prompting him to produce batches of his “soup” for friends. Soon, Clapp began selling his baby food to drugstores, a business he cultivated until 1931, when he sold his company to Johnson & Johnson. Under the direction of Johnson & Johnson, the distribution of Clapp’s baby food was shifted to food stores. Later, Johnson & Johnson sold the Clapp’s product line to the American Home Products Company, under whose guidance the Clapp’s product line was expanded to 37 items. After acquiring Clapp’s Baby Foods from American Home Products, Duffy-Mott expanded the product line to include nearly 100 items. Ultimately, the Clapp’s production plant in Williamson, New York, was refitted to process Duffy-Mott’s apple products, and the Clapp’s line was discontinued.

Duffy-Mott’s consistent efforts to expand both its range of products and its geographic presence continued in the 1960s. An important step toward the company’s commitment toward growth was taken in 1958, when Duffy-Mott converted to public ownership, providing it with working capital of an unprecedented amount. Before the public offering, there were slightly more than 100 owners, many of whom had held an investment in Duffy-Mott for many years. Immediately after the offering, there were roughly 3,000 shareholders. The company’s new “owners” were soon gratified to see their investment make its first step west of the Rocky Mountains. In 1960, Duffy-Mott reached an agreement with a West Coast food chain named Thriftimart, Inc. to acquire the processing equipment of the Pratt-Low Preserving Corporation and to lease a 407,000-square-foot plant. Pratt-Low, founded in 1905, operated as a packer of fruit and vegetables, as well as a national distributor of a line of dietary foods. The assets included within the acquisition became the Pratt-Low Division of Duffy-Mott, which sold its products through food brokers in 49 states. The division’s primary revenue earners were peaches, pears, fruit cocktail, and apricots.

Company Perspectives

Our success over the years is tied to our family of quality products, hard working and dedicated employees and the life blood of any consumer packaged goods company, innovation.

During the 1970s, Mott’s corporate structure, built up and spread outward during 130 years of development, was streamlined, giving the company a leaner, more efficient profile. Before the reorganization was completed, however, the late 1960s included several important additions to Mott’s sizeable stable of products. In 1966, the company acquired Lord Mott Canning Co., a company engaged in the canned vegetable industry. (Despite the name “Mott” in both corporate titles, there was no connection between the two companies before the acquisition). Also in 1966, Duffy-Mott purchased the Tilghman Packaging Company, a packer of seafood products, but the single greatest acquisition of the period was the purchase of a trademark. Duffy-Mott acquired the rights for Clamato and reformulated it as a clam-and-tomato-flavored cocktail. The addition of Clamato to the company’s portfolio soon led to the introduction of Beefamato and Nutramato, but the importance of the two sister products paled in importance to the lasting impact of Clamato on the fortunes of Mott’s. By the end of the century, Clamato figured as a signature product, occupying much of management’s attention and accounting for a sizeable portion of Mott’s’ annual revenue.

New Owners Spur Expansion During the 1970s and 1980s

The reorganization that occurred during the mid-1970s was precipitated by the beginning of a new era at Mott’s. One outcome of the company’s growing stature within its industry was the attraction it drew from larger suitors seeking to aggrandize their operations. Conglomerates coveted Mott’s, and after Mott’s shareholders voiced their approval, the American Tobacco Company acquired the company. Subsequent to the acquisition, Duffy-Mott became a subsidiary of the conglomerate American Brands, Inc. Duffy-Mott’s new owners soon ordered the consolidation of the company’s facilities, which prompted sweeping changes. Before the consolidation, Duffy-Mott operated 11 plants, facilities that were scattered throughout eight states: New York, New Jersey, Maryland, Virginia, Delaware, Pennsylvania, Michigan, and California. After the consolidation, the company’s physical presence was reduced to two plants, the facility in Williamson—a vestige of the Clapp’s Baby Foods acquisition—and the facility in Aspers, Pennsylvania.

Acquisition of Duffy-Mott by Cadbury Schweppes: 1982

As it happened, American Brands did not preside over its newly organized subsidiary for long. In 1982, American Brands sold Duffy-Mott to the giant candy and soft drink conglomerate Cadbury Schweppes PLC. London-based Cadbury Schweppes, looking to broaden its own reach in the beverage industry, proved to be a perfect fit for growth-minded Duffy-Mott, providing the financial support to fuel the 140-year-old company’s growth. A spate of significant acquisitions followed the arrival of Cadbury Schweppes, as well as the truncation of the company’s corporate title to Mott’s Inc. In 1987, the company purchased the Red Cheek apple juice brand. The year also marked the acquisition of Mr. & Mrs. cocktail mix, a leading brand of cocktail mixers best known for the top-selling Mr. & Mrs. Bloody Mary Mix. In 1989, the company acquired the Garden Cocktail and Zesty Garden Cocktail line from E.D. Smith, Inc., a Canadian-based concern. Once the two brands were absorbed into Mott’s, the company became the largest producer of tomato-based juices in Canada.

Quickening Growth During the 1990s

During the 1990s, the roster of Mott’s brands lengthened, giving the company more than a dozen well-known brands to ensure its financial stability. The Holland House and Rose’s mixer brands were acquired, giving the company the greatest share of the cooking wine mixer category in the United States. The largest acquisition of the 1990s occurred at the decade’s conclusion, when Cadbury Schweppes acquired the Hawaiian Punch brand. In 1999, Cadbury Schweppes paid $203 million for the brand, giving a portion of the business to Dr. Pepper/Seven Up, Inc., one of its subsidiaries, and giving Mott’s responsibility for producing and marketing the shelf-stable portion of the Hawaiian Punch business.

When Mott’s celebrated its 160th anniversary in 2002, the company was recording robust growth. Between 1998 and 2002, the company achieved great strides, doubling its annual sales volume. The prolific growth was attributable in part to the addition of Hawaiian Punch, but the surge in sales also was attributable to the company’s marketing expertise. Roughly eight months after the purchase of Hawaiian Punch, the packaging of the brand was revamped, resulting in a more attractive product whose new design made it more efficient to manufacture and to distribute. The company also registered success in the marketing of its Clamato Tomato Cocktail product. In a December 2002 interview with Beverage Industry, Mott’s’ senior vice-president of marketing explained the cause for soaring Clamato sales. “Three years ago,” he said, “we shifted our strategy 100 percent against Hispanics. Previous to that, we had been putting 90 percent of the marketing efforts against the Anglo market, and we had just been dabbling with the Hispanic market.” By 2002, after pinpointing Clamato’s target market, the company was deriving approximately 70 percent of its Clamato business from the Hispanic population, with more than 40 percent of sales centered in Los Angeles.

Key Dates

1842:: Samuel R. Mott starts making and selling cider and vinegar in Bouckville, New York.
1900:: The Mott Company merges with the W.B. Duffy Cider Company, creating Duffy-Mott.
1914:: Duffy-Mott is incorporated in New York.
1929:: Duffy-Mott acquires the Standard Apple Products Company.
1933:: Duffy-Mott begins producing prune juice.
1938:: Duffy-Mott introduces Mott’s Apple Juice.
1958:: Duffy-Mott completes its initial public offering of stock.
1982:: Cadbury Schweppes acquires Duffy-Mott.
1987:: The Mr. & Mrs. brand is acquired.
1999:: The Hawaiian Punch brand is acquired.
2001:: ReaLime and ReaLemon are acquired.
2002:: During the previous four years, annual sales for Mott’s double.

As Mott’s prepared for the years ahead, the company’s success in squeezing increasing revenues out of established brands boded well for the future. Further, Mott’s continued to demonstrate its willingness to acquire, a corporate posture that promised to fuel growth. In 2001, for instance, the company paid $128 million for the ReaLemon and ReaLime product lines, the leading lemon and lime juices in North America. Given these traits—the ability to derive growth from the old and a penchant for adding the new—Mott’s could look to the future with considerable and justifiable optimism.