Ranks Hovis Mcdougall PLC

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Ranks Hovis Mcdougall Plc

RHM Centre
Alma Road
Windsor, Berkshire SL4 3ST
United Kingdom
(0753) 857123

Public Company
Incorporated: 1933 as Ranks Limited
Employees: 39,000
Sales: £1.79 billion (US$3.24 billion)
Stock Index: London

Ranks Hovis McDougall PLC manufactures, processes, and distributes food products throughout the United Kingdom, Europe, the United States, Asia, and Australasia. The company’s roots can be traced to the flour-milling industry in Victorian England, but through the years it has branched into many other aspects of the food industry, including packaged and prepared foods, bulk chocolate, pasta, and tomato sauce as well as a variety of breads. The company also has invested extensively in research.

Joseph Rank, the founder of the company, began in the milling business in 1875 by renting a small windmill. He lost money at first and had to take a co-tenancy at West’s Holderness Corn Mill. But he was soon able to recoup his losses and set enough money aside to expand his business. At this time competition from American and Hungarian flour was an issue for English millers. Rank explored new milling methods to improve his competitive position against these foreign imports. In 1885, he built a mechanically driven flour mill in Hull. By using steel rollers instead of mill stones, the mill was able to produce an impressive six sacks of flour an hour, up from one and a half. In 1888 he built another steel-roller plant in Lincolnshire, and soon after still another even more modern plant. This new plant, equipped with the best technology available, produced 20 sacks of flour an hour and was considered one of the finest flour mills in the country.

At the turn of the century Great Britain was plagued by malnutrition. The poor often lived on little more than bread and tea, and infant mortality was high. In 1901, military recruitment standards had to be lowered to find enough men to enlist for the Boer War: the new minimum height for recruits was reduced to five feet. Since bread was the staple of the country, Joseph Rank was challenged to increase productivity. He installed a plant which produced 30 sacks of flour an hour, and then another plant with a 40-sack-an-hour capacity. He also set up agencies to distribute his flour in parts of England where it previously had not been sold. In May, 1899 Joseph Rank Limited was incorporated, and Joseph Rank became governing director, which he remained until his death in 1943.

In 1902 Rank made his first trip to the United States to see the wheat fields of the Midwest, determined to understand and conquer his competitors. Soon after his trip abroad, the company built mills in London and Cardiff. In 1912 a mill in Birkenhead was built to supply the needs of Ireland and northwestern England. Soon after that, the corporate headquarters was moved from Yorkshire to London.

During World War I, when starvation was a real threat to the people of Great Britain, Joseph Rank was asked to become a member of the Wheat Control Board. Frustrated by the government’s inability to warehouse large quantities of wheat—distribution became chaotic as many ships carrying supplies were sunk—he relied much on his own resources and initiative to buy and store quantities of wheat and to increase the production capacity of his London mill. During the war years, the company employed 3,000 workers, many of them women who took on production jobs while men were away fighting the war. Despite his philosophy of personal initiative, Rank and his sons were known for public service, religious faith, and philanthropic work. In 1935 Joseph Rank received the Freedom of the City of Hull (the only public honor he ever accepted) in part because of a trust fund he had set up in Hull to help “poor persons of good character.”

During the 1920s, the milling capacity in Great Britain exceeded the demand for flour. Nevertheless, Joseph Rank was able to expand into Scotland and consolidate and expand his operations in Ireland. He perceived the potential of new methods of transportation and communication very early, forming the British Isles Transport Company Limited to provide for the distribution needs of his company in 1920. In 1933, Ranks Limited became a public corporation. By this time, Joseph Rank was in his eighties, but he was still actively involved in the business. His son Rowland was running his own business—the Mark Mayhew mill, which produced animal feed as well as flour, and which, after World War II, would be incorporated into the Rank company. His son James, who after his father’s death in 1943 became chairman of the company, was employed during the war as the government’s director for cereal imports. Joseph Rank, despite his age, also contributed to the war effort by working as a secret wheat buyer for the government to build up stocks in the year before the outbreak of war.

After World War II, James Rank, the new chairman, was joined by an associate of his government-service days, Cecil Loombe, who became a director. Their challenge was to reconstruct the mills devastated by bombing and to expand the company. A new mill in Gateshead was their first big postwar accomplishment.

In 1952, James Rank was succeeded by his brother Arthur as chairman. Under Arthur Rank, the company explored many new ventures and began to acquire a variety of small, family-owned agriculture and baking businesses. It was also during this period that the company’s faith in quality control and research was firmly established. High standards of nutrition were set and maintained for both human and animal foods by testing in every phase of the production process. The legacy of these early efforts is the Research Centre at High Wycombe, staffed by more than 150 scientists who continue to improve the nutritional value of the company’s products as well as look for new food sources.

In 1962, still under the leadership of Arthur Rank, Ranks Limited acquired the Hovis-McDougall Company and became Ranks Hovis McDougall, Limited (RHM). In 1968 RHM made another important acquisition: the Cerebos food group, which brought with it a number of popular food brands as well as interests in France, Argentina, New Zealand, Australia, Canada, the United States, and South Africa. By 1969, after transforming the company from a flour mill to an international company with a variety of food interests, Arthur Rank was ready to hand over the chairmanship to his brother’s son, whose name, like his grandfather’s, was Joseph Rank.

Under Joseph Rank’s leadership the company maintained its dedication to research. During the 1970s, research center prospered and undertook projects in crustacea farming, cereal and seed production, wheat hybrids, and protein production from starch. By 1984, research had advanced to the point that the company was ready to undertake a joint venture with ICI, Britain’s largest industrial company, to form Marlow Foods, a company dedicated to producing and promoting mycoprotein food—food made by industrial fermentation of wheat-derived products. Mycoprotein food is high in protein and fiber, low in fat, and contains no cholesterol.

By the late 1970s, RHM and its competitor, Associated British Foods, monopolized their industry. Each company was selling over 60% of the flour it milled to its own subsidiaries, thereby offsetting losses in its baking division. Unable to compete or sustain losses, many small independent bakeries closed.

Joseph Rank became president in 1981 and was succeeded as chairman by Sir Peter Reynolds. The company made a number of important acquisitions during the 1980s in the United Kingdom, the United States, and the Far East. The largest acquisition was the purchase, in the United Kingdom, of the Avana Group. After a career with the company that had begun in 1936, Joseph Rank retired in 1988, remaining an honorary president after his retirement.

RHM undertook an unusual advertising campaign in 1986—one designed not for consumers of its products, but rather for the financial press, to increase awareness of the company itself. The ads featured a variety of slogans, all of which emphasized the diversity of the company—”We do not live by bread alone” and “We bakers like to have fingers in many pies.”

An innovative accounting practice introduced in 1988 also drew attention to the worth of RHM. In its 1988 annual report, RHM showed the value of all of its brands on its balance sheet. As intangible assets, brands are not usually counted on financial reports as part of a company’s assets. Grand Metropolitan was the first company to ever put acquired brands on its balance sheet, in September 1988. RHM went even further by including acquired as well as internally developed brands. Brand accounting is somewhat controversial because procedures for calculation have not yet been standardized.

In 1988 much of RHM’s energies were directed to fighting a hostile takeover attempt by Goodman Fielder Wattie Limited, of Australia, which owned 30% of RHM’s shares. The financial press saw RHM’s move to brand accounting, in part, as a way of discouraging such a takeover.

As it enters its second century, RHM remains dedicated to manufacturing wholesome food products at reasonable prices.

Principal Subsidiaries

Ranks Hovis Limited; RHM Ingredients Limited; Tenstar Products Limited; British Bakeries Limited; Holgran Limited; Inglis & Company, Limited; Manor Bakeries Limited; Société Francaise de Panification et de Pâtisserie-Lyon SA (France); Heinzel (London & Vienna) Limited; RHM Foods Limited; Supreme Salt Company Limited; J.A. Sharwood & Co., Limited; RHM Exports Limited; RHM Foods (Ireland) Limited (Rep. of Ireland); Tiffany Sharwood’s Frozen Foods Limited; Chesswood Produce Limited; McDougalls Catering Foods Ltd.; Pasta Foods Ltd.; RGB Coffee Ltd.; RHM Retail Limited; Cerebos Pacific Limited (70% Ord.) (Singapore); Cerebos (Australia) Ltd.; Cerebos Gregg’s Ltd. (New Zealand); RHM Computing Limited; RHM Research & Engineering Limited; RHM Holdings (USA) Inc.; Naas Foods, Inc. (U.S.A.); National Preserve Co. (U.S.A.); Pilgrim Farms Inc. (U.S.A.); Red Wing Co., Inc. (U.S.A.); Avana Bakeries Limited; R.F. Brookes Limited; S&A Lesme Limited; O.P. Chocolate Limited; CGPA Peny SA (France).