Chocolate Wars

by Deborah Cadbury

  With characteristic opportunism, Forrest seized the moment to discuss the confectionery business with his father. In the 1920s, Frank Mars employed over 125 in staff and had a large house in Minneapolis, home to his second wife who was also called Ethel, and their young daughter, Patricia. But his Mar-O-Bar company was not yet well known beyond the state of Minnesota. Forrest urged his father to think big. Surely they could come up with a new type of confection that they could launch from coast to coast like Hershey?

  Forrest was undoubtedly aware from his childhood of the potential of a particular type of confectionery, usually made by combining cheaper ingredients, such as toffee or caramel, with chocolate. In Canada, this type of candy had been on sale for many years, often handmade with maple fudge or marshmallow coated in chocolate. It was becoming known in the trade as a “countline” since the bars were sold by count and not by weight, like blocks of chocolate. During the First World War, countlines had been developed for the U.S. army when it was discovered that the chocolate coating kept the high-energy confectionery ingredients fresh. While leading manufacturers such as Hershey and Cadbury were focused on producing solid chocolate bars, no one was making chocolate-coated bars in factory quantities.

  Forrest sensed an opportunity. “My father and I walked into a Walgreen store,” he told Don Gussow in a rare interview for the Candy Industry and Confectioners Journal in February 1966. “Looking over the candy department, I said to him: Why don’t we find a way to make just one piece of candy instead of so many different items?” What Forrest suggested next was essentially a countline for mass production: “a chocolate center with some malted milk and coated in milk chocolate.”

  Frank Mars was evidently impressed by his son’s suggestions. Once back in the factory near Minneapolis, it did not take him long to come up with a mouthwatering concoction made by covering a bar of nougat and a layer of sweet caramel with a thick coating of chocolate. The bar was satisfyingly chunky compared to a Hershey chocolate bar and could be sold more cheaply since the confectionery ingredients cost less than cocoa. Equally important, the chocolate coating kept the nougat filling fresh, making it possible to transport the product around the country. Frank cheekily approached Hershey to purchase a supply of chocolate for the coating. By early 1924, he was ready to launch his new bar. He called it the Milky Way.

  The Milky Way was an overnight sensation. In one year, Frank’s dreams came true. Sales at the Mar-O-Bar Company leapt from $72,800 to $792,900. Frank was ready to expand beyond Minnesota.

  Within three years, he had started construction of a stylish new factory in Chicago that won much praise: “An outstanding bit of architecture,” enthused the Chicago Tribune. When Forrest joined his father at the new Chicago plant, there was just one problem. Forrest, like his father, “was more than a little brash,” observed Harold Meyers in Fortune in May 1967, and he “had definite ideas on how things should be done.” His father, now feeling his years, tried to smooth over the cracks.

  Father and son sold a staggering 20 million bars from coast to coast by 1929. It seemed nothing could stop them—even the financial drought of the Great Depression. In 1930, a year when 26,000 businesses failed and 10 percent of the population was out of work, Frank and Forrest Mars rode out the crash on a wave of innovation. That year they launched a peanut, caramel, and chocolate sensation called Snickers, allegedly named after the family horse. Their 3 Musketeers bar soon followed.

  In Pennsylvania, Milton Hershey wasn’t worried—yet. He had the foresight to spend his way through the Depression, giving generously. From the backseat of his gleaming sixteen-cylinder Chrysler, he cruised Hershey town, watching work progress for a new school, a grand hotel, offices, factories, and a sports hall. Working with his closest ally, William Murrie, the president of the Hershey Chocolate Company, Milton found $10 million to spend on new facilities and more importantly, to create jobs. Even though sales of Hershey’s block chocolate dropped by almost a half during the Depression, he was easily able to withstand the effects of the crash of 1929 protected by his venture into Cuban sugar.

  Sales for Mars’s countlines like Snickers, Milky Way, and 3 Musketeers were also reduced during the years of long queues for any kind of work, soup kitchens, the exodus from Dust Bowl farms. But the years of depression put Mars at an advantage. His countlines were satisfying snacks that could fill empty, hungry stomachs and were cheaper than block chocolate. Frank and Forrest found ways of improving efficiency by standardizing ingredients. They made sure their candy was priced within the reach of millions. Just eight years after father and son had reunited, Mars was the second largest confectioner in America. Not only did the obliging Mr. Hershey have to wake up. The upstart new company was soon casting its long shadow over the flourishing garden factory at Bournville.

  It was a family rift that launched young Forrest on his own path to success. “Frank Mars was proud as punch of his son,” insisted a colleague, “but he wasn’t about to let him run things.” In 1933 they had an intense quarrel. Father and son stopped talking almost as abruptly as they had begun. According to an article in Fortune in 1967, Frank sent his son packing, claiming “this company isn’t big enough for both of us. Go to some other country and start your own business.” Forrest walked out of the Chicago factory with the foreign rights to the Milky Way and never saw his father again.

  Free to dedicate himself to business, Forrest began his research in Switzerland. He worked first for Jean Tobler and then for Nestlé. When he had learned all he could of the Swiss secrets, he came to England. His plan: to enlist the help of the benign and unsuspecting Quaker gentlemen at Bournville to launch his own chocolate company. Unencumbered by religious idealism, he was free to bring his own driven business style to the quaintly philanthropic and paternalistic world of English chocolate making.

  BOURNVILLE, BIRMINGHAM, ENGLAND

  During the 1920s, the Cadbury cousins worked relentlessly to fill the great void left by George Cadbury Sr. There were more family members in the company than ever before: Barrow Cadbury was the figurehead at the helm of the British Cocoa and Chocolate Company, and several others from his generation held key roles on the Cadbury board.

  Barrow’s younger brother, William, who had been instrumental in setting up cocoa production in Ghana, contributed to developing the world-famous Cadbury script logo. Well before the concept of marketing was fully established, the Quaker directors understood the need for an instantly recognizable icon for the firm. In 1921, William’s signature was adapted to create a logo for the company, which appeared on the delivery trucks, in catalogues, and on some of the brands. Barrow and William’s cousins, Edward and George Jr., joined the board as well. After the early struggle to create Dairy Milk, George Jr. had the satisfaction of seeing it overtake the sales of all other British chocolate products. As for Edward, with his painstaking attention to every aspect of the business, he was emerging as a natural successor to Barrow.

  After the Great War, the Cadbury cousins were joined by a younger generation eager to master the business. This included Barrow’s son, Paul, and Edward and George Jr.’s half brothers: Laurence, who was awarded a military Order of the British Empire, and Bertie, decorated with a Distinguished Flying Cross. Edward, always keen to nurture the next generation and capitalize on its energy, saw with some satisfaction that his younger brothers had demonstrable leadership skills. Laurence joined the board of directors at Bournville while Bertie remained preoccupied with Fry in Bristol.

  They faced a tough new business world. The export market, built up over decades by Cadbury travellers, had collapsed with the gradual imposition of tariffs around the world. The Cadbury directors realized they needed a completely new strategy overseas. They aimed to team up with local partners and build foreign factories of their own. Cadbury’s first venture was in Australia with a local confectioner, James Pascall. They built a factory at Hobart in Tasmania in 1921, and Cadbury-Fry-Pascall was soon planning its assault on the Australian market.
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  At home the Cadburys feared the return of Nestlé, Menier, and other foreign rivals. To counter this threat, they embarked on a vast program of modernization. Much of the chocolate at Bournville was still handmade, but the Cadbury cousins understood what Forrest Mars had glimpsed: The future lay with the mass manufacture of fewer lines. Supply rationing during the Great War had forced efficiencies on Bournville. The Cadbury cousins knew it was possible to produce volume more cheaply and then pass the savings on to the consumer with lower prices. Adopting this strategy seemed imperative for survival.

  The Cadbury cousins oversaw the largest transformation of the chocolate works since it had been built by George Sr. and Richard fifty years earlier. Laurence, as a skilled engineer, supervised the designs of automatic production lines that were tailor-made for virtually every stage of chocolate making: molding machines, blending machines, wrapping machines—each one electrified. The scale of mechanization was so great that an entirely new building had to be built. The old blocks—some just a single storey—were knocked down to make way for a chocolate factory of the future that covered eighty acres. Over the course of the 1920s, Laurence watched with satisfaction as imposing red brick facades some five or six storeys high replaced the darker, smaller buildings of Victorian days. While making his mark on Bournville, he also settled into home life. He married Joyce Mathews in 1924, and soon a young family was on the way. Julian was born in 1926, followed by Adrian in 1929.

  At Bristol, the modernization of Fry was more of a challenge. “The Frys were having to fight very hard to keep their head above water,” recalled Bertie. The British Cocoa and Chocolate board identified a radical solution: They would abandon the centuries-old Union Street site beloved by Joseph Storrs Fry II and invest in a brand new factory in the country. In 1920 Bertie and the Fry directors walked along the railway lines leaving Bristol until they found a perfect location near Keynsham. They bought over two hundred acres bounded by the River Avon and the main Bristol-to-London Railway and initiated a massive construction plan. They decided to hold a public competition with a £1,000 prize to choose the site’s name: Somerdale was the winner.

  Against the background of the Roaring Twenties, the Quaker chocolatiers in Bournville held their own. They continued to show great flair in devising tantalizing new confections: the crumbly-textured, extra-light Flake was launched in 1920; Cadbury’s Fruit and Nut bar made its entrance in 1926; and the Cadbury Creme Egg, which came in a multitude of mouthwatering varieties, became a fixture at Easter. In Bristol, Fry’s Chocolate Cream and Fry’s Turkish Delight were still popular, but the company, particularly hard hit by the loss of export markets, was short of new products. Confections devised by the Cadbury development team were passed over for manufacture in Bristol: notably the honeycombed Crunchie covered in a thick layer of milk chocolate.

  All the while, the feared return of powerful rivals failed to materialize. Nestlé was slower to recover from the effects of the Great War than anticipated. Their share price crashed in the early 1920s, when it was revealed the company had debts approaching 293,000,000 Swiss francs. To tackle the emergency, the firm’s “outdated status as a family or pseudo family concern” was abolished, according to Jean Heer in a company history commissioned by Nestlé. New executives were appointed based on proven talent, not their relationship to the founders. Financial advisers were brought in to reschedule the debt and sell assets. With their expertise, the crisis was resolved.

  Rowntree in York was also struggling, and there too family management was blamed. Wages spiralled 150 percent between 1914 and 1924, but there was no corresponding rise in output and no dazzling new products to win over the public. The Great Depression brought matters to a head. Faced with plummeting trade, the company chairman, Seebohm Rowntree, feared for the survival of the business. For a while, the workers at Haxby Road were put on a three-day work week. In the early 1930s, the board decided that “all new directors were to be appointed on the basis of merit,” according to business historian Robert Fitzgerald. Family members would no longer have preference; there was no room for part-time directors with their “aesthetic form of entrepreneurship.” Fitzgerald notes, “There was no parallel year of crisis” at Cadbury. “The competence of family members like Paul, Edward, and Laurence was widely acknowledged in the industry.”

  But while their established rivals struggled, there was a newcomer that Cadbury had not bargained on, an American with ideas of his own. In 1933, Cadbury’s sales team was soon made aware of a fledgling company operating from a tiny flat in Slough, twenty-five miles west of London. Forrest Mars approached Cadbury directly for a supply of chocolate to coat his new confection. To Forrest’s delight, Cadbury’s coatings department agreed.

  Even today, Laurence’s second son—Sir Adrian Cadbury—smiles and shakes his head as he looks back on that decision made by his uncles. “Why ever did we do that? ” he asks. Growing up in the 1930s with his brother, Julian, he points out that at the time, the family “would not have seen Forrest Mars as a direct competitor. The basis of our business was moulded bars of chocolate. Mars was different.”

  In the summer heat of 1933, Forrest Mars set out to reconfigure the Milky Way into a chunkier, more satisfying bar. He hired four assistants and they set to work in an old building in Slough. On one occasion, he was nearly ruined when rain leaked through a roof onto sacks of raw materials, but Noah’s Flood would not have deterred Forrest Mars. He worked long hours until he had the perfect formula, combining a layer of soft caramel and a wrapping of the ever-popular Cadbury milk chocolate around a whipped fondant center. The resulting Mars Bar proved to be one of the most successful snacks of all time. In just one year, he sold 2 million bars.

  In York, a new director at Rowntree, George Harris, was paying close attention to the novel idea of mass-producing countlines. Although he had married into the Rowntree family (his wife was Friede, the granddaughter of Henry Isaac Rowntree, the company’s founder), he had his own ideas about moving the business forward. Harris recognized that Rowntree could never challenge Cadbury’s supremacy in block chocolate. Dairy Milk was so dominant that it was outselling Rowntree’s milk chocolate ten to one. But could Mars’s countlines offer a way forward? Harris went to Slough to meet Forrest Mars. The two men found they had a lot in common: both were seeking to tackle the Cadbury juggernaut.

  Under Harris’s pioneering charge, the research department at Rowntree was kept very busy. The results took everyone by surprise. Hundreds of tests were carried out on a new chocolate box to compete with Cadbury’s leading King George assortment. They came up with Rowntree’s Black Magic, which launched in 1933 to immediate success. When Forrest Mars debuted the Milky Way bar in Britain in 1935, followed by Maltesers in 1936, Rowntree had something else up its sleeve. Big things were not expected of the little bar called Chocolate Crisp, which was introduced without advertising in September 1935. It was only a wafer covered with chocolate, a wisp of a thing. But it carried all the promise of crispy crunchiness and melting chocolate—and it was an affordable treat. It proved to be a winner and soon got a catchy new name: Kit Kat. That same year Rowntree surprised the market with the bubbly Aero that teased the palate with a deceptive lightness. In 1936 came Rowntree’s Dairy Box, full of soft-centered chocolate temptation. Cadbury countered with intense promotion of its popular Milk Tray brand and launched a new assortment known as Cadbury’s Roses—supposedly named after George Sr.’s passion for the flower.

  But Harris had still more tricks up his sleeve. Soft chocolate beans coated in crispy sugared shells were repackaged in an eye-catching cardboard tube and sold as Smarties in 1937. To cap it all, in 1939 Rowntree came up with a round mint with a hole in the center and called it Polo. To create so many distinctive brands in such rapid succession was almost unheard of. At last Rowntree’s fortunes was turning, and the confectionery wars were intensifying.

  But soon the Swiss giant, Nestlé, entered the fray, making the competitive skirmishes of England’
s Quaker gentlemen look like a children’s game. Nestlé’s collaboration with the Swiss chocolatiers Peter, Cailler, and Kohler found its stride in the 1930s, and chocolate was now its second most important product. Nestlé and Peter, Cailler, and Kohler had sealed their alliance in 1929 with a full merger that brought six more chocolate factories in Europe under Nestlé’s control. As a result, in the year of the crash, Nestlé’s profits actually rose from 23 to 30 million Swiss francs. During the 1930s, Nestlé’s block chocolate, enhanced by an impressive array of promotional tools—prize schemes, coupons, collecting cards for children—was seizing new ground in British grocers.

  In the shadow of the European giant, Forrest Mars used any means possible to expand his operation—and he did not confine himself to selling chocolate. Mars bought a small British pet food concern, the Chappel Brothers, and within a couple of years, it was so profitable that he had more money to invest in his chocolate enterprise. The next step: a small chocolate factory in Brussels to make Mars bars. Soon he was generating sales across the continent.

  By 1935, however, the modernization of Bournville was complete. The new Cadbury factory was unlike anything that had been seen before: a vast mechanical palace where sugar and fat and cocoa were metamorphosed into “food of the gods.” Every process from molding to wrapping was fully automatic. The cocoa building had over a mile of conveyer belts that carried the beans from trains at one end and churned out cocoa tins ready for loading at the other. The scope of the reorganization was so huge that only a quarter of the works that existed in the days of George Sr. still remained. At Bournville in the late 1930s, a million bars of Dairy Milk and 2 million Chocolate Assortments rolled off the lines every day. The sheer scale of the operation meant the Cadbury cousins could afford to cut the price of Dairy Milk by a staggering 70 percent.