WETTERAU INCORPORATED History

Company History:

In 1867 young George H. Wetterau left Germany to seek opportunity in the bustle of post-Civil War America. George joined his brother in St. Louis, where many other Germans had also settled. While studying business at night school, he joined J.F. Lauman and Company, a local wholesale grocery firm, in 1868. J. F. Lauman retired a year later, leaving the young Wetterau to assume the leadership of the firm. George Wetterau persuaded Frederick Goebel to invest in the company, which became the Goebel & Wetterau Grocery Company.

During its early years the new venture thrived as a distributor of groceries in the booming St. Louis economy. St. Louis thrived during and after Reconstruction as the new transcontinental railway was completed and the city became the "gateway to the West" for the huge influx of pioneers drawn westward by the Homestead Act and the lure of a new life.

In 1899, the Goebel & Wetterau Grocery Company changed from a partnership to a corporation called the G. H. Wetterau & Sons Grocery Company, since two of Wetterau's sons, George Jr. and Otto, had joined the business. At the same time, the company moved into a new building described in a newspaper account of the time as "one of the most modern wholesale grocery stores in the western country." George Wetterau, starting another tradition that would be one of the hallmarks of his firm, was also quick to get involved with the new technology of the 1890s; Wetterau was among the first firms in St. Louis to be part of the telephone system.

In the first decade of the 20th century, G. H. Wetterau & Sons continued to share in the growth of a booming American economy. As immigrants poured into the cities there were more and more mouths to feed, and George Wetterau made sure that his company filled his clients' every need. Wetterau also grew as a family business when George's third son, Theodore, joined the firm in 1909. All three sons learned the business the hard way--from the ground up. This old school management training method assured that the future leadership of Wetterau appreciated the complexities of each stage of wholesaling operations.

During World War I Wetterau thrived, despite having no share of the lucrative government contracts for supplying canned food. But the increased military spending necessitated by the war served as an economic spur, and Wetterau prospered.

The booming 1920s meant even more expansion for Wetterau. When Otto Wetterau was named head of the firm in 1923, he set Wetterau firmly on a course of innovation and expansion. During the 1920s Wetterau was a pioneer in pallet-loading techniques and in the use of fork trucks. Wetterau was also quick to see the value of the wholesale warehousing of produce, which made daily trips to the produce market unnecessary. It was during this decade that Wetterau also expanded its operations into other parts of Missouri--to Desloge in 1925 and Mexico in 1928.

During the Depression, despite widespread unemployment and wage cuts for those still working, Wetterau continued to prosper. The company's affiliation with the Independent Grocer's Alliance (IGA), arranged at the urging of Theodore Wetterau, helped to keep the firm, along with 50 St. Louis retailers it urged to join, free from the threat of absorption by the retail chains beginning to spring up across the country. In 1936 the company relocated again to keep up with its growth, and was renamed Wetterau Grocery Company. The company made its first acquisition in 1938, buying the Niese & Coast Products Company, a St. Louis food wholesaler.

World War II brought an abrupt halt to Wetterau's plans for geographic expansion. Wetterau contented itself with enlarging and improving its warehouses and consolidating its Mexico, Missouri operation with the Nowell Wholesale Grocery Company.

During the postwar years Wetterau resumed the growth that the war had thwarted. In 1954 Theodore Wetterau, George Wetterau's youngest son, became president of the company. Five years later, in 1959, Wetterau finally outgrew its St. Louis facilities and moved to the complex in suburban Hazelwood where its main branch is still located.

Wetterau's modern history began in 1961, when the company went public with the sale of 100,000 shares of stock and changed its name to Wetterau Foods Incorporated. In 1963 total sales passed $100 million, Oliver S. Wetterau, grandson of the founder, became president, and John R. Figg Inc., now Wetterau's Bloomington Division, was acquired.

Under the leadership of "Ollie" Wetterau, the company looked for a plan that would help its retail customers to start up new outlets. Ted Wetterau, another of the founder's grandsons, developed the Package Store concept. Using this plan a local store owner could bypass designers and architects and set up a completely prefabricated store within ten weeks. The Package Store concept was the key to Wetterau's plan to expand the support services of offered retailers to meet virtually all their needs. Wetterau later granted the right to use the Package Store program to all IGA wholesalers.

In 1968 Wetterau advanced its communications capabilities by tying all its information systems into a central computer. A year later, Wetterau acquired the Thomas & Howard Company, now its Charleston division, and the Holbrook Grocery Company of New England, becoming the supplier to an additional 367 retail outlets.

In 1970 Ted Wetterau became president. He continued to make innovation, as well as growth, the watchword of the 1970s for Wetterau.

In 1973 the firm's name was changed to Wetterau Incorporated to describe more accurately a newly restructured company based on two major operating groups: Wetterau Food Services, its food wholesaling business, and Wetterau Industries, its retailer support services business.

Several more innovations during the 1970s helped to establish Wetterau as an industry leader. Wetterau's shelf space allocation and inventory control system, nicknamed HOPE, was unveiled in 1971. This revolutionary system used sales figures to determine how much of each product to display on store shelves. During this decade Wetterau also began to use computers to schedule its truck routes and developed a semi-automatic mechanization system for operating its large warehouses more efficiently.

Wetterau's talent for innovation was always tailored to the needs of retail customers, and Wetterau grew as its ability to please its customers increased. In 1972, pushing southeast, Wetterau established a nonfood concern in South Carolina to supply local Red & White retailers. The following year Wetterau bought out the J. Zinmeister Company of Kentucky, which supplied 80 IGA supermarkets in Kentucky, Tennessee, and Indiana. Other acquisitions made in 1976 and 1979 continued to expand the number of retail stores which Wetterau served. This whole period of diversification and acquisition culminated in a sales volume of over $4 billion for the first time in 1979.

Wetterau began the 1980s with still more acquisitions--the Milliken, Tomlinson Company, which added a 145,000-square-foot distribution center to the firm, in 1980, and the Fox Grocery Company, supplier to 300 retailers in six states, in 1981. But in 1981 Wetterau was the object of a hostile takeover attempt by Empire Inc., a propane fuel distributorship. For two months Wetterau battled to maintain the autonomy that it so valued. After wasting much time and energy in keeping Empire at bay, Wetterau committed itself to an aggressive expansion policy to guarantee that it would never again be threatened with the loss of its identity.

The takeover bid, combined with the startup costs of a new marketing program and a change in accounting procedures, caused a steep earnings drop in fiscal 1982, though the drop was only Wetterau's second in 50 years. By 1983 Wetterau's earnings had recovered, and the company continued to acquire.

Wetterau had entered the retail market in 1982 when it purchased Shop 'n Save, a string of 13 supermarkets in Missouri. A year later the company bought Laneco, Inc. of Pennsylvania, the operator of 31 stores. And in 1984 Wetterau bought Milgram Food Stores, Inc., whose 36 retail stores Wetterau sold, keeping Milgram's warehouse and dairy businesses. That same year Wetterau formed Foodland Distributors in a joint venture with the Kroger Company, the first time that a major retailer and wholesaler had combined forces to form their own distribution company.

1985 was Wetterau's biggest year yet: its four purchases that year solidified its position as a major force in food wholesaling. In June, Wetterau bought the Creasy Company Inc., a $280 million supplier in eight states and the District of Columbia; in August it bought Cressey Dockham & Company, a $250 million New England wholesaler supplying 300 retailers; in October it bought a $250 wholesaler to some 325 retailers in three southern states; and in December it bought Amerimark Inc., a food service and convenience store company. With all of these firms now under the Wetterau flag, the company was organized into three business groups. The first was food distribution, the wholesaling group that formed the core of Wetterau. The second group was retail outlets, businesses that allowed Wetterau itself to profit from the mark-ups of the goods it distributed. The last group was Wetterau's support service group, which offered retailers a range of services that included financing, construction, advertising, bakery goods, and communication services.

In 1987 Wetterau moved all the way to the West Coast when it acquired USCP-WESCO Inc., a company that supplied store owners in 13 western states as well as Mexico and Asia, making Wetterau an international company. And in 1988 Wetterau again made dramatically large acquisitions when it absorbed both the Moran Group Inc., the parent company of Save-A-Lot, and Roger Williams Foods. Together these businesses conducted nearly $650 million worth of business annually.

In 1988 Wetterau restructured its senior management to allow for greater future growth and appointed a new CEO and president, George H. Thomazin. A year later Wetterau was named to Standard & Poor's 500 Index, a fitting acknowledgement of the company's successful growth and strong position for the future.

Principal Subsidiaries: Wetterau Finance Co.; Glenn-Wohlberg & Co.; Transcontinental Leasing Co.; Wetterau Insurance Co., Ltd.; Laneco, Inc.; Shop 'n Save Warehouse Stores; Wetterau Builders, Inc.; Food Lane Supermarkets; Milgram Supermarkets; Bright Dept. Stores; Lane Dept. Stores; Carriage Drugs; Just Be Natural.

Further Reading:

Humiston, Ron. 120 Years of Progress, Wetterau Inc., Hazelwood, Missouri, 1989.

Source: International Directory of Company Histories, Vol. 2. St. James Press, 1990.

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