Welcome to The Business Buying Academy with Sieva Kozinsky.

🔑 Join the CEO Bootcamp

Nick Huber is hosting a CEO Bootcamp on Monday, September 21 to break down the four systems he uses to run his portfolio of companies.

He'll cover the strategies he uses to delegate and set targets for his 400+ employees.

Plus he'll go over his exact compensation structure.

As an investor in Nick's company Somewhere, I know firsthand how skilled he is at building teams, managing processes, and scaling.

If you're a business owner, I encourage you to join.

​Reserve Your Spot​

🔑 They needed better ingredients for soap. Now it's a $87 billion holding company.

Procter & Gamble is a home goods conglomerate that does $87 billion a year in revenue.

You've probably used one of their products today.

But before they owned Pampers, Tide, Olay, and dozens of other iconic brands, they started in 1837 with candles and soap.

English candlemaker William Procter and Irish soapmaker James Gamble teamed up.

They saw an opportunity to mass produce candles cheaply.

Cincinnati, their headquarters, was a packing-house city.

Tallow and lard were cheap.

The firm’s first two products were unglamorous, commodity products that were perfect for Cincinnati's supply chain setup.

The Civil War made the business national by putting P&G soap and candles into Union camps.

But the product that defined the company arrived later. In 1879 it launched Ivory, a white floating soap with a name and advertising aimed at the household rather than the wholesaler.

By 1900 Procter & Gamble was a national soap brand, built on Ivory.

Making soap and candles still depended on animal fats. Those fats were controlled by the big packers. Prices were volatile, and P&G’s growth was capped by someone else’s slaughterhouses.

Cottonseed oil looked like a solution.

It was a cheap Southern byproduct that chemists had learned to bleach and deodorize.

Basically, cottonseed was a cheaper, more price-stable substitute for lard.

The catch was that the oil was liquid. But soap makers wanted a hard fat.

So to expand its soap empire, P&G began vertically integrated by purchasing the makers of soap inputs and had them switch from producing liquid to solidified fats.

With these acquisitions, P&G would no longer have to rely on volatile lard and tallow.

P&G Vertical Integration: Deals from 1902 to 1911

• 1902: P&G forms Buckeye Cotton Oil to start buying mills. Within a few years it owns multiple Mississippi cottonseed plants.
• 1903: Buys Schultz’s Star Soap to get into washing powders, launches P&G White Naphtha Soap, and opens its first plant outside Cincinnati in Kansas City, next to the stockyards.
• 1909: P&G buys McCaw Manufacturing in Macon, Georgia. The purchase, reported around $1.4 million, gives P&G a discreet place to perfect an edible shortening before putting the P&G name on it.

Vertical Integration Turns into a New Product

This wave of new deals gave P&G an ample supply of cottonseed.

First they used it to make soap and other products, cutting costs from animal fat.

Then they made it into a consumer product.

In 1911, Crisco filed food-product patents on partially hydrogenated cottonseed oil and on blends of fully hardened oil with liquid oil.

The product is first called Krispo, then Cryst, then Crisco (the name comes from the phrase “crystallized cottonseed oil.”)

It was the first shortening made entirely from vegetable oil.

But early advertising did not say “cottonseed.” It said “absolutely all vegetable” and “Crisco is Crisco, and nothing else.”

It reaches grocery shelves in June 1911 and becomes one of the company's best sellers.

P&G gave away samples, ran a huge ad campaign, and published a cookbook with hundreds of Crisco recipes.

In June 2002 P&G moved Crisco and Jif together to J.M. Smucker in a tax-free spin-merge.

Deal value was reported around $780 million to $1 billion.

Combined, the two brands were expected to roughly double Smucker’s sales (to about $1.3 billion) and triple its earnings.

Under Smucker, Crisco broadened into bottled oils and sprays. Crisco retail sales were $379 million in 2016 (data for the brand isn't available for other years).

In 2020 Smucker sold Crisco to B&G Foods for $550 million.

Sieva

What did you think of today's newsletter? Rate this newsletter using the poll below:

Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.

​​