y

Bahlsen GmbH & Co. KG

unknow n in Germany at that time, and Bahlsen sensed a busi-

Podbielski Strasse 11 ness opportunity: to produce these confections at a price every
D-30163 Hannover German could afford. To realize this ambition Bahlsen acquired
Germany Engl. Cakes and Biscuits, a small factory in Hannover's Frie-
senstrasse, and renamed it Hannoversche Cakesfabrik H.
Telephone: (49) (511) 960-0
Bahlsen. Three years later the company moved its operations to
Fax: (49) (511) 960-2749
a new site in Celler Strasse which remained the company
Web site: http://www.bahlsen.com
headquarters until the end of the twentieth century. From the
Private Company very beginning Hermann Bahlsen emphasized making products
Incorporated: 1889 as Hannoversche Cakesfabrik H. of high quality which he would be able to sell under a brand
Bahlsen name. At a time when brand-name marketing was still in its
infancy, it was very common in Germany to name products
Employees: 3,872
after well-known personalities. For his first product, the com-
Sales: DM 1.04 million ($501.2 million) (2000)
pany founder chose the most famous of Hannover’s citizens: the
NAIC: 311821 Cookie and Cracker Manufacturing;
philosopher and mathematician Gottfried Wilhelm Leibnitz
311812 Commercial Bakeries; 31134 Non-Chocolate
(1646-1716). Two years after the company's founding.
Con fee ti o n ery M an u fac t u ri ng Bahlsen's Leibnitz Cakes were launched throughout Germany.
Within four years Bahlsen's sweets were in such demand that
the company’s number of employees grew from 10 to 100.
Based in Hannover, Bahlsen GmbH & Co. KG is Germany's
leading manufacturer of cookies. The company also makes
A gold medal at the World Exhibition in Chicago in 1893
cakes and granola bars under three major brand-names—
brought Bahlsen its first international recognition. In 1900 the
Bahlsen, Leibnitz and PiCK UP!—as well as national brands in
company expanded its product line to include sally snacks,
other European countries such as Austria and France. Bahlsen
starting with the company's own version of the American
products are manufactured at eight sites—live in Germany, two
cracker. In 1904 the company started packaging its cakes and
in France, and one in Poland. Roughly one third of the com-
cookies in a new dust- and-moisture-resistant package which
pany's revenues come from abroad, where Bahlsen maintains a
they called TET. TET was a simplified version of an ancient
distribution network that serves approximately 80 countries
Egypt symbol that meant "everlasting.” Suggested by Hans
around the world, reaching from its core markets Austria.
Bahlsen's friend Friedrich Tewes. a museum director in
France, and Poland to the United States and the Middle and Far
Hannover, the symbol—a snake over three dots and a semi-
East. The company is owned and controlled by Werner M.
circle within an oval—as well as the TET signet, became an
Bahlsen. a grandson of the company founder.
integral part of the company’s logo. Bahlsen also made use of
modern production techniques. In 1905 the company was the
German Keks: 1889-1919 first in Europe to implement the assembly line method.

Hermann Bahlsen was born in Hannover, Germany, in 1859 With a solid means for mass production in place, Bahlsen's
into a family of merchants, teachers, priests, and jewelers. After business took off in the following decade. In 1911 Hermann
learning the trade of an export merchant, the young Bahlsen Bahlsen decided to "translate” the English word "cakes” into
worked as an apprentice in Switzerland and England. In En- German, coining the term "Keks,” which was pronounced
gland he became involved in the sugar trade, and he saw how much the same as its English cognate but had a more German
popular English biscuits and cakes were manufactured on an appeal. One year after Leibnitz Cakes had become Leibnitz
industrial scale. Mass-produced baked specialties were almost Keks, the company was renamed H. Bahlsens Keksfabrik ( "H.

38
 Bahlsen GmbH & Co. KG 39
tributed to a steady stream of revenue for the business during
Company Perspectives: the early 1930s, a time of severe economic depression in Ger-
many. Two years later Salzletten, a new' salty snack, was
Strong brands as a basis for long-term success, hi times of launched. Production, marketing, and distribution processes
saturated markets and excessive supply Bahlsen benefits were streamlined during this time. For example, in 1937
from over a century of expertise in its field. Instead of trying Bahlsen reorganized its logistics system. In 19.39, the com-
to respond to changing trends, the company develops its own pany's 50th anniversary year. Bahlsen had about 2,000 people
concepts to stimulate new markets. Bahlsen 's strategy is on its payroll. However, further progress was again interrupted
based on further developing and improving the company's as World War II started in the fall of that year.
position as a leading supplier of brand-name cakes and
cookies. In order to achieve this goal, the company trusts in During the war. food was rationed and Germans had to use
three of its major brands—Bahlsen. Leibnitz, and Pick their “bread stamps" for cookies. The company also had diffi-
UP!—along with national brands in other countries. With culties securing raw materials, and numerous employees were
the slogan. "We sweeten your life." Bahlsen conveys the drafted into the military. Bahlsen ceased all research and devel-
image of a company whose products and services are asso- opment activities and cut its product range down to just
ciated with spoiling oneself and enjoying life. eleven—including emergency food supplies for German sol-
diers. Between 1943 and 1945 the company employed about
200 forced laborers who were working under the same condi-
tions as Bahlsen's German workers and received the same
Bahlsen’s Keks Factory"). The company founder had a passion
wages and benefits. When Hannover became the target of bomb
for the fine arts and sponsored several artists who. for example,
attacks in 1943. the company established a warehouse in Gera
designed little stamps with picture stories for Bahlsen’s
in the southern state of Thuringia. By the end of the war in
Leibnitz Keks. These commercial artifacts soon achieved the spring 1945, Bahlsen’s production facilities were half de-
status of collector's items. Later, many of the company's pack- stroyed. along with most of the company's warehouses. In April
ages. cookie tins, posters, and print ads were designed by 1945, Bahlsen started making bread for hospitals. Klaus
various artists. Bahlsen also showed a personal concern for his Bahlsen was the driving force behind the company’s recon-
workers, offering them a company health plan and health care struction efforts and behind the establishment of a number of
personnel, spacious dining halls, a company library, music new domestic production facilities. Like his lather, he also
room, and roof-top garden. In addition. Bahlsen workers were focused his efforts on setting high quality standards. In 1950,
allowed to take weekly baths during work hours in one of the Bahlsen established its own laboratories for monitoring product
company's tubs, since most of them could not afford such quality. By 1951. the company’s work force was back to about
luxuries in their homes. By 1914 the company had set up 2,200. Bahlsen’s second factory was opened in 1954 in Lindau.
national distribution, owning warehouses in 26 German cities. The third one followed in Barsinghausen in 1957. A fourth
The company employed 1.7Ü0 people and Bahlsen’s Keks and factory in Varel started operations in 1963, followed by the
other sweets were shipped to 31 countries. opening of a brand-new warehouse in Langenhagen in 1965.
Finally, in 1967. Bahlsen’s fifth factory slatted operations.
Bahlsen ’s Second Generation
Four Decades of Growth: 1950-90
World War I interrupted Bahlsen’s growth in 1914, since
sweets were not among the goods requested by the German After the reconstruction years. Werner Bahlsen was the driv-
military. Raw materials became scarce, domestic consumers cut ing force behind the company’s international expansion.
back on spending, and the company was cut off from its export Bahlsen was the first German manufacturer of sweets to be
markets. By 1918 only one of Bahlsen’s 25 ovens was still in issued an export license after the war. In 1950. the first postwar
operation. After Hermann Bahlsen’s death in 1919. three ot his export shipment with Bahlsen products went to Switzerland.
four sons entered the business. The first was his oldest son Two years later the company began exporting to the United
Hans, who had studied at Hannover’s Technical College and States. By 1956, Bahlsen products were shipped to 74 countries.
entered the company in 1919 at age 18. Three years later he was After the European Common Market had been established, the
followed by his brother Werner who at the same age became the company started setting up its own foreign sales offices, starting
company's new director while Hans took care ot the technical with France and Italy in 1960. During the 1960s and early
side of the family business. Bahlsen managed to survive the 1970s. Bahlsen continued establishing subsidiaries in Western
economic turmoil of the 1920s. including hyper-inflation and European countries, including Austria. Luxembourg, the Neth-
worldwide economic depression starting at the end of the dec- erlands. Belgium. Denmark, Spain, and the United Kingdom.
ade. In 1930 the company founder’s youngest son Klaus joined The company’s American sales office. Bahlsen of North Amer-
the company at age 22. During the following decade the three ica, was set up in 1967. In 1972. all Bahlsen subsidiaries abroad
brothers struggled to bring Bahlsen back on track. T he com- were organized under the umbrella of Bahlsen International
pany's old machines were replaced by modern ones, including Holding AG.
the introduction of steel-belt ovens beginning in 1932. Bahlsen
also introduced new products to the market. In 1933 the com- Besides growing internationally. Bahlsen expanded its salty
pany launched the Express Dose, a one-pound box of wafers snacks division during the 1960s. mainly by acquisitions. In
which sold for a very low price. The product become a popular 1963 the company acquired an interest in the Hamburg-based
item, with about four million boxes sold per year. Despite the Wilhelm Liebelt company, a maker of nut snacks. In the follow-
very small profit per box. the Express Dose significantly con- ing year. Bahlsen bought a majority share in potato-chip maker
40 Bahlsen GmbH & Co. KG

flour from only one supplier, the Hedwigsburger Oker-Mühle.

Key Dates: In 1985 the company’s sales force was reorganized. Two years
later production ceased at the company’s oldest factory and
1889: Hermann Bahlsen takes over a cakes and cookies headquarters in Hannover. In 1988. a modern new plant started
factory in the German city of Hannover. operations in North Carolina. Finally the company reorganized
1891: The company launches Leibnitz Cakes, which will its distribution system, and beginning in 1988 Bahlsen products
eventually become its flagship product. were distributed through wholesalers and central warehouses.
1919: The company founder dies.
1930: Hermann Bahlsen’s son Hans assumes management
of the company and is soon after joined by his Bahlsen’s Third Generation
brother Werner.
The 1990s started out with an unexpected growth opportu-
1933: The Express Dose, a one-pound box of wafers, be-
nity when the former German Democratic Republic reunited
comes a top-selling product for the company.
with its West German counterpart. People in the live new
1952: Bahlsen begins exporting to the United States.
eastern German states were eager to buy the West German
1956: Hans Bahlsen’s son Herman enters the family-
brand products that had been unavailable to them for decades—
owned business.
including Bahlsen cookies. In addition, an almost untapped
1960: Bahlsen establishes sales offices in France and Italy.
market was waiting to be exploited in Eastern Europe. Bahlsen
1975: Werner Bahlsen’s son Lorenz enters the family
acquired the Polish firm Unimarex in Poznan in 1992 and
business.
cookie maker Skawina near Krakow, with 1.100 employees,
1979: Werner Bahlsen’s son Werner Michael joins the
one year later. During the 1990s Poland emerged as one of
company.
Bahlsen’s new core markets from which the company also
1980: American Austin Quality Foods Company is ac-
started venturing into the Czech Republic. Slovakia. Hungary,
quired.
and Russia, where the company opened its “House of Bahlsen”
1988: Bahlsen products are distributed nationally through
in St. Petersburg in 1993. However, these triumphs were over-
wholesalers and central warehouses.
shadowed by a severe setback when the company had to recall a
1994: Takeover of French cake and cookie manufacturer
batch of potato snacks that turned out to contain spices polluted
St. Michel.
with salmonella. The so-called “paprika affair” cost the com-
1995: Bahlsen lakes over the cookie business of its com-
pany almost DM 50 million and contributed to a first-time net
petitor Brandt.
loss. The acquisition in the following year of French cake and
1996: Hermann Bahlsen withdraws from top management
position and takes over subsidiary Austin Quality cookie manufacturer St. Michel-Grellier S.A.—a family busi-
Foods. ness like Bahlsen itself, with roots going back io the beginning
1999: Bahlsen launches PiCK UP! bars. of the 20th century—became an important milestone on
1999: The company is divided into three independent Bahlsen’s way to an international company: 1994 was the first
firms with Bahlsen focusing on sweets. year in which sales abroad exceeded domestic totals In 1995.
Bahlsen took over the cookie business division from Hagen-
based competitor Brandt Zwieback-Biskuits GmbH, including
cookie and wafer maker Gottena Keks und Waffelfabrik GmbH
Flessner in Neu-Isenburg. Both of these companies later be- & Co. KG in Schneverdingen. As a result of this five-year
came fully owned Bahlsen subsidiaries. In 1966 Bahlsen ven- period of expansion the company’s sales passed the DM 2
tured into the market for industrially baked cakes when the billion mark for the first time in its history.
company acquired Oldenburg-based firm Brokat. In 1968 the
company took over chocolate maker Gubor Schokoladenfabrik Alongside the acquisitions and expansions that Bahlsen had
located in the Black Forest and expanded its product line again made as the 1990s unfolded, the company also faced formidable
in 1970 to include pre-baked cake layers, which became very challenges, including a stagnating German market and the
popular among German homemakers and working women. growth of international competition. To complicate matters,
Bahlsen acquired additional production capacity outside Ger- tensions between the family members who had so far success-
many in 1965, starting with the takeover of Austrian snacks fully steered the company surfaced in 1992. The three Bahlsen
manufacturer Kelly. Nine years later Bahlsen opened its first brothers who managed the company after the war— -Hans. Wer-
production facility abroad in Noyon, France. In 1980. the com- ner. and Klaus—got along well, all of them belonging to the
pany acquired the American Austin Quality Foods Inc. based in same generation. However, after Hans Bahlsen’s early death in
Cary. North Carolina, establishing a commercial foothold in the 1959, his son Hermann, who had entered the business in 1956.
United Slates In that year the number of Bahlsen employees became the junior partner of his uncle Werner while his cousins
reached an all-time high of 11,200. With the opening of Lorenz and Werner Michael were just ten and 12 years old. The
Bahlsen’s second factory Nimes-Grezan in France in 1981 and two sons of Werner Bahlsen entered the family business in the
the start of operations at a state-of-the-art wafer factory in 1982, second half of the 1970s when Hermann Bahlsen was already a
the company’s expansion of its production capacity also managing director. Their father Werner Bahlsen died in 1985
reached a high point. and three years later Klaus Bahlsen retired as managing direc-
tor. By that time, Hermann Bahlsen was established as not only
When an economic recession set in around 1982, the com- the leading company figure but also as a leader in the industry.
pany cut down production and reorganized operations to cut When his cousins—20 years his junior—demanded leadership
costs. Beginning in 1983, Bahlsen’s German factories received positions, conflict arose.
 Bahlsen GmbH & Co. KG 41

In 1992 the conflict erupted publicly when Hermann Principal Subsidiaries

Bahlsen, backed by a prominent advisory board, demanded to
bring an experienced manager from outside into the company to Gottena Keks- und Waffelfabrik GmbH & Co. KG; Bahlsen St.
lead a business concern w hich by that time had roughly 10,000 Michel SARL (France); Bahlsen Sweet Sp. z o.o. (Poland);
employees. In opposition to this plan. Lorenz and Werner Deleben S.A. (Spain); Bahlsen GmbH (Luxembourg); Bahlsen
Michael Bahlsen wanted to preserve family control over the s.r.l. (Italy); Bahlsen Ltd. (United Kingdom); Bahlsen A/S
business and believed that they were capable of taking over the (Denmark); Bahlsen N.V./S.A. (Belgium).
leadership of the company. In the end. Lorenz, and Werner
Michael Bahlsen won the battle. Hermann Bahlsen retired from Principal Competitors
all management responsibilities at Bahlsen and in return took
control of the group’s American subsidiary. Austin Quality Associated British Foods pic; Groupe Danone; Nestle S.A.;
Foods Inc., the maker of Zoo Animal Crackers, which he sold to United Biscuits (Holdings) pic.
Keebler Foods Company in early 2000 for an estimated $250
million. The remaining Bahlsen shareholders were Lorenz and Further Reading
Werner M. Bahlsen and their sister Andrea von Nordeck.
"Bahlsen: Nach der Neuordnung die Ziele erreicht,” Frankfurter
Allgemeine Zeitung. May 24. 2000, p. 21.
In 1993 the company started restructuring its operations: the "Bei Bahlsen hat der Familienstreit die Gruppe nicht gesprengt,”
sweets and snacks divisions were split, first operationally and Frankfurter Allgemeine Zeitung. March 13. 1995. p. 25.
“Das Gebäckwerk in Polen bereitet Bahlsen viel Freude.” Frankfurter
later legally . In 1995 Bahlsen was renamed Bahlsen KG, which
Allgemeine Zeitung. September 14, 1999. p. 27.
became the holding company for ten domestic subsidiaries. Fischer. Oliver. "Zwischen zwei Keksen.” Werben und Verkaufen.
Bahlsen’s international firms were organized under the um- January 22. 1999. p. 76.
brella of Bahlsen International Holding AG. With markets "H. Bahlsen feiert Geburtstag.” Lebensmittel Zeitung, November 7.
stagnating and competitive pressure rising, the company turned 1997. p. 20.
up a loss again in 1997. Finally, in 1999 the family decided to Kohlbrück. Olaf, and Frank Roth. "Süsswaren; Bahlsen-Market-
completely spin off the snacks business under the leadership of ingvorstand Hans-Jürgen Grabias setzt auf Carpe Diem.” HORI-
Lorenz Bahlsen. Brother-in-law Gisbert von Nordeck was ZONT. January 25. 2001, p. 22.
handed over control of Bahlsen’s Sw iss and Austrian subsidiar- Schulze. Peter. "Trennung der Geschäftsfelder; Bahlsen will Potenziale
für das Saison- und Ganzjahresgeschäft stärker ausschöpfen,”
ies. Werner Michael assumed control of Bahlsen. which kept all
Lebensmittel Zeitung. December 15. 2000. p. 57.
the brand-name rights and focused on sweets. After the success- Sturm. Norbert. "Dynastien. Aussenseiter. Newcomer: Bahlsen KG.
ful launch of Bahlsen’s PiCK UP! bars in 1999. the company Hannover,” Süddeutsche Zeitung, August 5. 1995.
focused on product innovation in the premium segment and "Werner Michael Bahlsen: 3 Fragen." Lebensmittel Zeitung. June 9.
market penetration in Germany and Eastern Europe, as well as 1995. p. 3.
fine-tuning its management and sales organization to compete
effectively in a consolidating market. Evelyn Hauser