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Gerber Celebrates 70th Anniversary

July 27, 1998

FREMONT, Mich. (AP) _ Gerber Products Co. still makes baby food at the same plant where Dan Gerber first strained peas and other vegetables after his wife asked for help feeding their young children. But as the company celebrates its baby food’s 70th birthday, it clearly has grown beyond its humble, small-town roots.

For one thing, it’s now owned by a Swiss pharmaceutical company. For another, officials at this American icon of a company expect that before long, at least half of its sales will be overseas.

Today consumers in Japan can buy Gerber baby food with sardines in it. In Poland, Gerber sells baby food made from rabbit. And more international entrees may be on the way. Gerber President and chief executive Al Piergallini says the company, which already does business in 80 countries, is also looking at the Chinese and Indian markets.

The Gerber of 1998 has more than 200 varieties of baby food and juice and holds nearly 70 percent of the $1 billion dollar U.S. market.

``Both my kids liked the apple-and-chicken flavor they sell, although it sounds kind of disgusting to me,″ says Davida Dennen, a Grand Rapids mother whose daughters are now ages 2 and 4.

In 1996, responding to the tastes of the American public, Gerber stopped adding sugar and starch to its U.S. baby food line. An organic line was brought out last year.

Jill Miller, whose son is 14 months, says she occasionally bought the organic products.

``I’ve read so much about pesticides and hormones in animals and all the negative effects they have,″ says Miller, who lives in East Grand Rapids. ``There was a squash mixed with fruit and a sweet potato mixed with fruit that he really liked.″

During the 1980s and early 1990s, Gerber invested in side businesses ranging from baby apparel and life insurance to fiber-fortified juices for adults. Today, the life insurance business remains as the only sideline.

One thing that will never change, the company says, is the Gerber Baby’s face, which has adorned its products for 70 years.

``It’s extremely important,″ Piergallini says. ``In some countries, the Gerber Baby is recognized even though we’ve never sold baby food there. When we went to Poland, shopkeepers asked for the `baby head’ posters because the trademark was so well-known.″

Fremont, the tiny southwest Michigan town where the Gerber was born, also remains a part of the company’s identity. The company employs 1,200 people in this community of nearly 3,900, and recently committed to a $30 million upgrade of plant facilities.

``If we didn’t have Gerber today, we’d be in very tough times, we would be hurting economically,″ says Mayor Raymond Rathbun, who fed only Gerber to his children.

But the security has come at a cost. Fremont, like communities across the country, has watched anxiously as a foreign company assumed ownership of what had been a hometown enterprise.

The company struggled financially through the 1980s, then began cutting back. Piergallini says new, more efficient equipment made it possible to close one of Gerber’s three domestic plants, in Asheville, N.C., leaving the Michigan facility and an Arkansas plant.

Then in 1994 _ 20 years after Dan Gerber’s death _ the company was sold to Sandoz Ltd., a Swiss pharmaceutical giant for $3.7 billion in cash. Two years later, Sandoz merged with another Swiss pharmaceutical to form Novartis AG, the world’s second-largest drug maker. Gerber’s new owners challenged the city’s valuation of its real estate.

The dispute was settled this year. Rathbun says under the new valuation, Novartis AG will see a 40 percent drop in its real estate taxes. Before the adjustment, Gerber had accounted for nearly 20 percent of the city’s tax revenues for real estate.

Still, Rathbun says the city is lucky to have Gerber.

``Of course, I wish things were like they were 15 or 20 years ago, but they can’t be,″ says Rathbun, who says he lost his own data processing job with Gerber due to cutbacks in 1991. ``It’s a different world. They have to compete. As long as they are here, we have a strong job base.

``While they’re a good corporate citizen, they’re not what they used to be.″

David Molowa, an analyst with Bear Stearns, predicts Novartis eventually will sell or spin off Gerber. He says baby nutrition and pharmaceuticals may not be a healthy marriage in the long run for either business.

``There really isn’t enough complementary interests″ between Novartis and Gerber, Molowa says. ``Novartis’ focus is really to be the premier life sciences company ... in health care and agribusiness.

``Baby food does not really fit.″

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