Apparently copyright laws were pretty weak during the great depression, so Joseph Rosefield started Peter Pan and Skippy peanut butter.

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Dave Young:
Welcome to the Empire Builders Podcast, Dave Young here with Stephen Semple. And Stephen is just, he’s breaking tradition. Instead of whispering today’s topic into my ear moments before hitting the record button, as is usual, he decided to not whisper it in my ear at all. What’s going on, Stephen?

Stephen Semple:
Changing it up a little. Changing it up a little.

Dave Young:
Changing it up. All right.

Stephen Semple:
So have you ever heard of Joseph Rosefield?

Dave Young:
Joseph Rosefield, Joseph Rosefield? I think I might’ve gone to third grade with little Joey Rosefield, but I could have him confused with someone else. No, I’ve not heard of Joseph Rosefield.

Stephen Semple:
Yeah. This is a little different Joseph Rosefield than anybody you would’ve gone to first grade with. He’s a father of a product that is found an over 90% of homes in the US. There’s 700 million pounds eaten annually in the US alone. And in fact, he’s responsible for not one, but two brands in this category.

Dave Young:
It’s got to be sugar.

Stephen Semple:
You’re close. You’re close.

Dave Young:
Really?

Stephen Semple:
Yeah, peanut butter.

Dave Young:
Peanut butter.

Stephen Semple:
Yeah.

Dave Young:
Okay, okay.

Stephen Semple:
Now, peanut butter was invented by Kellogg as a health food for people who couldn’t eat meat, but it had a very different texture. It was kind of cement and oil. It was a paste. And Kellogg had patented this process for developing what he called nutmeal. So he would boil the nuts, and then what he would do is he’d grind it into a meal. And then what happened is lots of employees left Kellogg’s and set up their own businesses, basically grinding up these peanuts. And what you would have is you would have this oil and this ground peanut… It’s kind of like the natural peanut butter you see in the stores today, how the oil separates from the peanuts and you got to mix it all up.

Dave Young:
The description of it, I mean, even though it’s just one ingredient, the description of it boiling and then mashing into it. That takes all the excitement out of it for me. I love peanut butter, but I don’t even want to know that.

Stephen Semple:
And today, what a lot of makers do is roast the peanuts. But here’s the problem.

Dave Young:
Instead of boiling them.

Stephen Semple:
Yeah.

Dave Young:
I’m for that.

Stephen Semple:
Here’s the problem. In the early 1900s, just like that natural peanut butter, that peanut butter would go bad. It needs to be refrigerated. It would go rancid. So enter Joseph Rosefield. He was a food distributor. He did pickles and coffee and tea, and also distributed a peanut butter brand called Luncheon. And he had a problem with his peanut butter product coming back pretty regularly spoiled because when the oil and the peanuts separate and it’s not refrigerated, it spoils. There were a lot of people making peanut butter, at this point, by roasting the peanuts and doing that. The demand had grown because during World War I, governments promoted peanuts as a meat substitute, so there was this meatless Monday. So that grew demand and grew the awareness of this peanut butter, and people started creating a taste for it. So he decided he wanted to make a shelf stable peanut butter.

So he starts experimenting with chemistry because the problem that he discovered is that the oil melts. That’s what actually makes it separate at room temperature. So he needed to find a way to raise the melting point of the oil. There was a new product on the market that he took a look at, margarine. Margarine keeps the oil solid at room temperature because of a process known as hydrogenation.

Dave Young:
Yeah.

Stephen Semple:
Now, hydrogenation was invented a decade earlier by Procter & Gamble when they had to find a substitute for lard in the making of soap. So Rosefield decides to experiment with hydrogenizing peanut oil and it turns out, this changes the structure of oil to become something more stable. So the hydrogen molecule binds, and now you’ve got something that’s a molecule that’s more stable, and now the peanut butter is smooth and creamy and will stay that way and not go bad.

Dave Young:
And you can just sit it in your pantry like we’ve done since we were little children.

Stephen Semple:
Exactly. So he starts to file a patent for his process, and he learns another patent was filed three weeks earlier, and the process was licensed to Heinz.

Dave Young:
Oh, wow.

Stephen Semple:
Now he determines his process is different enough that he can go ahead with his patent, but here’s the problem. He now is a huge competitor, Heinz. And at this time, Heinz was a major company, 7,000 employees international in scope. This is bad news. He is like, “I’m going to be competing against fricking Heinz.” But when the Heinz product comes out, Joseph realizes that they’ve got it wrong. The Heinz product is thicker. It does not spread well. What they did is they fully hydrogenized all the peanut oil. His was partially, which makes it creamier peanut butter, because it had more of a butter feel to it. But now he has to compete with Heinz and their distribution. So he decides to go to Chicago to a food producer called Kase Foods, which was a subsidiary of Swift. Now, they mainly did meat, but they also had a peanut butter line that was not shelf stable. So he presents the idea to them and they love it. So they sign a licensing agreement to use this process to make this peanut butter. The first peanut butter product that they launch is called Dainty peanut butter.

Dave Young:
Dainty.

Stephen Semple:
Dainty peanut butter. It does not sell well. He realizes he needs to rethink the product. Around this time, sliced bread comes out onto the market. What he realizes is kids can now make things on their own without their parents’ help, so maybe they should market peanut butter to kids. Food and products are not being marketed to kids at this time because there’s a couple of issues. How do you reach the kids? There’s no TV. There’s not radio in every home, so how do you reach the kids? He decided to appeal directly to them by the name and the packaging.

Dave Young:
I could guess, there’s one or two. Maybe either Peter Pan or Skippy.

Stephen Semple:
Peter Pan.

Dave Young:
Peter Pan.

Stephen Semple:
Peter Pan, because what he notices is there’s a popular book, Peter and Wendy, that is turned into a play, and also the first movie geared to kids, Peter Pan.

Dave Young:
Did he not have some trademark issues with that?

Stephen Semple:
What’s incredible is he talked to no one and he did it and it never ended up becoming a problem. I have no idea how that happened.

Dave Young:
I can’t believe Disney didn’t get involved. Maybe it was pre-Disney.

Stephen Semple:
It would’ve been pre that, yeah, for sure.

Dave Young:
Yeah.

Stephen Semple:
So now, crazy thing about Peter Pan peanut butter, it’s still one of the most popular brands of peanut butter today. So they relaunched, aimed that at kids, flying off the shelves. Three years of success, George Kase dies. He’s the guy who was Kase Foods and signed the agreement. Finance guys take over. They take a look at this deal and they say, “Hey, we want to change his deal. We want to cut your fees in half.”

Dave Young:
Oh no.

Stephen Semple:
And he says, “Screw that.” He breaks off the agreement, but he doesn’t own the brand. He doesn’t own the brand, so what do you do? This is right at the start of the Great Depression where meat substitute and inexpensive meals is a real need, and he decides to make a new peanut butter.

Dave Young:
Okay.

Stephen Semple:
But by this time, lots of competitors have come into the market, but what he notices is everyone is making the same variation of creamy. They’re all smooth. So what does he do? Makes it crunchy.

Dave Young:
Yes. Don’t grind the peanuts completely.

Stephen Semple:
Yeah.

Dave Young:
Leave some of them in pieces.

Stephen Semple:
And he looks to pop culture for an inspiration in marketing. There’s this comic out that is called…

Dave Young:
It’s got to be Skippy.

Stephen Semple:
Skippy. And it also had become a movie. It had four Oscar nominations. So he named his peanut butter Skippy.

Dave Young:
Still no trade name issues?

Stephen Semple:
Still no trade name issues, which is really remarkable.

Dave Young:
That’s crazy. You couldn’t do that today.

Stephen Semple:
No, no. You would not be able to do that today. But he also changes the packaging. He goes to a bottle with a wider mouth, making it easier for kids to make sandwiches. So by 1940, Skippy’s doing really well and it’s making a profit. Along comes World War II. Government wants to take over his property, which would put him out of business, but instead he talks them into buying his product. Meat substitute, stable peanut butter can be shipped anywhere.

Dave Young:
Heck, yeah.

Stephen Semple:
And soldiers, in fact, invented a new sandwich, a sandwich that get into gets nicknamed “The Food of Soldiers” and it’s PB and J.

Dave Young:
PB and J, yeah, because they probably had little packets of jelly, and they had little packets of peanut butter and off you go.

Stephen Semple:
Yeah, and sliced bread. Off you go. So when the troops come back, they actually already have this taste preference for Skippy peanut butter because they’d been eating it during the war. We’ve seen this with so many products where during World War II, troops got exposed to it, like Scotch.

Dave Young:
Yeah, Scotch, Spam, lots of things.

Stephen Semple:
And come back with this desire for that product. So in 1947, Joseph gets his revenge, and Skippy becomes number one, surpassing Peter Pan. By the mid fifties, it’s selling more than the top three competitors combined. Heinz even leaves the market. Heinz goes, “We’re done. We’re out.”

In 1958, Jif enters the market, but that’s a completely different story that we’re not going to be talking about today. We’re talking about Joseph and his successes.

Dave Young:
First, he has the innovation that changes the product and is something that can be mass marketed and is shelf stable. That’s brilliant in itself. That’s the last original idea he had. Then it’s just steal names. But I was going to say, that’s also a brilliant move because he’s riding the coattails of popular culture in marketing something to children.

Stephen Semple:
And he was really great at looking around. So even this whole idea of changing the structure of the peanut butter came from looking at margarine. So he said, “Okay, well what did they do over here? Well, maybe I can do this here.” But the idea of marketing the kids came from this unexpected opportunity due to sliced bread. So he looked at sliced bread and he said, “This is going to change things.” So this opens up this new market and often lose sight of these unexpected opportunities that happen due to a technological change. Sliced bread was a technological change and it changed the landscape opening up the opportunity to kids. But then like you were saying, in terms of marketing to kids, he looked at pop culture. I think today, if there was something where there was the name, okay, you couldn’t take the name, but you could still look to pop culture for the inspiration.

Dave Young:
I think it’s a mistake not to.

Stephen Semple:
Yes.

Dave Young:
Right? You need to be a fully aware of what’s going on and see if there are trends that you can surf on with a product and with a name. I wouldn’t name something after a Disney film today.

Stephen Semple:
Right.

Dave Young:
The legal environment has changed. I love this story in so many ways. I have a theory, Stephen, about peanut butter.

Stephen Semple:
Let’s hear your peanut butter theory.

Dave Young:
I think that fully 80% of those 700 million pounds of peanut butter that you were talking about-

Stephen Semple:
Yeah?

Dave Young:
I think fully 80% are eaten off a spoon.

Stephen Semple:
That could be. That could be. But the other part that I also like about him is when he decided to reenter the peanut butter market, the first thing he did was take a look at what everybody was doing and figured out something that was different. So often, people look at the leaders and want to copy the leaders instead of going, “All right, they’re all doing this thing. What can I do that’s different and new and innovative?”

Dave Young:
Sure, yeah. Really a cool story. Even when the government’s stepping in and saying, “Hey, it’s wartime and we’ve got to commandeer all these resources in business and industry,” and he figured out a way to convince them, “No, I’m good. I’m here to help you,” instead of “Take over my factory and start making whatever it is that you think soldiers want to eat.”

Stephen Semple:
Yeah. Instead, he convinced them, “You should buy the product I’m making.” The guy was very sharp, very innovative, and very aware of the world around him. Kind of a cool story and how often it’s said, you get something where he develops one product, loses it, creates the second one, takes over the world. What I found incredible is when you named two peanut butters-

Dave Young:
It was those, yeah.

Stephen Semple:
It was those two.

Dave Young:
Well, it’s the two that I could think of with names that kids would like.

Stephen Semple:
Right.

Dave Young:
Right? We may not know the origin story of Skippy may not be in the public consciousness anymore, but it’s certainly a young sounding name. It’s a little kid, or it’s a dog or a puppy or something like that. Right?

Stephen Semple:
Yeah, exactly.

Dave Young:
And of course, Peter Pan is Peter Pan.

Stephen Semple:
Joseph Rosefield, really the father of peanut butter.

Dave Young:
The father of peanut butter. I wonder if that’s on his tombstone.

Stephen Semple:
I don’t know. That would be an interesting question.

Dave Young:
Thanks for sharing this one, Stephen. That was fun.

Stephen Semple:
All right, thank you.

Dave Young:
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