Arrangements between Bakers and Baumanns

Baumann’s (ie. Selected Products Ltd) was a subsidiary of Bakers Ltd.  There was an interesting arrangement that both companies would exchange recipes and yet each company could adjust the recipe to suit its own requirements.   It was also agreed that Baumann’s could use all the Bakers Ltd trade names such as Pro Vita, Tennis, Eet-Sum-Mor, selling them under the name of Baumann’s.  Legal user arrangements were registered to enable them to do this while still protecting the trade names against other competitors.  

Another arrangement was that if one company evolved a new line of biscuits - a very difficult thing to do - then after certain lead time the other company was to be given the recipe and was entitled to bring the same line onto the market provided it was under a different biscuit name and that there could be no confusion in the packages between the two companies.  For example, Baumann’s Biscuits evolved a line called Choc-Krust and after a while Bakers Ltd made the same line and called it Choc-Kits.

It was in 1970 that my cousin Desmond experienced severe ill health and he was advised to withdraw from work for about six months.  He asked me if I would take care of the Cape Town operations during this period.  To do this I arranged a monthly visit to Cape Town where I would meet with the executives to discuss plans and operations pending the next monthly meeting. 

Later on Desmond Baumann said that he wished to resign as Chairman of the Group as he felt the strain was too great.  I encouraged him to remain as Chairman and said I would, in my existing capacity as Deputy Chairman, undertake all the duties that he would normally have to do.   He agreed to continue but after another year  felt it was still too much for him.  On medical advice he withdrew from the Chair and I was appointed Chairman of the Group.   In the meanwhile Desmond Baumann had returned to work and continued to supervise the operations of the Cape Town company.

Although Desmond Baumann had resigned as Chairman of the Group, I urged him to remain as Chairman of Selected Products Ltd in Cape Town.  It was good for the general presentation of the company in that area to the public and to the trade and to the employees.  This he agreed to.

Things went well for a few more years until Desmond again suffered health problems and he told me that he had finally decided that he must withdraw from active involvement in the company and go on retirement.  However, he agreed to remain on the group Board as a Director, for which I was grateful.

It was obviously not possible for me permanently to run Selected Products directly from Durban so I appointed Mr E C Dunne as Managing Director of that company.   Mr Dunne had been employed by the company for many years as the Financial Director and was very capable and able to lead the company well.

Some years later I decided that it was in the interests of both companies to trade throughout South Africa and not be confined to their specific areas and that they should compete with each other subject to certain  overriding rules.  This was accomplished successfully.   The next step was to arrange that executives of both factories could interchange visits and have free access to each other’s factories.  We also arranged that where volumes justified it Bakers Ltd in Durban and Johannesburg would make Baumann’s biscuits in those areas to save railage, and similarly Baumann’s in Cape Town would make Bakers biscuits lines for them and deliver to each other’s warehouses. 

It might seem strange that the two companies should vie with each other on the market place and in fact the sales people became very competitive, but at top executive level I had laid down certain rules.   We were now going through a period of special deals to supermarkets and big buyers at special discounts.  I gave each of the two companies a specific value expressed in money terms that they could give away in discounts throughout the current financial year.   It was up to the management of each company to decide what lines to promote and at what periods of the year to use it.   The discounts could be used to promote generic lines such as Marie, Cream Crackers, Lemon Creams as well as our registered lines such as Eet-Sum-Mor, Tennis and Pro Vita.   We held monthly meetings at which the figures were discussed and the market share of the two companies was tabled.

This competition actually led to increased sales.  By operating two companies we were obviously given increased shelf space and supermarkets liked it because when they had run a special promotion on, for example Pro Vita, and the promotion had come to the end they would be overjoyed to find that the other company would now be offering a promotion.   So the supermarkets would again throw their weight behind it.

The word came back to us from time to time that the big buyers thought we were crazy in our attitude but trading results showed that the arrangements were paying off and our profits remained strong.

We continued to operate in this manner until the time of my retirement.