Rowntree's

1900 to 1945

Rowntree had struggled to make a milk chocolate product of comparable quality or value to Cadbury's Dairy Milk. Joseph Rowntree even described the growing market for milk chocolate as a fad. Rowntree's poor performance in the category became a major problem from 1914 onwards, as British public preference continued to move towards milk chocolate, and away from the more bitter cocoa essence products. Rowntree's two major rivals, Cadbury and Fry, merged in 1918, and although Rowntree was invited to participate in the merger, the company declined to do so. Meanwhile, the Rowntree board was torn as to whether it should become a low-turnover, high-quality product company or a mass producer of cheaper lines. Seebohm Rowntree inherited a struggling company when he succeeded his father as chairman in 1923. By 1930, as a result of all its problems, Rowntree was approaching bankruptcy.

In 1926, Rowntree's acquired the Cowan Company of Toronto Limited (founded in 1890 as Cowan Cocoa and Chocolate), for CA$1 million, giving Rowntree's a line of successful cocoa and chocolate products and a factory for the production of Rowntree's products for the Canadian market. From 1931, Rowntree of Canada began to manufacture Mackintosh toffees under licence. In 1927, the company began to market its fruit gums, and its pastilles from 1928, in the now familiar tube packaging. The company later produced the Coffee Crisp bar at the Canadian factory.

George Harris was appointed marketing manager for chocolate bars in January 1931. Harris had learned the latest marketing techniques while he was in the United States. According to Robert Fitzgerald, "It was Harris's drive and insight which inspired his firm's renaissance in the 1930s." In 1932, Rowntree appointed a new advertising agency, the London branch of J. Walter Thompson. Thompson undertook extensive market research to discover what consumers wanted. As a result of this research, the Black Magic assorted chocolate box was launched in 1934.

In January 1935, Rowntree decided to abandon its attempt to compete with Cadbury Dairy Milk. In May 1935, Rowntree launched the Aero, an aerated milk chocolate. The Chocolate Crisp, a wafer-and-chocolate bar later known as the Kit Kat, was also launched in 1935. In 1937, the Dairy Box of assorted chocolates was launched, using the market research that had been undertaken for Black Magic. Chocolate beans were first sold loose in 1938, but were later packaged in a cardboard tube and branded as Smarties. Polo, the distinctive mint with a hole in the centre, was developed in 1939, but its introduction was delayed by the onset of war. Harris was made company chairman in 1941.

1945 to 1988

Rowntree entered the continental Europe market in the 1960s, establishing production facilities in Hamburg, Dijon, Elst, and Noisiel. After Eight thin mint chocolates were launched in 1962.

In 1969, the Rowntree board rejected a £37 million takeover bid from General Foods. That same year, Rowntree entered into a long-term agreement with Hershey whereby Hershey would produce Rowntree products under license in the US. Rowntree merged with John Mackintosh and Co in 1969, to become Rowntree Mackintosh. Mackintosh produced Rolo, Munchies, Caramac, and Quality Street. Hershey's began U.S. distribution of Kit Kat in 1970 and followed in 1971 with Rolo.

In 1971, Rowntree Mackintosh acquired Menier Chocolate of France. In the same year, the board attempted to diversify the business, and made a bid for Bovril, but lost out to James Goldsmith's Cavenham Foods. In 1972, Hoadley's Chocolates of Australia was acquired by Rowntree Mackintosh. This company had invented such products as the Violet Crumble and Polly Waffle.

The Yorkie and Lion chocolate bars were introduced in 1976. In 1978, the Hershey contract was renegotiated, giving Hershey the rights to the Kit Kat and Rolo brands in the US in perpetuity.

The best known products that are still branded under the Rowntree name are Rowntree's Fruit Gums, Rowntree's Fruit Pastilles and Jelly Tots. Jelly Tots are soft, chewy fruit-flavoured sweets. They are round, sugar-coated gumdrop-like confections and contain 25% fruit juices and no artificial colours or flavours. Jelly Tots were invented by Dr Brian Boffey of Horsforth, Leeds when he was working for Rowntree's. Jelly Tots were launched in 1965 and quickly became established as a popular children's brand in Europe. Rowntree's Randoms were introduced in 2009.

The Rowntree brand is also used on a number of ice lollies (made by Froneri) for Nestlé.

On 13 April 1988, the Swiss confectioner Jacobs Suchard began a dawn raid on Rowntree's shares, which had been under-performing the market, although they were beginning to improve, taking a 14.9% stake in the company by 9:15 am. As a result, the managing director of Nestlé, Helmut Maucher, contacted Kenneth Dixon, the chairman of Rowntree, offering to act as a white knight. Nestlé was the largest food company in the world, and had been interested in Rowntree previously, but the Rowntree board would aggressively contest any attempted takeover, and Nestlé had never undertaken a hostile takeover before. Nestlé was worried about the potential of Rowntree falling into the hands of one of its major competitors. Rowntree was the fourth-largest chocolate manufacturer in the world, after Mars, Hershey, and Cadbury, with a 7% global market share.

Nestlé eventually won control with an offer valuing Rowntree at £2.55 billion. Strategically, Nestlé had always seen Rowntree as a perfect fit for its own operations. Nestlé had strength in the block chocolate bar business, and Rowntree had strength in the countline branded chocolate business. Rowntree's strong global brands were the key reason for Nestlé's interest. Due to potential synergies between the two companies, Nestlé believed that savings between 5 and 15% of Rowntree's operating costs could be made if the companies were to combine.

The takeover was controversial, as Nestlé was effectively protected from similar takeover attempts under Swiss law. After the Nestlé takeover, the Rowntree chocolate ranges began to use the branding "Nestlé Rowntree", before eventually the Rowntree name was dropped from the packaging altogether, except on Rowntree's Cocoa and the Fruit Pastilles and Fruit Gums lines. The Mackintosh branding was dropped from all former Rowntree Mackintosh products except for Mackintosh's Toffee.

Nestlé still had to honour Rowntree's perpetual licensing agreement for Hershey to produce Kit Kat, Rolo, and other products in the United States. The agreement includes a "change of control" clause, allowing Nestlé to regain the US rights if Hershey is sold.