The Once And Future King

Wherein the heir to King Arthur Flour sets off to build an empire and almost loses his kingdom.

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When Frank Sands graduated from Harvard Business School in 1963, it was hard for him not to feel an overwhelming sense of opportunity. The business world was in the throes of an expansion and merger spree that saw companies, both large and small, devouring competitors and noncompetitors alike. The unquestioned assumption of the day was that growth would not just solve problems, it would also ensure success.

Yet in Frank Sands's case, his academic orientation and the business atmosphere that fostered it, were to prove nearly fatal for Sands Taylor & Wood. The family-owned, Boston-based company had sold the same type of unbleached, unbromated, high-protein wheat flour throughout New England since 1790 the year of George Washington's inauguration. In 1963 when Sands joined his father at Sands, Taylor & Wood, the company was a profitable, $3-million operation that relied exclusively on the uniqueness and solid reputation of its sole product, King Arthur Flour. Within five years, Sands had embarked on what turned out to be a decade-long round of acquisitions that would see sales shoot up to $45 million and the number of employees climb from 20 to 160.

Today, 15 years later, Sands, Taylor & Wood is once again a small operation, with sales of $3.5 million, and it produces its long-standing product, King Arthur Flour. The company narrowly escaped going under, warehouse space that had once been full of baking ovens and 10,000-gallon corn syrup tanks is now empty, and Frank Sands is a much wiser man.

Sands's long, cyclical odyssey from success to near failure and back began in 1968, when his father retired from Sands, Taylor & Wood and Frank became company president. That same year, there were 4,500 mergers in the United States, a 50% increase over the previous year, but still far less than the 6,100 that would be registered one year later. Sands himself wasted no time. Within months of taking over the company, he had paid $300,000 in cash for Allied Bakers Supply Co.'s assets, a marginally profitable bakery-ingredients supply distributor in Cambridge, Mass.

Sands justified his acquisition in two ways. His company distributed King Arthur in both family- and larger-size bakeries, but family flour consumption was declining. At the turn of the century, over 90% of all flour usage in the United States was family flour, that is, smaller bag sizes bought by consumers in stores; by the end of World War II, that figure had dropped to 40%, and by 1968 it had dropped even further, to 8%, where it has since plateaued. Sands was convinced he should pursue a wider share of the bakery market and sell not just flour but other bakery ingredients as well.

Sands also took note of Allied's faithful customer base. He figured he could penetrate the bakery market faster and easier by absorbing a supplier that had existing relationships with retailers. "By picking up those customers, we telescoped a penetration that would normally have taken five years into 60 days," summarizes Sands. "Making it work meant turning over sugar faster." He began turning it over so fast, in fact, that he recouped his initial investment in 60 days. By the end of the year, sales had doubled to $6 million, and 15 new employees were added.

The company now had two operations, and the would-be flour mogul immersed himself in the business, working 14 hours a day, seven days a week. By the early 1970s, Sands concluded that he could run a more efficient organization and save considerable money by manufacturing some of the goods he was distributing, instead of buying from a middleman. In 1973, he purchased Joseph Middleby Jr. Co., a 100-year-old manufacturer of fillings and toppings for pastries and other baked goods located in South Boston. Joseph Middleby had a reputation for quality, but its three manufacturing plants hadn't been upgraded since the early 1900s, and the company was losing money. Sands laid out about $300,000, most of it cash, for the company's assets, which included beneficial tax losses. Company sales leapt to $12 million.

Then, in 1975, Sands bought H. A. Johnson Co., another bakery supply manufacturing business whose primary asset was a block-long, two-story, 140,000-square-foot manufacturing plant and warehouse in the Boston neighborhood of Brighton. On the surface, it looked as if he had struck a sweetheart deal. Johnson was a money loser, and its owner, Aerojet-General Corp., a giant California aerospace company, had neither the qualified managers nor the inclination to save it. Sands obtained a $2-million bank loan to pay for a company that Aerojet had originally bought for $4.5 million. Johnson produced 14 different product lines, including toppings, fillings, glazes, and extracts; with its addition, Sands, Taylor & Wood boosted sales from $12 million to $25 million within two years.

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