George Weston Limited
George Weston Limited is one of North America’s largest processors and distributors of food. The company operates two subsidiaries: grocery, drugstore and general retailer Loblaw Companies Limited and Weston Foods, a baking company. George Weston Ltd. owns a variety of brands and retail banners. Weston Foods includes Wonder, D’Italiano and Country Harvest and Loblaw brands include No Name, President’s Choice, Life Brand and Joe Fresh. Loblaw stores include Loblaws, Zehrs, Your Independent Grocer, Provigo, Atlantic Superstore, Fortinos, Dominion, Independent City Market, Valu-mart, ARZ Bakery, Wholesale Club, T&T Supermarket, Real Canadian Liquorstore, Real Canadian Superstore, No Frills, Maxi, Extra Foods and Shoppers Drug Mart. In 2016, George Weston Ltd. registered $48 billion in revenue and $550 million in profit and held assets valued at $38 billion. George Weston Ltd. is the country’s largest employer, with 201,500 full- and part-time employees as of 2016. It is a public company headquartered in Toronto and listed on the Toronto Stock Exchange under the symbol WN.
George Weston Limited’s beginnings go back as far as 1882, when George Weston, a Toronto bread salesman and former baker’s apprentice, went into business by purchasing a bread route from his boss. In 1884, he bought out his employer’s bakery. At least four expansions followed as the popularity of Weston’s Real Home-Made Bread grew. In time, Weston introduced modern production methods, such as mechanical mixers, to his facilities. He eventually renamed his bakery G. Weston’s Bread Factory (see Baking Industry).
In 1897, he opened Weston’s Model Bakery, which boasted state-of-the-art equipment and processes. Its initial output was 20,000 loaves per week, with a capacity for 40,000. A price war among bakers followed, with competitors attempting to undercut Weston’s prices. In retaliation, Weston left the local bakers’ association and undercut his competitors by 2¢, thereby breaking an agreement that set a common price for a loaf of bread. As a result, bread prices in Toronto went down even more. Despite the price drop, Weston prospered, delivering bread to 38 towns and cities in Ontario. By the turn of the century, George Weston had become Canada’s biggest baker.
Early in the 1900s, Weston began making biscuits, which became an increasingly important part of the business. In 1911, Weston amalgamated his bread business with several Canadian bakers to form the Canada Bread Company. The partner companies of that operation signed an agreement to stay out of the bread business for 10 years. During that time, George Weston Ltd. shifted its focus to biscuits, opening a Weston’s Biscuit Factory at the corner of Peter and Richmond streets in Toronto. In 1921, with the 10-year agreement at an end, George Weston returned to the bread business. He continued to head the company until his death in 1924, when he was succeeded by his son Willard Garfield Weston.
While serving overseas during the First World War, Garfield Weston had toured the famous British biscuit factories and was sure that a similar product could be marketed in Canada. After he returned home, he had convinced his father to import biscuit-making equipment from England, and in 1922 Weston’s English Quality Biscuits were launched.
W. Garfield Weston
W. Garfield Weston became president of George Weston Limited at age 26. He is credited with aggressively expanding and modernizing the company. In 1928, he brought Weston public and purchased William Paterson Limited, a biscuit manufacturer in Brantford, Ontario, and another outside of Boston. Backed by American financiers, he took the business into overseas markets during the Great Depression of the 1930s, purchasing biscuit and bread factories in the United Kingdom.
Weston modernized those new production facilities and imported Canadian wheat in an effort to increase its demand, which was hard-hit by the Depression (see also Canadian Wheat Board). He also began mass marketing a more affordable biscuit to the British public. Within a few years, the Canadian press was calling him “Britain’s biggest baker.” He also continued to expand operations in North America, buying bankrupt competitors and opening new plants.
Second World War
During the Second World War, George Weston Ltd. continued to expand, purchasing more bakeries and biscuit manufacturers. In 1944, it acquired Western Grocers, a wholesale food distributor in the Prairie provinces that oversaw more than 675 Red and White grocery franchises. But with both Canada and Britain at war, the baking side of the business struggled at times to maintain production due to labour shortages and lack of ingredients such as sugar. During this period, much of its production went to the war effort.
Loblaw Companies Limited
After the Second World War, the company embarked on a period of expansion and acquisition. In 1947, it acquired William Neilson Limited, a confectioner that produced chocolate and dairy products. About this time, Weston started buying shares in Loblaw Groceterias, one of the country’s biggest grocery chains. By 1953, Weston had gained controlling interest in the company, which in time became its leading asset.
In 1956, Loblaw Companies Limited was incorporated to handle the grocery side of George Weston Ltd. and over the decade that followed, Loblaw acquired several food distributors and grocery chains across Canada and the US: National Grocers of Ontario in 1955; National Tea, an American chain, in 1956; Kelly, Douglas and Company in 1958; Atlantic Wholesalers in 1960; and, the Zehrmart chain in 1963.
Consolidation and Turnaround
The company’s rapid growth had slowed down by the 1970s, when George Weston Ltd. began to reorganize its operations and hired new management. In 1972, with too many small, failing stores and the rapid loss of market share in Ontario, Loblaws faced mounting debt and looming bankruptcy. In an attempt to turn the company around, Garfield appointed his youngest son, W. Galen Weston, as CEO of Loblaw Companies Ltd. Before he was called home to the family business, Galen had built a successful chain of grocery stores in Ireland. Under his leadership, Loblaw’s operations were streamlined to ease the effects of its many acquisitions.
Loblaws closed stores that were no longer viable — including almost half its Ontario locations — rebranded its corporate image and redesigned its stores. Shortly after they were reinvigorated, individual store sales would increase two and sometimes threefold. Aided by the runaway success of two generic in-house brands, No Name (launched in 1978) and President’s Choice (1984), Loblaws’s turnaround was a success. By the 1980s, Loblaws had become the largest and most profitable grocery retailer in Canada.
However, the company’s US grocery stores did not experience the same turnaround. Though Loblaw Companies shuttered hundreds of its National Tea locations, rebranded the business and renovated its remaining stores, its efforts were not enough. Loblaws sold its National Tea locations in the Chicago area to the A&P chain, and divested its remaining interest in National Tea many years later, in 1995.
Weston Foods Ltd.
While Loblaw Companies was being overhauled, Galen Weston oversaw a similar consolidation in the food processing and resource sides of the business, opening the Weston Foods subsidiary in 1986. The company reorganized its diverse portfolio of assets while responding to changing economics, including a recession and free trade agreements of the late 1980s and early 1990s. Over the coming decades, the company exited resource-based industries such as paper products, fish processing and flour milling. In 1988, it sold its Canadian biscuit operations for $120 million.
2000 to Present
In 2001, Weston acquired Bestfoods Baking Co. for nearly US$1.8 billion. In 2008, Weston announced the sale of many of its American baking companies, including Bestfoods, to Grupo Bimbo, a Mexican bakery conglomerate, for US$2.5 billion, the biggest deal in the history of George Weston Limited. Also in 2008, Weston sold Neilson Dairy to Saputo Inc. for $465 million. George Weston Ltd. maintained Weston Bakeries in Canada and Interbake and Maplehurst Bakeries in the US. In 2010, Weston purchased Keystone Bakery for US$185 million and ACE Bakery for $100 million.
In 2006, as Loblaws tried to resolve supply chain problems and recorded its first loss in almost two decades, Galen G. Weston (W. Galen Weston’s son) was appointed executive chairman of Loblaw Companies Limited (see Galen Weston Jr. Takes over at Loblaws). Galen G. Weston, in conjunction with president Allan Leighton, refocused the company’s attention on food retailing, with less emphasis on general merchandising, while developing specialty areas such as the Joe Fresh clothing line in 2006 (see Joe Mimran). In 2007, Loblaw returned to profitability.
Bread Price Fixing Scandal
On 19 December 2017, George Weston Ltd. and Loblaw Companies Ltd. revealed that both companies had participated in a bread price fixing scheme between 2001 and 2015. According to George Weston Ltd., the price fixing arrangement was organized industry-wide, with companies coordinating regular price increases together. In the eyes of the Canadian Competition Bureau (see Competition Policy), price fixing amounts to “consumer fraud,” and occurs when two or more companies in a free market agree to either raise, lower or set the price of a particular good. Since companies alter their prices to remain competitive with others, price fixing is often difficult to detect; therefore, the Competition Bureau usually relies on a company to come forward. In this case, Weston and Loblaw came forward in 2015, when they alleged they first learned of the scheme, and cooperated with the Competition Bureau in exchange for immunity, which protected both companies from any fines or other penalties, including jail time. To assuage consumer outrage, Loblaw offered shoppers $25 gift cards. In late 2017, two $1-billion class action lawsuits were filed against Weston, Loblaw and several other companies believed to be part of the scheme.