The Emperors of Chocolate: Inside the Secret World of Hershey and Marsby Joel Glenn Brenner
Corporate candy giants Milton Hershey and Forrest Mars built business empires out of one of the world's most magical, sought-after substances: chocolate. In The Emperors of Chocolate, Joël Glenn Brenner--the first person to ever gain access to the highly secretive companies of Hershey and Mars--spins a unique story that takes us inside a world as/b>… See more details below
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Corporate candy giants Milton Hershey and Forrest Mars built business empires out of one of the world's most magical, sought-after substances: chocolate. In The Emperors of Chocolate, Joël Glenn Brenner--the first person to ever gain access to the highly secretive companies of Hershey and Mars--spins a unique story that takes us inside a world as mysterious as Willy Wonka's Chocolate Factory. Packed with flavorful stories and outrageous characters that give the true scoop on this real-life candyland, The Emperors of Chocolate is a delectable read for business buffs and chocoholics alike. Start reading and you'll soon be hungry for more.
The 25 pounds of sweets Americans ingest each year provide wholesome energy, they say, never acne or tooth decay. The big rock candy mountains have grown and diversified. They sell pasta and dog food. Mars may earn as much from commodity futures trading as from candy sales. With this text, the industry will be a bit better understood bythose who don't read Confectioner magazine. Stock up on Godiva and Goo-Goo Bars and be entertained by this substantial report, without sugar coating, on a surefire topic.
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Hershey and Mars both supplied U.S. troops with candy during World War II, trumpeting their efforts in promotions on the home front.
Mars, Inc., factory outside Amsterdam, July 31, 1990, just before midnight
Theo Leenders hadn't moved from his desk all day. He just sat there, stiff and silent, his eyes riveted to the sleek black telephone in front of him as if his gaze could convince it to ring. He thought the phone call would have surely come through by now. After all, three days had passed since he left his first message for Omar Sharir, the twenty-seven-year-old manager of Mars's Middle East operations. Sharir, a marketing man and fresh recruit Leenders had sent to the region only six weeks earlier, was supposed to be living at the SAS Hotel in Kuwait City while looking for permanent housing and becoming familiar with the sales territory. But no one at the SAS had seen him for days.
Leenders had left a half-dozen messages with the hotel operator and had even sent the SAS manager to check Sharir's room, but nothing seemed out of place. Nevertheless, Leenders was worried. Sharir was green and arrogant. Born in Egypt, he spoke fluent Arabic though he had lived most of his life in London. Leenders knew Sharir was a savvy salesman, but he wasn't sure the freshman was ready for a big assignment like Kuwait, where he was to oversee and expand the company's Persian Gulf business. Forrest Mars, Sr., the now-retired patriarch of the Mars empire, seeded this territory in the late 1960s, hiring locals to distribute M&M's, Snickers bars and Uncle Ben's rice to Arab shopkeepers. Now, some twenty years after the Old Man sold his first chocolate bar in the desert, the gulf region accounted for more than $40 million in sales annually, with Kuwait and Saudi Arabia the leading markets.
Sharir's job was to keep it that way.
His first priority: to convince Kuwaiti merchants to devote precious store space to a new candy bar display, specially designed by Mars engineers. The new display case looked like any ordinary shelf unit, but it was refrigerated, allowing merchants to prominently display Mars chocolates in the heat of the day while the competition's candy stayed buried in the freezer in the back of the store--a distinct advantage for Mars. Sharir was supposed to persuade shopkeepers to make room for the new units by proving that sales of Mars products would be more profitable than sales of chips or sundries, which already crowded the shelves. Sharir was expected to report on his progress daily, but he hadn't called Leenders in Amsterdam since the previous week.
Now, at 2 a.m. local time, Leenders was giving up hope. If Sharir didn't reach him by late morning, he would have to call Mars headquarters in McLean, Virginia, and report the young man's disappearance. The thought made him cringe, like he'd eaten a piece of sour candy.
Next day, McLean headquarters, just outside Washington, D.C.
Edward J. Stegemann was worried and everybody knew it. The finesse and poise that were typical of the well-dressed corporate attorney had vanished in a frenzy of scowling and pacing and barking.
"Damn it," he yelled across the open office, his remark aimed at no one in particular and, at the same time, at everyone in the room. "Shit."
For three weeks now, Stegemann had closely monitored the growing political crisis in the Persian Gulf. On July 17, when Iraqi president Saddam Hussein gave his "Revolution Day" speech, a rousing oratory peppered with attacks on neighboring Kuwait, Stegemann received a personal translation of Hussein's fiery prose from the intelligence unit at Mars Electronics, a division of the company that, among other things, gathers information on political activities around the world that might affect Mars operations. While Hussein's verbal assault piqued Stegemann's interest, he wasn't deeply disturbed by it; Hussein was known to be a hotheaded fanatic, and Stegemann, like most of the world, had regarded the speech as bluster.
It wasn't until July 24--when two Iraqi armored divisions massed on the Kuwait border--that Stegemann became concerned enough to telephone friends at the State Department to get the inside track on the Iraqi dictator's intentions. Stegemann reminded his contacts--men he knew from his previous career as a U.S. intelligence agent--that Mars had a rapidly expanding business in the Persian Gulf. The company, he said, would do whatever was necessary to protect its investment in the region, which included two full-time Mars executives, a state-of-the-art distribution warehouse in the free port of Jebel Dhanna in the United Arab Emirates and an extensive network of local candy brokers who distributed Mars products in six gulf states.
If trouble was brewing, he told his State Department sources, he needed to know. But Stegemann's contacts had informed him, just as the government had informed the media, that there was no cause for concern. The Iraqi president promised he would never attack Kuwait, and on July 25, Hussein had personally told the U.S. ambassador to Iraq that the border tanks were meant only to intimidate.
Based on these assurances, Stegemann had advised the owners and CEOs of Mars, Inc.--John Mars and his older brother, Forrest Mars, Jr.--to proceed with business as usual. The brothers did not order Mars personnel to leave the gulf region; just the opposite, additional Mars managers were flying to Saudi Arabia from London right now for a regularly scheduled meeting on marketing strategy for the coming fall season. The team would arrive in Riyadh, the capital of Saudi Arabia, in a matter of hours, just after Stegemann received word from Leenders that Sharir was missing.
"Christ," Stegemann moaned into the telephone as he listened to Leenders's report. "This is just great."
"I'll keep trying to reach him," Leenders assured the corporate counsel in McLean. "I'll send a distributor to look for him."
"You do that," Stegemann barked. "Now!"
But less than twenty-four hours after Stegemann ordered the search for Sharir, Saddam Hussein did the unthinkable, sending his troops to invade Kuwait. Without hesitation, the United Nations Security Council and President George Bush denounced the invasion and demanded the immediate, unconditional withdrawal of Iraqi forces. The United States froze Iraqi and Kuwaiti assets and banned all trade and financial relations with Hussein. On August 3, Iraq said it would withdraw troops from Kuwait within two days, but when the deadline came, hundreds of Westerners were detained in Kuwait City or taken to Baghdad instead. No one knew if Sharir was among them.
"We phoned and phoned, and he never returned our calls," Leenders said. "Finally, SAS International told us he was gone. He had left the hotel. We said, 'Bloody hell, where is he?' That was the hotel where all the internationals were staying . . . but he wasn't there."
Leenders called the Egyptian secret police, hoping they might help in the search as Sharir was an Egyptian citizen. He also sent telegrams directly to Baghdad demanding Iraq release all international citizens from Kuwait, which on August 8 was "annexed" by its Iraqi invaders. Leenders pleaded with the British Embassy, the American Embassy and the Egyptian Embassy for news of his missing colleague. But for four weeks, there was no word. Not a message or a rumor. Nothing.
Mike Davies couldn't imagine what had happened to Sharir, but he didn't have much time to think about it. What began for him as a regularly scheduled marketing meeting in Riyadh had turned into a nightmarish effort to save Mars's Middle East operations from collapse. All channels leading into the gulf had been blocked by the U.S. Navy; communication with anyone in Kuwait was impossible for those not in the military; journalists from around the world were swarming around the King James Hotel, where Davies and the other Mars managers were staying, making it impossible for the Mars executives to send even a simple fax to McLean because the machines were so jammed. It was a circus that threatened the entire business.
If Mars couldn't get its products into the region and distribute them as usual, the record-breaking sales year that Davies had envisioned would be lost. What's more, the company's relationships with local shopkeepers and candy brokers, carefully cultivated over decades, could be severely damaged. That would make it impossible for Davies to expand Mars sales in the future. And that could ultimately cost Davies his job.
"Saudi was fifty percent of the business; Kuwait was twenty-five percent," Davies recalled. "We had to turn the whole thing into an opportunity or else." As Iraqi troops prepared for a showdown, marching closer and closer to the Saudi border, Davies and the rest of the London team hurriedly set up a crisis management center in a conference room of the King James. The posh, European-style hotel was quickly becoming a headquarters for every major media outlet in the world, including CNN, which was mesmerizing America with its frontline, twenty-four-hour coverage of the events unfolding in the gulf.
But the men from Mars were oblivious to all of this; their mission, as spelled out by headquarters, was to protect the Mars franchise--to sell Mars bars, Milky Ways, Starburst Fruit Chews and Uncle Ben's rice to anyone who could possibly use the products during the standoff.
In just a few days, Davies and his team plotted a new marketing campaign aimed at increasing Mars sales throughout the region. They code-named the operation "SuperSavers," and Davies personally traveled to Bahrain, Qatar and the UAE to launch the program.
"We told the trade [distributors and shopkeepers], 'We know times are tough, the future is uncertain, but our products are the market leaders in their category. "'You know that if you buy our products you can sell them quickly--you don't have to tie up your money in inventory you can't sell. . . . We, as a company, are prepared to stick by you. We are here for the duration, and we won't abandon you in this time of crisis.'"
Other than the pitch, the program was basic: special rebates, coupons and price breaks to merchants. For example, a 10 percent discount on the invoice price of Uncle Ben's or a free case of candy bars for every ten cases purchased.
As sales orders rolled in, Davies next turned his attention to the military, where the big bucks were at stake. Mars products were necessary foodstuffs, critical in a time of war, he told the U.S. Army Command Center, which was overseeing the flow of hundreds of warships, aircraft carriers, supply barges and troop carriers to the gulf. Candy bars might seem secondary to B-1 bombers and Black Hawk helicopters, but, Davies told the generals, "Snickers bars are just as necessary as weaponry." After all, none of the countries participating in Operation Desert Shield, as the initial maneuvers came to be known, had time to establish supply lines before sending troops to the region. Mars was the only company to operate an air-conditioned distribution warehouse and control an enormous fleet of refrigerated supply trucks, a boon to the troops who were being scattered throughout the 400,000 square miles of Saudi Desert.
Overnight, Mars received permission to continue shipping its products, and as President Bush drew a line in the sand and authorized the first call-up of military reserves in more than two decades, Mars began loading candy bars, instant rice and ice cream onto barges headed for Jebel Dhanna.
"We were supplying both the U.S. and the British military, and the Saudis," said Davies. "We were one of the only companies--if not the only company--where the U.S. military came and actually inspected our warehousing facilities and checked it all out and qualified us as an authorized supplier."
But, for Mars, the real war had only just begun.
It was Hershey Foods Corp.--not Mars--that held the prestigious reputation for serving as the U.S. military's chief candy maker. Although Mars worked closely with the U.S. Army in the early 1940s, placing M&M's in C rations during World War II, Hershey's relationship with the Pentagon extended back more than eighty years.
The maker of America's best-known candy bar--and Mars's archenemy--first supplied candy to U.S. soldiers in 1914 at the outbreak of World War I. After the war was over, the company's chemists and food technologists continued to work closely with the U.S. quartermaster general to develop high-energy chocolate rations that could sustain the GIs when they had nothing else to eat. The result was the famous Field Ration D, a nutrition-packed "subsistence" chocolate made from a thick paste of chocolate liquor, sugar, oat flour, powdered milk and vitamins. Although the bar tasted nothing like a typical Hershey bar, it could withstand temperatures of up to 120 degrees Fahrenheit and contained 600 calories in a single serving. The bar was the first to be sealed in cellophane to keep it fresh; it was protected from heat and humidity by a brown cardboard box coated with wax. The entire package could be immersed in water for an hour and remain unspoiled, just as government regulations required.
In 1942, when the United States entered the war against Germany and Japan, the military ordered Hershey to commence full-scale production of the new ration bar, and for the next four years the Hershey plant operated around the clock, seven days a week, churning out half a million Ration D bars per shift. At the time, the factory was considered the most modern chocolate manufacturing facility in the nation. The plant was so efficient it supplied nearly every candy company in the country--including Mars--with chocolate to manufacture candy bars.
"When you ate Snickers or M&M's in those days, you were eating Hershey's chocolate," boasts Hershey archivist Pamela Whitenack. "It might have been a Mars candy bar, but it was our chocolate that made it taste so good."
By Hershey's estimate, the 1.5-million-square-foot plant provided more than 75 percent of the nation's eating chocolate. The factory was the only one in the United States equipped with continuous cocoa bean roasters, industrial-sized mixers, automatic molding machines, wrapping machines and partly automated packaging equipment. None of this machinery, however, helped much when it came to producing the Ration D, as any old-timer in Hershey will tell you.
"It was like clay when we got it from the mixing room," remembers Leonard Hoffman, who worked on the production line. "You had to shovel it into huge bread dough mixers and cool it down, then it became more like putty.
"God knows what all was in that bar--I happened to find out the hard way how nourishing it was. When I was cooling it, I would reach into the mixer and make a little ball about the size of a marble and put it in my mouth. Funny, I was never hungry--used to take my lunch home with me every day."
Philomena Castelli, one of hundreds of women who kept the Hershey plant running during the war, recalls the physical strength required to keep the line running smoothly: "That bar could kill you if you weren't careful. It got stuck to the molds and the rest of the machinery, and you had to go in there with your hands and dig it out. But we did it because we knew the GIs needed chocolate. They needed Hershey to win the war."
Castelli and others of her generation still talk of the day in 1942 when the quartermaster general himself came to Hershey to present the company with the military's highest award for civilian contributions to victory. Every Hershey worker received a pin commemorating the award. Castelli still wears hers, a tiny gold-toned E for Excellence.
By the time the war was over, Hershey had earned four more military citations and had supplied more than one billion rations to U.S. soldiers--a feat that turned Hershey into a household name. From 1945 on, the Hershey brand was synonymous with chocolate to the U.S. consumer. Purchasing a Hershey bar became as patriotic as reciting the Pledge of Allegiance. The candy was as American as baseball, as popular as the Fourth of July.
Of course, Hershey products had gained national attention even before the war. With much fanfare, Hershey bars were carried to the Antarctic in 1928 and again in 1932 by adventurer Admiral Richard Byrd, who subsisted on the candy as he led the first expeditions through the frozen tundra. But it was WWII that made Hershey famous around the world--and that established the company as the military's chief candy supplier, a position Hershey was ill-prepared to give up.
So, as the battleships Wisconsin and Missouri steamed toward the Persian Gulf in the fall of 1990, Hershey chairman and CEO Richard A. Zimmerman ordered his chemists to determine whether full-scale production of a new ration bar would be possible. Code-named, appropriately, the Desert Bar, the new candy was to be Hershey's contribution to troop morale, a familiar taste of home amid the scorching Saudi dunes.
The Desert Bar, Hershey declared, was a tremendous advance over the Ration D, which had served the military through the 1970s. It tasted just like an original Hershey bar but could withstand temperatures up to 140 degrees Fahrenheit. Instead of liquefying in the heat, the Desert Bar turned soft and fudgy, a breakthrough in chocolate technology that took decades of intense research to perfect.
Zimmerman boasted that except for egg whites--which were used to help alter the melting point of the chocolate--the Desert Bar contained the same ingredients as a piece of ordinary candy. "That's why you cannot notice a real difference in the taste," he explained. But he refused to say anything more about how the bar actually withstood the heat. "That is our secret," he told the Associated Press. "It's a special technology that we simply cannot share."
Not that it is difficult to produce a non-melting chocolate; Hershey had solved that riddle long ago by simply replacing the cocoa butter in the Ration D with a fat that could withstand extremely high temperatures. The problem was that the substitute fats always made the chocolate taste terrible, like eating a mixture of wax and chalk.
Chemically speaking, what makes chocolate so unique and irresistible is that its melting point is slightly below body temperature. Hold a chocolate bar in the palm of your hand and it becomes a gooey mess. But place it on your tongue, and instantly, you're overwhelmed with mouthwatering delight. That's because the cocoa butter dissolves first and distributes the rest of the chocolate ingredients over the taste buds in quick succession, starting with the sugar. Remove the cocoa butter and the entire eating experience is altered.
The puzzle for Hershey and the rest of the industry was how to preserve the quality of real chocolate while still protecting the candy from the devastating effects of the sun. The payoff for such a discovery was potentially enormous, since some 30 percent of the Earth is plagued by high temperatures year-round, and at any given time, one-quarter of the rest is sweltering in summer heat.
Before the advent of air-conditioning, chocolate manufacturers could not even conceive of selling chocolate bars in climates such as these. When temperatures climbed above 78 degrees Fahrenheit, the melting point of cocoa butter, Hershey, Mars, Nestlé and others simply shut their doors and halted production until the return of cooler weather. Selling candy in the Saudi Desert was completely out of the question. When Willis Carrier invented the dehumidifying system that made modern air-conditioning possible, he forever changed the way chocolatiers did business, opening up markets around the globe. But even he couldn't solve all of the manufacturers' problems. Every year, tens of millions of dollars in chocolate products are ruined because of electrical outages, coolant failures and penny-pinching shopkeepers who refuse to keep their cooling systems running through the night. In the Third World, where air-conditioning is rare, chocolate is as scarce as ever.
But if a manufacturer could overcome these barriers, billions of dollars in new candy bar sales would be there for the taking. Hershey and other chocolate makers salivated at the thought.
During the 1980s, the industry poured millions of dollars into cocoa butter research. Chocolate manufacturers endlessly tested new fat compounds and fiddled with new fat combinations. They studied how fats delivered the flavors in a chocolate bar and experimented with hundreds of different methods of altering the melting point of the cocoa butter itself. Many scientists believed the answer was hidden inside the cocoa bean, the source of cocoa butter and the intense liquid chocolate "liquor." Still others were devoted to the theory that some outside component, a fake fat or some other ingredient, was required to solve the riddle.
In 1987, the first breakthrough came, not from a chocolate manufacturer, but from a small research firm in Morris Plains, New Jersey, called Food-Tek, Inc. The company's president, Gil Finkel, was a pioneer of chewy cookies and strudel, and he had been working on a non-melting chocolate recipe for almost a decade. His patent was the first to involve technology that rearranged the molecular structure of the cocoa butter to make it more stable. But critics complained that Finkel's chocolate still tasted like paraffin, and although he managed to license the invention to firms in Japan, Europe and the United States, the only result was a minor product in Southeast Asia.
The following year, scientists at the Battelle Memorial Research Institute in Switzerland followed up Finkel's discovery with one of their own, announcing in May 1988 that seven years of research had culminated in "a chocolate that not only doesn't melt in your hand, it hardly melts anywhere else."
A spokesman for the institute, which conducts research in commercial fields for itself and for a variety of clients, declared that the new chocolate tasted just like real milk chocolate and could withstand temperatures up to 100 degrees Fahrenheit.
"For the average consumer, the difference is not noticeable in the mouth," said Battelle's William McComis the day the discovery was made public. "Only a chocolate connoisseur might notice that it melts slower."
Despite those claims, Hershey scientists publicly pooh-poohed Battelle's development, which involved rearranging the fat molecules in the cocoa butter to make it heat resistant. A spokesman for Hershey said of Battelle's discovery: "We've been checking out similar technology for years, and it just doesn't satisfy our concerns for quality." Others in the industry, including Mars, also downplayed the announcement, saying Battelle's chocolate could never measure up to the real thing.
But privately, chocolate manufacturers around the globe were reeling from the news.
According to a former scientist at Battelle's U.S. headquarters in Columbus, Ohio, the day The New York Times ran a story about the discovery, the phones never stopped ringing.
"Everyone wanted a piece of it," said the scientist, who asked not to be identified for fear of being blacklisted by the industry. "The competition got very ugly."
As firms frantically negotiated to license Battelle's technology, a black market for information about the discovery quickly emerged.
"The rumors were flying," recalled the scientist. "How did we do this? What was the new twist? Did it really taste like chocolate? Everyone wanted to know.
"There were all kinds of stories floating around about how we had manufactured it, the chemicals we used, the processes we had perfected. I remember being cornered at a research convention in Geneva by guys from Mars and Hershey who were firing questions left and right. Somebody even showed me a Xeroxed report of what was supposed to be the secret to our discovery. I was blown away.
"Of course, none of it was true, but I think a lot of people spent an awful lot of time and money trying to chase down the rumors and duplicate our success."
Tension in the industry mounted as firms tried to figure out who had access to the technology and who did not. Some companies, like Nestlé, decided not to join the race, believing that heat-stable products were of limited value because no matter how "real" they tasted, they would never have the "mouthfeel" of an original chocolate bar.
But Hershey's management strongly disagreed. If the chocolate tasted good enough, they believed there was a solid market for it, especially in the southern half of the United States, where chocolate consumption has always lagged behind the rest of the nation. If nothing else, Hershey marketers thought, the product had potential for use in the military, a prospect that could prove extremely lucrative in the long run. So, secretly, a team of Hershey scientists joined with Battelle's researchers. By the fall of 1990, just as the buildup of troops in the Persian Gulf began, they were ready to test their creation.
As U.S. military troops gathered strength at the border with Kuwait, Hershey blitzkrieged the media back home with news of its breakthrough. In a not-so-subtle jab at Mars, Hershey's press releases, news conferences and radio announcements all hailed the company's triumph over the elements by "developing a candy bar that melts in your mouth, not in the sand." In December 1990, just before the ground war erupted, Hershey shipped 144,000 of the one-ounce milk-chocolate bars to the troops free of charge, making the evening news all across the country. In the following weeks, pictures of soldiers eating the candy bars showed up in Life, People and Newsweek magazines. Small-town newspapers even went so far as to include testimonials from soldiers who had tasted the bars in their "news from the war zone" columns.
"The media was just eating this up," remembers Lisbeth Echeandia, publisher of Confectioner magazine, a prominent industry journal. "To have a candy bar receive this much press attention was absolutely unheard of, a real coup."
By the time Hershey shipped another 750,000 bars to the gulf in February, the Desert Bar was being trumpeted on the home front as a real war hero, the perfect boost for the bored and homesick soldier.
On the front lines, however, it was an entirely different story.
From the port of Jebel Dhanna in the UAE, Mars was commanding the supply of candy to the gulf forces, with Davies and his salesmen going to extremes to protect the company's distribution lines.
While businesses worldwide were pulling their executives out of the region, Davies and a handful of other Mars workers "volunteered"--in typical Mars fashion--to remain in the gulf throughout the conflict. (They were never specifically required to make this sacrifice; the corporate culture simply left them little choice.)
Explained Davies: "We wanted to ensure that our products cleared the ports and got distributed throughout the region. We felt that the only way to do that was to stick around." Or get fired.
Apparently, Omar Sharir agreed. Although his colleagues at Mars feared they would never again hear from the company's Kuwait representative, five weeks after disappearing from Kuwait City Sharir surfaced in Jordan, a bit shaken but in good health. The young businessman told Davies he had decided to escape as soon as he heard that Iraqi troops had assembled at the border. For more than a week, he hid in a basement in Kuwait City. After Iraqi troops overran the country, he disguised himself as an Arab bedouin and traveled 350 miles to Baghdad, straight into enemy territory, so as not to arouse suspicion. Armed with his Egyptian passport, he then made his way to Jordan, where he stayed with a childhood friend until it was safe to travel to Riyadh and rejoin the Mars team.
The result of efforts like Sharir's were clear. On Thanksgiving Day 1990, frozen Snickers bars nestled against the turkey and reconstituted mashed potatoes on every U.S. soldier's plate. Mars products were available at every military Post Exchange, while Hershey products were nowhere to be found.
"I know Hershey made a big song and dance about their desert product, and I've actually seen one and tasted one and had a look at it," said Davies. "But I had everyone searching Saudi Arabia for it, and we never found one."
Quietly, Mars had actually been supplying the troops with its own heat-resistant products--M&M's and Galaxy Block Chocolate--which were being manufactured in Mars factories in Australia and England. Although Mars's formula for these chocolates differed slightly from Hershey's, the products were based on the same technology developed by Battelle. "The troops loved 'em," said Davies. "They were eating our heat-resistant M&M's faster than we could ship 'em."
Eventually, news of the competing products reached Hershey, Pennsylvania, where CEO Richard Zimmerman was working frantically to secure business from the military. In a last-ditch effort to earn the Pentagon's loyalty, Zimmerman decided in the summer of 1991 to switch combat zones: On Memorial Day weekend, Hershey rolled out the Desert Bar to the American public, seizing on the patriotic zeal that had overcome the country. Cases of Desert Bars flooded the nation's supermarkets and drugstores, where Americans eager to support the troops snatched them up.
"It was a novelty," noted Echeandia. "Everybody wanted to test it to see if it would melt. It got Hershey a lot of notice, although it never became a really big seller." But while Hershey was clearly winning the PR war at home, it was Mars that had captured the attention of the U.S. brass. When the Pentagon called for bids on a contract for 6.9 million non-melting chocolate bars in August 1991, Mars won the business.
Just days after the contract was awarded, however, the U.S. General Accounting Office (GAO) suspended it. Hershey, it seemed, was not ready to surrender.
As Paul Lieberman read through the inches-thick file that had landed on his desk earlier that morning, it was all he could do to keep from laughing. As an attorney for the General Accounting Office--the independent agency established by Congress to investigate waste and fraud in government--Lieberman didn't find much humor in his job. But this one had him grinning.
The military contract he was being asked to review had been awarded ten days earlier to candy giant Mars, Inc., a company Lieberman knew very little about. He hadn't realized Mars was a local firm, headquartered just twenty minutes from his office near the U.S. Capitol, nor had he ever paid particular attention to the heated rivalry between Mars and Hershey. So he was more than a little amused by the voluminous protest filed that morning by three of Washington's highest-paid attorneys on behalf of Hershey and its Desert Bar.
According to the filing, the Pentagon had hired Mars to produce heat-resistant chocolate bars for 18 cents apiece. The total cost of the contract was a mere $1.2 million--trivial by Pentagon standards and an amount that would normally stir little controversy. "Usually, when we get these appeals, it's for the big money," explained Lieberman. "A contract of this size just isn't worth a big fight."
But Hershey executives felt differently. Outraged at losing the bid and certain Mars had cheated to win it, they accused Mars of making its chocolate bars with excessive amounts of lactose--a sugar found in milk that is permitted only in limited amounts under the Food and Drug Administration's standards for chocolate. Hershey claimed its heat-resistant candy bar met all FDA criteria; instead of extra lactose, Hershey used egg whites to stabilize the chocolate, an ingredient not specifically limited by federal standards.
Furthermore, Hershey stated, it had tested the product "believed to be the product being offered by Mars" and found that it melted at temperatures far below 140 degrees-the standard required by the military.
"It couldn't stand up to the heat, and we knew it," said a researcher from Hershey. "We couldn't believe the Pentagon would let Mars get away with that." According to Hershey's protest, Mars's bar also lacked the "mouthfeel" of a "real commercial chocolate bar." And, in summary, it was "woefully inferior" to Hershey's own product.
"Bottom line, Hershey was accusing Mars of selling plastic, not chocolate," said Lieberman. "It was pretty harshly worded stuff."
It didn't take long for all of Mars to get the news. The rumors had spread almost as fast as the production line at the M&M's factory could manufacture its brightly colored candies, which came tumbling off the conveyors at the rate of 12 million M&M's per hour. By the time Ed Stegemann arrived at his desk in McLean at 9 a.m., most everyone at Mars headquarters was talking angrily about Hershey's complaint. In the heated conversations taking place around the open office, even the way Mars employees spoke the name Hershey became an insult to the competition--it rolled off the tongue with an extra "sh," "Hershshey," like they were choking on it.
Everyone in the office believed that this time Hershey had gone too far. Competition between the two companies--which together control the lion's share of the $14-billion U.S. candy market--was always fierce, even vicious on occasion. But now, the Mars workers agreed, Hershey had crossed the line to downright sleaze. Both companies had bid for the military contract fair and square, and Mars had won. But instead of accepting defeat graciously, Hershey was trying to steal the prize with false and malicious charges.
"This is outrageous," Stegemann fumed as he read through Hershey's protest, his face turning a deeper shade of red with each page. "Those lying SOBs."
Stegemann's frustration had been growing ever since Hershey's public relations department began working overtime to promote the Desert Bar. While the family-owned Mars company held fast to its long-standing policy of keeping its business activities quiet, Hershey had stolen headlines across the country with its version of the non-melting candy. Although hundreds of companies had fired up their production lines to help support the U.S. desert force of nearly half a million soldiers, Hershey's relentless PR ensured that on the home front, at least, the Desert Bar was the product mentioned most often-a fact that endlessly annoyed the workers at Mars.
By the time the war was over, it was Hershey--not Mars--that was the star of most newspaper articles on troop morale. And it was Hershey--not Mars--that the American public credited with supplying the soldiers with chocolate.
"We were over there working our asses off," said Stegemann, "and they were over here taking all the credit."
Now, it was Mars's turn.
The normally elusive and media-shy attorney picked up the telephone and did what few Mars executives would dare: He dialed the business desk at The Washington Post and offered a seemingly candid twenty-minute interview on Mars's Pentagon contract.
The next day, a small story appeared in the newspaper's financial pages giving Mars credit for beating Hershey in the race for the military's business. The story began: "Hershey Foods Corp. may have succeeded in selling its heat-resistant chocolate bars--better known as Desert Bars--to the public, but the Defense Department doesn't want them."
Stegemann never mentioned the pending dispute at the GAO.
For the next four months, the chocolate war continued to rage. At one point, Mars threatened to sue Hershey for defamation, according to one government source. Hershey, in turn, threatened to sue Mars for misrepresenting its products to the Pentagon. The war of words escalated until the GAO decided months later that the contract could not be overruled--whether Hershey's allegations were true or not--because the bidding process had been seriously flawed.
The Pentagon, it turned out, never tested Mars's chocolate to determine whether it met the contract's specifications. The initial call for bids, however, failed to require such tests, leaving Hershey without grounds for a GAO appeal.
"It was a mistake," Zimmerman said coldly. "A big mistake."
Lieberman, who ultimately decided the dispute, agreed that the military handled the contract badly. But he still laughs when he thinks about the case, calling it one of the most bizarre and outlandish protests to reach his desk.
"The way Hershey was complaining, you'd have thought Mars was breaching national security by selling military secrets or something. But this contract was puny by Pentagon standards--and it was for chocolate, for goodness' sake. Chocolate.
"I mean, let me ask you: Whatever happened to Willy Wonka?"
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Meet the Author
Joël Glenn Brenner began reporting on the candy business in 1989. She is the first and only journalist ever to gain access to the Mars company, and her Washington Post Magazine cover story on Mars won numerous prizes. She was recognized five times by the Financial News Journalism Reporter as one of the best financial journalists in the nation under the age of thirty. She is a 1989 graduate of the University of Missouri at Columbia and now lives in New York. She can be reached at www.JoelGlennBrenner.com.
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