Beyond Flour Power

Pillsbury Co., a firm of flour power, has a message of love. To millions of housewives, it preaches that the way to express affection for husband and chil dren is to bake them a cake. Its ads pro claim that "Nothin' Says Lovin' Like Something from the Oven, and Pillsbury Says It Best." This somewhat sac -charine slogan helps to boost sales. In the fiscal year ending last May, they rose to a record $526 million, and prof its increased 7.4% to $13 million. This year the Minneapolis-based company anticipates an earnings gain of 10%, which is one reason that since the beginning of the year its stock has climbed 43%, to last week's 561.

Pillsbury's bread-and-butter business is still based on flour, but lately it has done well in other fields. It now manufactures 150 products, up from only seven in 1950. More than half of last year's volume came from such laboratory-developed convenience foods as prepared mixes, fresh-dough products and a growing shelf of calorie-free sweeteners. The company's president, Terrance Hanold, is an articulate intellectual who is interested in philosophy and psychology. "Eating habits are changing," says he. "We are exploring food, but more than anything else, we're exploring the minds of people who eat food."

Tomato Tootsie Roll. Obviously, one thing on their minds is space exploration, and Pillsbury's latest goody is the "Space Food Stick." Derived from the concentrated foods developed by Pillsbury for U.S. astronauts, the stick looks like a Tootsie Roll and is soft and chewy. It comes in chocolate, peanut butter or tomato flavors. The stick, promoted with TV spots showing a Cape Kennedy blastoff, is being test-marketed in seven U.S. cities. Packs of 14 sell for 490. Space fans, candy addicts and weight watchers seem to eat it up (each stick has only 41 calories), and marketing will be expanded.

Other ventures are more down to earth. Pillsbury has gone into the broiler field (cutup chickens), and has begun to market dehydrated cake mixes. Unlike the conventional powdered mixes, they contain all the necessary ingredients thoroughly mixed into a "batter," and the lovin' housewife has only to add water and eggs. Last year the company acquired the nationally franchised chain of Burger King diners. That move capitalized on a number of trends: the nation's increasing mobility and affluence, the fast growth of roadside restaurants and the rapid expansion of franchising. Pillsbury estimates that Americans spend $22 billion a year eating out, and the figure will double by 1975. There are close to 500 Burger King outlets now, and the number is growing by two a week.

Decisions, Decisions. Pillsbury's profitable diversification is plotted mainly by Hanold who, unlike most corporate presidents, spends more time on forward planning than day-to-day operations. He shares the top management in close tandem with Robert Keith, the chief executive. When Keith moved Hanold up from treasurer last year and took the post of chairman for himself, he deliberately left the division of authority vague. Keith, a longtime Pillsbury salesman, says that he wanted a man to move Pillsbury into untapped areas.

Hanold plans the moves on a computer keyboard next to his desk. The management's devotion to the computer verges on idolatry. Before making an acquisition or marketing a product Hanold programs a model--with such factors as anticipated investment, cash flow and market behavior--to see how the new venture would fit into the company's existing business. Every domestic branch and office is linked to the com puter center in Minneapolis, where the memory bank receives daily field reports and shows instantaneously how each department is doing. Keith and Hanold figure that decisions should be made as close to the point of action as possible, and that junior managers in the field can make them with the help of the quick, explicit computer information. Says Keith: "To have most of the decisions made in my office is no damn good. It's anachronistic. Our idea is to get savvy young managers and let them make the decisions."

The computer brought the company into its first nonfood venture last year. To make fuller use of its computer experts and their equipment, Pillsbury started a time-sharing service, Call-A-Computer, in partnership with Occidental Life Insurance Co. of North Caro lina. So far, income is small, but the service is gathering clients as far afield as the Harvard Business School.

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