Marvin M. Schwan, 64, Builder of a Billion-Dollar Food Empire
Marvin M. Schwan, who transformed his father's local door-to-door dairy company into a billion-dollar
food empire covering 49 states, died on Sunday at a hospital in San Diego. He was 64 and lived in Sioux
Falls, S.D.
The cause of death was a heart attack, a company spokesman said.
His company, Schwan's Sales Enterprises based in Marshall, Minn., operates an estimated 2,300
computerized vans that deliver frozen food, including meat, vegetables and juices, to customers' homes.
The yellow vehicles, bearing a swan logo, have been described as traveling 7-Elevens.
The company also expanded into the nation's leading supplier of frozen pizza to school cafeterias and
grocery stores under the Tony's, Better Baked and Red Baron brands. It also owns the Ram Center
robotics company in Red Wing, Minn. 70th Richest American
Forbes magazine rated Mr. Schwan among America's richest people for the past several years. He
ranked No. 70 on last year's list, with an estimated worth exceeding $1 billion. Corporate Report
magazine estimated the company's annual revenues at $1.8 billion.
Mr. Schwan's personal life was reclusive and his company highly secretive.
The business had humble beginnings. His father, Paul, a Prussian who immigrated to America in 1921,
delivered milk in a wagon drawn by a horse. In the 1940's he started his own business and built a dairy.
Seeking customers, it found a welcome market by sending trucks along remote routes.
Marvin Schwan worked his way through Bethany Lutheran College in an ice cream factory and after
graduation in 1949 joined the milk bottling operation. He drove trucks himself, soon took over the office
side and began running the company in the late 1950's, while his father worked in the plant. The food
delivery vans flourished, and the company also became known for its premium ice cream.
In 1970 it bought Tony's, a pizza business with a small plant in Kansas and annual sales of $600,000.
By 1975 Schwan was the nation's top supplier in the frozen pizza industry, and sales had grown to $80
million. The operation cut out middleman wholesalers and employed drivers as sales representatives.
By the late 1980's the pizza gross was estimated to be in the hundreds of millions of dollars.
Two months ago the company bought Chicago Brothers Frozen Pizza in San Diego.
Mr. Schwan's first marriage ended in divorce. The Minneapolis Star Tribune said he was survived by a
second wife, Delores, three sons, a daughter, two brothers and his mother.
SOURCE:
https://www.nytimes.com/1993/05/12/obituaries/marvin-m-schwan-64-builder-of-a-billion-dollar-food-empire.html
UPLOADED TO ANCESTRY ON 1/10/2019 BY: LAURA SHEPHERD (laurakayshepherd@gmail.com)
Obscure Company Gains Unwelcome Prominence
This article mentions his first wife; Mavis
The carved wooden sign hanging in the lobby of Schwan's Sales Enterprises Inc. here says, "The
Uncommon Company."
These days "Uncomfortable" might be more like it, given a coast-to-coast outbreak of food poisoning
linked to the company's ice cream.
All but invisible in urban America, Schwan's quietly spent the last 42 years becoming as comfortable as
an old couch in the nation's countryside, emerging as a trusted source of home-delivered ice cream and
other frozen products for hundreds of thousands of households.
Its distinctive yellow trucks, which typically make their rounds from dawn to well past dusk, have lately
been rolling ever farther into suburbia. And the product line has steadily expanded to include Oriental,
Mexican and health food specialties that farmers of decades past would never have ordered.
All that growth has been achieved with no publicity and no advertising, just door-to-door contacts and
word-of-mouth recommendations.
But the company's obscurity began unraveling early this month, when its trucks apparently delivered a
nationwide travail of salmonella poisoning.
Federal health officials, Schwan's and lawyers for people made ill are all trying to figure out just how
far-reaching the salmonella outbreak has been, and to what extent the company is responsible for it.
About 400 cases of food poisoning among Schwan's customers in 16 states from New York to
Washington have been confirmed, and some of them have been definitively traced to tainted ice cream
that the company made at its sprawling plant here. But thousands of other Schwan's customers in more
than 30 states may also have been infected.
As a result, Schwan's will not be returning to obscurity any time soon. Indeed, the spotlight could get
even brighter if further investigation turns up evidence that the outbreak caused death or serious longterm illness -- effects that are especially possible among old or very young victims of the salmonella
bacteria, or among people already suffering from another ailment. Four class-action suits have already
been filed in Hennepin County Court in Minneapolis on behalf of all victims around the country.
The silver lining is that, given the quick response by Schwan and many customers' initial reaction to the
outbreak, the company's unusually close relationship with the people to whom it sells may well emerge
stronger than ever.
"We're continuing to buy the Schwan's products -- in fact, I'm baking their chocolate chip cookies right
now," Carla Gates, the mother of two infected children, said in a telephone interview from her home in
Spencer, Iowa. "My kids already said they would eat the ice cream again."
Mrs. Gates said "Paul the Schwan's man," who delivers to her house every other Wednesday, had
apologized so profusely that she found herself comforting him. She said she had been assured by the
company's insurer that it would pay for the medical visit to diagnose the children's illness.
Customers less directly affected have been even more impressed by the company's response to the
outbreak. That response began with an immediate shutdown of the entire plant on Oct. 7, as soon as
Minnesota health officials warned that reports of food poisoning linked to Schwan's ice cream were
accumulating. And in addition to offering to pay for diagnostic medical exams, the company mailed
letters to its customers telling which products were involved, giving directions on how to return them
and offering full refunds.
Federal and state health officials believe that the problem was imported to the plant by a supplier that
brought in an ice cream mix in a tanker truck that had previously carried raw eggs, a leading source of
the salmonella bacteria.
The plant will remain shut until health officials have drawn up a plan for reopening it and testing the
initial output. That may well keep it closed another week, costing up to 400,000 gallons of production
worth well over $2 million in revenue.
It could take Schwan's years to sort out its liabilities, and the liabilities of its insurers and suppliers. The
company is no giant by food industry standards, but, with more than 6,000 employees, annual revenue
of well over $1 billion and virtually all stock tightly controlled by the close-knit Schwan family, it seems
well positioned to take the losses in stride.
Schwan's was founded in 1952 as a one-van ice cream delivery venture selling 17 gallons a day to farmers
around this southwestern Minnesota town. In the early days its founder, Marvin L. Schwan, and his
first wife, Mavis, rose at 3 A.M. to pack the ice cream, and he traveled from 7 A.M. to 8 P.M. selling
it.
By the time Mr. Schwan died of a heart attack last year at the age of 64, the home delivery business and
other Schwan's food ventures, like the sale of frozen pizzas to school lunch programs and through
grocery stores, was bringing yearly revenue of $1.2 billion to $1.8 billion, by the estimates of various
outsiders.
The guessing at the company's size reflects the nature of its business. Market researchers have
sophisticated measures of sales of products like ice cream in grocery stores, but no way to track who is
selling food directly to individual consumers or institutions like schools.
Schwan's does nothing to help the guessers. Even by the standards of privately held businesses, Mr.
Schwan was noted for the lengths to which he would go to keep his commercial affairs to himself. That
penchant for revealing as little as possible about operations has permeated the company. His older
brother, Alfred Schwan, who took over as president, has done nothing to change matters.
"We don't even discuss our charitable contributions publicly," said David Jennings, a Schwan's
spokesman.
But some details that have emerged over the years suggest that an aggressive and technologically
advanced enterprise has grown up behind the folksy direct approach to consumers.
Starting in 1970 with the acquisition of Tony's Pizza, Marvin Schwan acquired a string of food
companies to expand the offerings on his trucks and branch into new fields, like direct sales of Tony's
and Red Baron pizzas to grocers. And Schwan's became a pioneer in sending field sale data by satellite
to help tie factory production schedules more closely to demand.
The company's most important business remains the home delivery service. Founded to cater to
farmers who had trouble getting to town, Schwan's now thrives by providing convenience to families
too busy to shop or to cook fresh food. Most of its products can by prepared by microwave, and many
come prepackaged in individual portions.
Court records from a Kansas discrimination case show that the company had more than 3,700 route
drivers in 1992, most working 10 routes each and returning to a customer every other week. After a
training period, the drivers are paid strictly on commission. Those in the Kansas region covered by the
case were expected to sell an average of $20 to $25 worth of goods per stop.
Former employees say an average driver earns about $30,000 a year, with the most ingratiating drivers
on the better routes sometimes selling enough to earn twice that amount. The company likes to promote
an image of drivers so trusted that customers are comfortable leaving their homes with the doors open
so that the deliverers can enter whenever they arrive. Now it has to reassure customers that the products
are equally reliable
SOURCE(S):
https://www.nytimes.com/1994/10/23/us/obscure-company-gains-unwelcome-prominence.html
UPLOADED TO ANCESTRY ON 1/10/2019 BY: LAURA SHEPHERD (laurakayshepherd@gmail.com)