BACK IN 1935 when Robert E. Rich borrowed $5,000 from his father to buy a dairy business in Buffalo, he had an ambitious goal: to be the largest milk distributor in Buffalo and do $1 million in sales annually.
He recently overshot that goal by more than $1 billion.
Rich ran his dairy company for 10 years, then he got into something new. And 50 years later, that new venture -- Rich Products Corp. -- has become one of Buffalo's largest companies and one of the largest private companies in the United States, employing 6,000, operating plants in three countries and selling products to 50 nations.
Along the way it has been an innovative developer of new food products. Now it is striving for the same innovation in its operating culture.
From a company built on a single product -- non-dairy whipped topping made from a soybean base -- Rich's has developed 1,700 different products and has come to dominate the U.S. chain restaurant, food service, and bakery products markets.
With characteristic modesty, Rich, now 82 and still actively engaged in the family business as chairman, attributes some of his success to getting into frozen products just as the frozen food business was taking off.
"That's how lucky you can be to get into the right business at the right time," said Rich, who was the second person inducted into the Frozen Foods Hall of Fame, after Clarence Birdseye.
But it took a lot more than luck to build the international business that will celebrate its 50th anniversary Friday with a party in the Buffalo Convention Center.
Innovation and customer service have been at the core of the company's success and will increase its international scope through the decade, say those associated with Rich's.
The $1 billion sales level is just another signpost for the company; it intends to grow a lot more, says Bob Rich Jr., son of the founder and president of the company, as he sipped a cup of black coffee bereft of the company's famous non-dairy creamer. "It makes me too mellow and I have to wake up," he explained with a grin.
Aims for 25% annual growth
The company's new directive is growth of 25 percent a year, with much of it coming from outside the United States, he said. At that rate, sales would double in a little over three years.
Although Rich's has long been a fixture in Buffalo, many probably know the company more from its ownership of the Buffalo Bisons and its forays into broadcasting than for the wide range of products it makes and the markets where it competes.
Its best-known product -- and still the founder's favorite -- is Rich's Whip Topping, a can of non-dairy topping that resembles whipped cream but has a much longer shelf life. It was followed by frozen eclairs, Coffee Rich -- the first frozen all-vegetable coffee creamer -- and related products.
The drive for new products has never stopped and led to the decision in the 1950s to branch out into other lines, the chairman said.
"We had saturated the country with non-dairy whipping cream and I figured as long as we had the best distribution system in the country we should find new products to sell," he says.
Product development has led to 1,700 different products, including frozen doughs and other baking products, frozen fish, dinner entrees, baked goods and desserts, specialty meats and barbecue products.
Committed to R&D
The chairman brags about the $17 million research and development laboratory at company headquarters on Niagara Street, where 60 people work on developing new products.
Consumers aren't as aware of the company's reach in the food business because much of it is centered on commercial food service customers. Rather than compete with the giant consumer foods companies, Rich's has chosen to go after fewer and bigger customers: restaurant chains, in-store bakeries and other food service operators, Bob Rich Jr. said.
The company's Niagara Street plant, which is built around Rich's original dairy, is a good example: It is one of three making non-dairy products like creamers and whipped topping, said Terry Tierney, plant manager.
But many of those products aren't packaged under the Rich name, but under the names of users. On a typical day recently the plant was churning out coffee creamers under the name of Metromedia Steak House, one of many restaurant customers. Woody Bearss, the plant's environmental services manager, estimates 90 percent of non-dairy products in restaurants are made by Rich's.
Has been acquisitive
Internal product development alone doesn't account for Rich's growth. Its acquisitions -- 42 since 1969 -- have put it into whole new product lines, such as frozen fish and baked goods.
Rich's has followed a unique strategy in its acquisitions, using its reputation as a family-owned business to seek out other family-owned businesses, Bob Rich Jr. said.
"We have become a major alternative for a lot of families who have hit a plateau or come to a crossroads like we did," he said.
The company is able to resolve familial conflicts at those companies. "We emerge as a viable opportunity for parents to take some money out of the business and the kids to continue to grow it," he said. "We are almost a family business made up of family businesses."
The company encourages family members in acquired businesses to remain with the company; many often use the opportunity to move into other areas of Rich's operations, he said.
Family involvement is important for the company, and both Bob Rich and his father leave no doubt that Rich's will continue as a family-operated business.
Grandchildren in the business
Bob Rich and his brother David each have three children working at Rich's, and they make sure the children know "there are no free rides here and they are going to have to perform," he said.
The family emphasis extends to Rich's workers: The company encourages families to work for the firm, and operates a well-equipped professional day-care center for 65 children at its headquarters.
"The family atmosphere is just extraordinary," said Peter Fleischer, vice president of strategic alignment, who joined the company a few years ago from Hill & Knowlton, the big advertising firm in New York City. "It's one thing to be family-owned, but it's another to treat your company as a family."
Just as it will stay a family firm, Rich's will remain private, even though dozens of suitors would like to buy it or take it public.
When the company gets proposals, "we ask the question: 'To what good?' " Bob Rich Jr. said. "They usually end up saying you really have the best of all possible worlds. We've gotten to the point where we don't even entertain suitors."
His father likes the flexibility of a family-owned business: "When you are family-controlled, if you have an idea you go and try it out, you don't have to get your board and the bankers to approve it."
The company never entertained the idea of moving out of Buffalo, even though there is no strategic reason to keep its headquarters and manufacturing here.
"When National Gypsum moved out of town and then Houdaille moved out, someone called me and said 'You probably will be next, where are you going to move?' " said Robert Rich Sr. "I said 'This is our home and this is where we will always be.' "
His son is critical of companies that extract economic incentives to maintain an operation in one place. "It really galls me to see companies using this constant threat of moving," he said.
Targeting foreign markets
Rich's is becoming one of Western New York's largest exporters, with 10 percent of its business going to 50 foreign countries and ambitious plans to expand its global reach.
"Our competitors are increasingly large, multinational companies, so we can't make a choice between being a domestic or an international company," said William G. Gisel Jr., the executive vice president leading the international expansion effort. "The choice has been made for us."
Recent joint venture projects include a frozen food company in Bombay and a bakery in Mexico. Its biggest markets are Canada, Mexico, Hong Kong and China, and, surprisingly, Israel, where non-dairy creamers are popular in a nation of ardent coffee-drinkers.
Gisel said the company works hard to tailor its products for overseas tastes: Each country has its own unique flavor and visual preferences.
For instance, Mexicans like their whipped creams to be white and sweet, while New Zealanders prefer a yellow cream because they are used to dairy products colored by the high levels of carotene in cattle feed there, said Sean O'Mahony, vice president of research.
The Buffalo plant runs as many as 80 different formulas for the same products in order to satisfy national tastes, Bearss said.
Products alone won't drive growth, the company believes. It has taken great pains to involve employees -- "associates" in its internal language -- in its future.
"I want people to feel they are doing more than coming here for an eight-hour day," Bob Rich Jr. said. "I want them to feel they are associates of the business and have a stake in it. To use the 'E-word' is almost like a slap, it's degrading."
For two years the company has been rolling out its internally developed business philosophy, dubbed "Mission: World Class," which includes five principles: customer satisfaction, continuous improvement, empowerment, elimination of waste, and ethics.
"It's a recommitment to the values the chairman began to instill 50 years ago," said Fleischer, whose job includes spreading the philosophy throughout the company.
The key is complete customer satisfaction, both those outside and inside the company, he said. "We are trying to instil in everyone the belief that everything can be improved, so there is no end in sight," he said.