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 / Summer 2009 / Issue 55(originally published by Booz & Company)


Epics of Enterprise

In any case, Edmund was the first to squeeze the peppery sauce into those miniature bottles, and by the early 1880s he was selling more than 20,000 bottles a year at the wholesale price of a dollar a bottle ($15 in today’s money). Today, the factory on Avery Island turns out 600,000 bottles every 24 hours — and it’s a tourist attraction.

Rothfeder glories in describing McIlhenny’s ultimately successful campaign to get the rights to use the Tabasco name as a registered trademark. First, in 1870, Edmund patented a recipe for making the sauce — and, according to Roth-feder, he purposely lied in his application about the ingredients, listing bisulfate of lime, ostensibly to retard fermentation. Rothfeder says McIlhenny added that ingredient to “sabotage anyone who attempted to use the patent as a crib sheet to copy the product.” How devious can you get?

Plenty. In a patent claim in 1906, John McIlhenny, son of the founder, stipulated that his was the only company in the U.S. making a pepper sauce called Tabasco. That was untrue; there were at least a dozen others, including H.J. Heinz Company and Campbell Soup Company. In 1909, the patent office rescinded the Tabasco trademark after learning about this deception. Despite this ruling, the company continued to warn distributors and retailers that it was illegal to sell any sauce labeled Tabasco that did not come from McIlhenny. Then, in 1918, the U.S. Court of Appeals in New Orleans, in a stunning setback to competitors, said that McIlhenny had a “common-law” right to use the name, asserting against the known facts that Edmund was “the first person to grow those peppers in the United States.” Whatever political engineering went into that decision, it certainly represented a great victory for the McIlhennys: akin, as Rothfeder puts it, to getting the trademark rights for Wisconsin cheese or Idaho potatoes.

Another chapter in the McIlhenny saga involves the company town that was built on Avery Island. E.A. McIlhenny, younger brother of John, took the reins of the company in 1906 and immediately began building bungalow homes for the company’s workers in what was dubbed Tango Village. More than 500 people would eventually live in these homes. To compensate for low wages, rent was free. There was a distinct caste system, described by Rothfeder as follows: “The Anglo-Saxon McIlhennys were, of course, the bosses. The few non-McIlhenny supervisors…were generally of mixed origin, part Cajun and part French, Spanish, or Anglo. Most of these trusted employees were given homes on the island a little roomier than those of the common worker…. One step below the non-McIlhenny managers were the factory hands, who were nearly all Cajun and consigned to less luxurious quarters…. The pepper pickers, who were black, belonged to the bottom caste. None of them was allowed to reside on Avery Island. In fact, the only people of African or Caribbean descent with homes on the island were McIlhenny servants.” In its typical secretive manner, the company kept quiet about this replica of pre–Civil War plantation society.

With the exception of 24 months in the late 1990s, every CEO of the company has been a McIlhenny. The current chief executive is Paul McIlhenny, great-grandson of the founder. About 200 McIlhenny family members make up the sole shareholders. Rothfeder believes the company has reached a turning point, needing to decide whether to continue as an independent entity, to sell shares to the public, or to become part of a bigger company like Kraft or Campbell Soup. The company supposedly has standing $1 billion-plus offers, but Rothfeder points out that “no one yet has gotten wealthy betting against the McIlhennys.”

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Corporate History Resources
Works mentioned in this review.

  1. Wayne G. Broehl Jr., John Deere’s Company: A History of Deere & Company and Its Times (Doubleday, 1984), 880 pages
  2. Donald R. Katz, Just Do It: The Nike Spirit in the Corporate World (Random House, 1994), 344 pages
  3. Maggie Keswick, editor, The Thistle and the Jade: A Celebration of 150 Years of Jardine, Matheson & Company (Octopus Books, 1982), 272 pages; revised and updated by Clara Weatherall (Frances Lincoln, 2008)
  4. Beverly Rae Kimes, The Star and the Laurel: The Centennial History of Daimler, Mercedes, and Benz, 1886–1986 (Mercedes-Benz of North America, 1986), 368 pages
  5. Robert Lacey, Ford: The Men and the Machine (Little Brown, 1986), 798 pages
  6. David Magee, The John Deere Way: Performance That Endures (Wiley, 2005), 234 pages
  7. Jeffrey Rothfeder, McIlhenny’s Gold: How a Louisiana Family Built the Tabasco Empire (Collins, 2007), 260 pages
  8. Barbara Smit, Sneaker Wars: The Enemy Brothers Who Founded Adidas and Puma and the Family Feud That Forever Changed the Business of Sport (HarperCollins, 2008), 400 pages
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