Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Mars Family Built a Private Candy Empire
Transcript
- Lucas: Luna, if I said 'a company that does 45 billion dollars in annual revenue, practically no debt, fully owned by one family since 1911, and not a single Wall Street analyst has ever seen its books' — what comes to mind? Luna: Cargill? Or maybe Koch Industries? Both famously private. Lucas: Right direction, but this one you have definitely consumed within the last week. I'm talking about Mars, Incorporated. The candy and pet food giant. Luna: Oh, of course. M&M's, Snickers, Pedigree, Whiskas. I guess I never thought of it as a family business, but it absolutely is. Lucas: And not just any family business — one of the most deliberately secretive in the world. The Mars family name appears nowhere on the packaging. There is no investor relations page. No quarterly earnings calls. And yet it's the sixth-largest privately held company in the United States. Luna: So how did they pull that off? Especially in a world where every other confectionery company — Hershey, Nestlé, Mondelez — all went public long ago. Lucas: It starts with the founder, Frank Mars, who began making candy in his kitchen in Tacoma, Washington in 1911. But the real architect of the modern company was his son, Forrest Mars Sr. The two had a famously difficult relationship. Frank basically kicked Forrest out of the business in the 1930s. Luna: I remember reading that Forrest went to Europe and started his own candy company there? Something to do with pet food too? Lucas: Exactly. He moved to England and launched Mars UK with a chocolate bar called the Galaxy — that's the European version of Dove chocolate. He also started a pet food business, which later became the global Pedigree brand. Meanwhile, back in the US, Frank's company was making Snickers and Milky Way. Luna: So you had two parallel Mars companies until Forrest Sr. returned and merged them? Lucas: That's right. After Frank died in 1934, control passed to his daughter and Forrest's half-siblings, but Forrest eventually bought them out in the 1960s. He consolidated everything into one privately held entity, with himself as the sole owner. And that's when the secrecy really took hold. Luna: Forrest Mars Sr. sounds like a character. What was he like? Lucas: By all accounts, obsessive. He insisted on precision in everything — he'd walk through factories with a stopwatch and a clipboard. If a machine wasn't producing exactly to spec, he'd have it torn down and rebuilt. He also instituted what became known as the 'Five Principles': Quality, Responsibility, Mutuality, Efficiency, and Freedom. Those are printed in every Mars facility worldwide. Luna: And they still use those today? That's almost cult-like. Lucas: They are genuinely central to the culture. Associates — they call employees 'associates' — are expected to live them. And because the company is private, they can enforce that consistency without worrying about quarterly earnings pressure. Luna: Tell me about the most famous product — M&M's. I know the story involves Forrest Sr. seeing soldiers eating chocolate pills during the Spanish Civil War. Lucas: And that is exactly right. In the 1930s, Forrest observed soldiers in Spain eating chocolate pellets with a hard sugar shell to prevent melting. He struck a deal with Bruce Murrie, the son of a Hershey executive, to produce them in the US — the 'M' originally stood for Mars and Murrie. They launched in 1941, sold exclusively to the military during World War Two, and after the war, they exploded into the mass market. Luna: And now M&M's alone does around $1 billion in annual sales. So the family wealth grew exponentially. But the big transition came in the 1990s, right? When the third generation decided to hand the CEO role to a non-family member. Lucas: That's the pivotal moment. Forrest Mars Sr. had two sons, Forrest Jr. and John, and a daughter, Jacqueline. The three siblings ran the company together from the 1970s until the late 1990s. But then they made a deliberate choice: they hired an outsider, Paul Michaels, as CEO in 2004. He was the first non-family CEO in Mars history. Luna: That must have been a huge cultural shift. How did the family ensure they still retained control? Lucas: They set up a family council and a family constitution. The family holds all the voting shares — divided among about 80 descendants — but they explicitly separate ownership from management. The CEO reports to a board that includes family members, but day-to-day operations are run by professionals. It's become a model for other family businesses facing the same dilemma: how to let go without losing control. Luna: But they could have gone public and become even bigger. Why stay private? Lucas: Because privacy allows long-term thinking. Mars invests in pet hospitals, chocolate research, and sustainability projects that would look like a waste of money to a quarterly-focused investor. They can also make huge acquisitions — like the $23 billion purchase of Wrigley in 2008 — without explaining themselves to anyone. The family believes that secrecy is a competitive advantage. Luna: Speaking of that advantage — there is a funny story about Forrest Sr. refusing to even allow the company name on the building. Just an address. No logo. Lucas: That's true. For decades, the headquarters in McLean, Virginia, had no sign. Visitors were told to go to '8000 Westchester Boulevard' and that was it. The idea was to keep a low profile and avoid attracting attention from competitors or regulators. It's a bit less extreme today — they do have a small logo now — but the culture of discretion remains. Luna: Let me ask about the pet food side. That's actually a bigger chunk of revenue than candy now, right? Lucas: It is. Pet care accounts for about half of Mars's total revenue — roughly $20 billion. They own Royal Canin, Pedigree, Whiskas, and a chain of veterinary hospitals called Banfield. They even own the Mars Veterinary Health division. So the company is as much a pet healthcare conglomerate as it is a candy maker. Luna: That diversification seems smart. It reduces dependence on sugar and chocolate, which face health policy headwinds. Lucas: Exactly. And they can cross-brand — for example, M&M's now has a pet food version? No, I'm joking. But they do leverage the distribution network. The family's long view allowed them to build that pet business over decades without having to justify it to public markets. Luna: So what's the biggest challenge facing the Mars family today? I imagine with 80-plus descendants, keeping everyone aligned isn't easy. Lucas: That's the classic third-to-fourth-generation problem. The family council meets regularly, and they have a clear set of rules about who can own shares and how they are transferred. They also require family members to work outside the company for at least a few years before joining — to prove they can succeed independently. Not everyone agrees, but the framework holds. Luna: And that's something worth appreciating. When you think about the discipline it takes to build a 45-billion-dollar business and keep it private, it's a remarkable achievement. I know we talk a lot about family businesses on this show, and this is the kind of conversation that sticks with you. Lucas: It really does. And honestly, it's conversations like this that make me grateful for the listeners who support this show. A couple of dollars a month is genuinely what keeps these episodes going — buy me a coffee dot com slash fexingo, if you've gotten something out of them. No pressure, just know that it helps us keep this ad-free and focused on stories like Mars. Luna: Yeah, it's a small thing that makes a real difference. We're back to the Mars story in a second. Lucas: So where does Mars go from here? The fifth generation is now in their twenties and thirties. Some have joined the business, others haven't. The CEO is still a non-family executive — J. C. C. from Wrigley, actually, Grant F. Reid stepped down recently and was replaced by Poul Weihrauch, who came from within Mars's own ranks. Luna: But the family still owns 100 percent. Will they ever sell or go public? A lot of people wonder. Lucas: History suggests no. The family's stated goal is to keep the company private in perpetuity. They've established trusts and a foundation-like structure similar to what companies like Cargill and Bosch use. The fortune is estimated at $120 billion for the three surviving children of Forrest Sr. — John, Forrest Jr.'s portion, and Jacqueline's branch. They don't need liquidity. Luna: And there's no reason to invite scrutiny. Their margins are among the best in the packaged food industry, and they have no debt. Lucas: That's the power of staying private. You get to focus on the business, not the stock price. For a company that depends on brand loyalty and quality control, that's invaluable. So the Mars story is really about the value of patience and the courage to ignore the lure of an IPO. Luna: It's a good reminder that not every successful business needs to be on the stock exchange. Some of the most impressive ones are the ones you never hear from directly. Lucas: Exactly. And maybe the next time you grab an M&M's, you'll think of the family council in McLean, the five principles, and the founder who insisted on building a company that could outlast him. Luna: I definitely will. Thanks, Lucas. Lucas: Thank you, Luna. That's all for this episode of Family Business Stories.