From a nondescript office in Fairfax County, a handful of reclusive people, mostly members of one family, presides over a multibillion-dollar worldwide food processing empire that has made them very rich but not famous. They don't want the fame.
Their company is Mars Inc., named for its founder, the late Frank C. Mars. It has 15 manufacturing plants in this country and 26 abroad, and its annual sales are conservatively estimated at $3 billion, which puts Mars in the top rank of privately held corporations, right behind such giants as Cargill Inc., the grain-trading firm, the Bechtel Group of construction companies and Hallmark Greeting Cards.
Its products, including M&Ms candies and Uncle Ben's rice, are well known to consumers, but the company takes pains to conceal information about its corporate operations and the family that owns it. Until last month, when corporate secretary Edward J. Stegemann unexpectedly authorized the head of the M&M Mars candy division to give an interview to The Washington Post, no Mars executive had talked to anyone outside the trade press for 40 years.
Frank Mars' grandsons, Forrest E. Mars Jr., 50, and John F. Mars, 46, share the title of president and serve on the board of directors. A few nonfamily members are listed as company officers, but the Marses' sister, Jacqueline Mars Badger, 42, is the only other member of the board.
Little is known about them because since childhood they have followed the path marked out by their father, Forrest E. Mars Sr., staying out of the limelight, avoiding the press, living modestly and keeping the company's operations as secret as possible.
Mars Inc. is best known for the candies of its M&M Mars division: the original Milky Way bar that Frank Mars first marketed in Minneapolis in 1920, Snickers, 3 Musketeers, Mars bars, and M&Ms--named for Forrest E. Mars and a long-forgotten partner, Bruce Murrie.
Mars is much more than candy. It is Kal Kan Foods of Vernon, Calif., a giant of the canned dog and cat food industry in the United States and in much of Europe. It is Mars Money Systems, a manufacturer and distributor of coin machines. And it is Uncle Ben's Inc., which produces rice, prepared foods and stuffing mix in the United States and Australia and is test-marketing a new product called SunCrisps, frozen French fried "potatoes" made from rice.
In candy alone, the company had sales of about $1.25 billion in the United States and $1 billion in Britain in 1980, according to estimates by industry consultants and labor union economists. Mars also has strong markets in Germany, France, the Netherlands and other countries.
Sales of Kal Kan and Mealtime pet foods were $238 million in this country in 1980, according to food industry analyst John C. Maxwell of Lehman Brothers Kuhn Loeb, and probably greater in Europe since the company holds 80 percent of the West German pet food market. Rice industry executives say Uncle Ben's holds about half the European retail rice market, in addition to its traditionally strong U.S. position.
If its total annual sales exceed $3 billion, as various industry sources say they do, Mars is larger than such well-known food companies as Pillsbury, H.J. Heinz, Nabisco, Campbell Soup and Quaker Oats--and more than twice the size of archrival Hershey Foods, which reported 1980 sales of $1.34 billion.
As a privately held corporation that does not sell stock to the public, Mars is not obliged to reveal any sales or profit information and has never done so. The reason, according to a lawyer who has represented the company, is that Forrest E. Mars Sr., 77 and running his own candy company in Las Vegas, "was always afraid somebody would kidnap his kids if anybody knew how rich they were."
The M&M Mars division has been attracting unwelcome attention to the company because it is battling the rest of the candy industry in a price war that has stirred angry criticism of its policies. That apparently is the reason Stegemann allowed Howard L. Walker, president of the division, to talk to The Washington Post.
Walker freely discussed M&M Mars' marketing strategy but refused to answer questions about sales, revenue or profits or about the relative size of the corporation's different divisions. "We're just not obligated to give out that information," he said.
So closely does Mars hold its financial information that it recently reaffirmed its longstanding refusal to provide sales or profit data even to Dun & Bradstreet, which was trying to evaluate Mars' corporate credit. Mars would not even tell Dun & Bradstreet the names of its banks.
The company does, however, communicate vigorously with consumers, mostly through extensive television advertising. Advertising Age magazine estimates that Mars Inc. spent $83.7 million on advertising in the United States alone last year, making it the 58th largest advertiser.
The corporation describes itself in promotional literature as "a lean, private company that avoids unncessary links in the chain of command," keeping its executives out of the public eye and its strategies secret. As a private company, responsible only to its handful of owners, Mars is free of the concern about quarterly dividends and stock prices that influence the decision-making process of most big companies.
According to Walker, Mars has about 5,000 workers--known as "associates," not as employes--in its U.S. candy manufacturing plants. By conservative estimates, the company has an additional 15,000 to 20,000 employes worldwide, but the exact number is not known because most Mars operations are non-union.
In the United States, only the Kal Kan pet food plant in California is unionized. A November, 1980, contract between Kal Kan and the United Food and Commercial Workers provided what union local president Don Holeman called "a good package for that industry," with a "gravy mixer" now getting $8.61 per hour and a "blood system operator" getting $8.98, but it covers only 220 workers, a tiny fraction of the entire Mars work force.
Mars has developed an ostensibly egalitarian management structure. Executives punch the same time clocks as rank-and-file workers, executive perquisites are kept to a minimum, communication between workers and supervisors is encouraged, and each division retains administrative autonomy.
A recent report by the Geneva-based International Union of Food and Allied Workers observed that "the Mars employe is encouraged to feel like a member--though not necessarily an adult member--of a 'big Mars family.' On the other hand, this 'family relationship' is exploited to stimulate efficiency."
It is no accident that Mars has kept the unions out of most of its plants. The company pays well to keep its workers happy, so much so that no union has even reached the stage of forcing a representation election for at least 20 years. The company's anti-union philosophy is reflected in regular annual donations by the family's charitable foundation to the National Right to Work Legal Defense Foundation.
The company has been incorporated in Delaware since 1952, but that is a legal fiction adopted by many large corporations to take advantage of liberal Delaware law. Its actual headquarters is in an office building that has a McLean address and is at Tysons Corner, and the company is registered with the Virginia State Corporation Commission.
Records there show, and company documents obtained separately confirm, that Mars Inc. has only 500,000 shares of common stock and 60,000 shares of preferred stock outstanding. That in itself shows how closely held the company is: publicly traded corporations of comparable size often have tens of millions of shares outstanding.
Besides the Mars brothers and Stegemann, the only corporate officers are L. J. Futchick, senior vice president, who has been with the company more than 25 years; J. L. Mayberry Jr., treasurer, and V. J. Spitaleri, director of finance. Each of the divisions--candy, rice, pet food--functions as a subsidiary corporation with its own officers, such as Walker at M&M Mars.
"I report to the office of the president," Walker said, "but in reality each division is self-sufficient. The decisions are mine to make."
The corollary of that divisional autonomy, according to an industry consultant who has worked with Mars, is that "nobody outside the Virginia headquarters ever gets to see the whole thing. Everybody only sees his own slice of the pie."
The Mars story began in 1911 in Tacoma, Wash., when Frank Mars and his wife, Ethel, began selling candies they made in their kitchen. A popular success led to the opening of a factory, which employed 125 people when Frank Mars decided to go big-time. He moved the operation to the more centrally located Minneapolis in 1920.
He lost money with a product called the Mar-o-Bar, but by the mid-1920s he had introduced the Milky Way and Snickers bars, still staples of the company's output, and was on his way. In 1929, Mars opened a plant in Chicago that is still operating, and the company made money throughout the Depression.
The expansion and diversification of the company that produced the Mars empire was the work of Frank Mars' reclusive, temperamental and eccentric son, Forrest C. Mars Sr. According to company literature, he went to Europe in 1932 armed with $5,000 and a determination to build an international company, and by the start of World War II had created a network of candy and pet-food companies that still exists.
Among its components are Unisabi and Mars of France, Master Foods of Austria, Mars Italia, Effem (the founder's initials) of Belgium and Switzerland, Pedigree Pet Foods of Britain, and Kesp Ltd., a British producer of soya protein, acquired in 1978.
According to the International Union of Food and Allied Workers report on the company, Mars built sales in Europe through bonuses paid to distributors and wholesalers who promoted Mars products at the expense of competitors. The more Mars products sold, the higher the bonus, until the German government finally banned the bonus system. "Presumably, the system is still being used on other markets," the report said.
Back from Europe in 1940, Forrest Mars Sr. established the enormously successful M&M Candies, which was based in Newark, N.J., until it moved to its present headquarters in Hackettstown, N.J., in 1958. The company acquired Uncle Ben's in 1943, Kal Kan in the 1960s. At one time Mars owned the Puppy Palace chain of pet stores, but that business was sold.
Forrest Mars had a reputation as a fanatic for cleanliness who would abruptly sack any worker who failed to meet his exacting standards. He never posed for photographs, and was interviewed only once, by a trade journal. Because of his vast wealth, his reclusiveness and his occasional outbursts of temper, he was sometimes described as the Howard Hughes of the candy business.
He has retired from Mars Inc., but not from the candy industry. After a few years of riding and fox-hunting near his estate in The Plains, Va., he suddenly decamped to Nevada with a trusted lieutenant, Dean Musser, and at the age of 77 created a new firm, Ethel M Chocolates, named for his mother, which makes expensive, liquor-filled bonbons for the tourist trade.
Musser, reached by telephone in Las Vegas, refused to give any information about Ethel M, just as he always did at Mars Inc. Tim Carlson, the Nevada Development Authority representative who helped Mars open the new plant, said Mars was "very intelligent" and "one of the finest gentlemen I have ever met."
The Ethel M factory employs about 45 persons, he said, and the candy is promoted through such devices as leaving samples on hotel-room pillows.
Business contacts who have dealt with members of the Mars family say their living style is relatively modest considering their wealth and they take less out of the company than they could. Their reluctance to expose themselves to publicity extends even to their personal affairs--Jacqueline Mars Badger, for example, declined to fill out an alumnae questionnaire for her college, Bryn Mawr.
Some of their money goes into the tax-exempt Mars Foundation, which is also based in McLean. The foundation reported to the Internal Revenue Service that it had net assets of $2.99 million at the end of 1980. Its officers are Forrest E. Mars Jr., president; John F. Mars, vice president; David H. Badger (Jacqueline Mars' husband) vice president, and William C. Turnbull, secretary-treasurer.
The foundation owns a conservative portfolio of investments, concentrated in blue-chip stocks, Treasury obligations and corporate bonds.
In 1980, according to records filed with the IRS, the foundation gave modest grants, usually less than $5,000 each, to a variety of private schools and colleges, medical institutions, cultural organizations, wildlife groups and the Capital Children's Museum, as well as to the Right to Work group. Its total of grants and contributions for the year was $179,000. CAPTION: Picture 1, Some of the Mars, Inc. products for people and pets that made the company one of the most prosperous privately held corporations, with annual sales estimated at $3 billion. By James M. Thresher -- The Washington Post; Picture 2, Huge candy mixers at Ethel M Chocolates factory; Picture 3, Workers prepare bonbons at Ethel M Chocolates factory, which Forrest Mars Sr. started in Las Vegas, Nev., after retiring from Mars, Inc. Ethel M is named for his mother. Photos by Art Nadler -- The Washington Post