Aarhus United A/S - Oil Business in the 1870s

Oil Business in the 1870s


Aarhus United's origins lay in the late 19th century, when the Aarhus Palmekaernefabrik was established in 1871. The company's earliest product was cattle feed, in the form of cakes produced using the oil from palm kernels. For the next decade, the young business focused exclusively on cattle feed. Yet in the early 1880s, the construction of another factory in the town of Aarhus—for producing margarine—led the feed cake company to change its direction. In 1883, Aarhus Palmekaerne-fabrik began refining its palm oil imports as food-grade vegetable oil in order to supply the margarine factory.

Vegetable oils rapidly became the company's focus, leading to the change in name to Aarhus Oliefabrik in 1892. From the start, Aarhus Oliefabrik distinguished itself by a willingness to invest in research and development, which in turn enabled the company to capture a leading share of the Danish vegetable oils market. Leading this growth was Frederik Lausen, who took over as the company's manager at the age of 25. Lausen built a new, modern facility for the company, which then expanded its operations to include the refining of oils from a variety of sources, including sesame, copra, peanuts, and others.

Aarhus rapidly turned to the international market, expanding its reach into the wider Scandinavian market before expanding throughout much of Western and Eastern Europe in the years leading up to World War I. Acquisitions formed a significant part of this expansion, bringing the company to Germany, Russia, and the United Kingdom, and then farther afield, to the United States.

Aarhus's commitment to technical development played a major role in the company's international success. Much of the company's development was attributed to technical manager M.C. Holst, who joined the company in 1896. Under Holst, Aarhus developed a new method for refining coconut oil, eliminating the unpleasant smell and taste from the oil and making it suitable for a variety of foods applications. The new coconut oil made possible the development of the first all-vegetable oil margarine in 1909. Over the next decade, the company added raw materials purchasing subsidiaries in the oil crop producing markets of Southeast Asia and Africa. In this way, the company was guaranteed a steady supply of coconut, palm kernels, and the like, for its steadily growing production levels.

Holst also led the development of another highly significant product for the company, CEBES, in the late 1920s. This was the company's first foray into specialty fats and oils, which became the company's core activity throughout the rest of the century. CEBES represented a breakthrough as one of the first successful cocoa butter substitutes. The new substance, much less expensive than cocoa butter itself, enabled Aarhus to achieve strong growth in the 1920s and 1930s, despite the Depression era. By 1937, Aarhus's raw materials processing levels had topped 300,000 tons annually. The company also had emerged as one of Denmark's largest and most successful enterprises.