Many years ago I did some research at the archives at Duke University, which houses the records for the J. Walter Thompson advertising company, the real-life company Mad Men is based on. I took away huge amounts of information, including a company history of Miracle Whip (JWT had the advertising account back in the 1950s). All the information here is from that history, from 1952.
Miracle Whip’s history is rooted in the mayonnaise business. Kraft, which invented Miracle Whip, got its start in the cheese business, and decided to start selling mayonnaise in 1926. Rather than starting from scratch they purchased four regional mayonnaise producers around the country, changed the name on the label, and eventually did well selling mayo.
Until the Depression hit in the 1930s. Even though almost no one does it today mayonnaise can be fairly easily made from scratch, and in those penny-pinching days many homemakers switched to making their own mayo instead of purchasing it. As a result sales of mayo, and almost everything else during the Depression, collapsed.
Kraft’s response to the situation was somewhat unusual. Rather than try to sell mayonnaise as cheaply as possible they put their money and attention into making a product that was slightly different from mayo, better than mayo (they hoped), and which could be sold for a slightly higher price. They might not sell as much of it but they could get more revenue per unit sold. At the same time they kept selling mayo with the knowledge that they might take a loss from it and that the new product would probably hurt their mayo sales more than their competitors’. On the other hand, they figured that once the Depression was over they would bounce back to mayo leadership, so they believed taking a loss on mayo was a short-term problem.
That Miracle Whip is different from mayonnaise can be seen quite plainly on the Miracle Whip label: it is a “salad dressing,” not a “mayonnaise.” The US government has strict requirements regarding just what makes mayonnaise mayonnaise, and Miracle Whip doesn’t meet those requirements. It may look like mayo, it might be sold alongside mayo, it might be used for the same purposes as mayo, but, in order to not violate US labeling laws, it is very clearly marked as a “salad dressing.”
To make the new product Kraft engineers created a machine to mix the ingredients together and make a standardized product at a high rate of production. The machine worked so well the engineers called it the “Miracle Whip” machine, not because it produced Miracle Whip but because it was so good at whipping the product. The product, then, took its name from the machine, because obviously the Miracle Whip machine produced Miracle Whip.
The product was launched in June, 1933, the worst year of the Depression. It may have been a terrible time to introduce a new product but Kraft backed the introduction with a months-long advertising campaign (in that market Kraft must have gotten some amazing deals on advertising space).
Miracle Whip was originally introduced in New England, but after eight weeks sales were high enough that the product, and promotions, went national. Within six months Miracle Whip was outselling all other brands of salad dressing and mayonnaise, and has continued doing so ever since then.
By the 1950s Miracle Whip had 60% of the market for salad dressings, and the Thompson report I read noted that its closest competitor, the Ann Page brand from A&P, only had 12% of the market.
Source: “The History of Miracle Whip,” November, 1952, File “Kraft Product Histories: Miracle Whip, Cheese Spreads, 1952-1953,” Information Center Records, Box 4 of 24, J Walter Thompson Company Archives, David M. Rubenstein Rare Book & Manuscript Library, Duke University