KLN Family Brands: Producing Innovative Lines of Sensational Edibles

Some people get snack attacks that lead them to the pantry; other people get snack attacks that lead them to found businesses that grow to employ 1,300 people and generate $500 million in annual revenue. Kenny Nelson – the founder, president and CEO of KLN Family Brands (KLN) – is the latter category.

Headquartered in Perham, Minn., the heart of corn, sugar and potato country, Nelson’s family of four companies supplies an outstanding array of snack food products, licorice, chocolate and pet foods to customers in the U.S. and Canada. KLN’s lines include Barrel O’Fun Snack Foods, Kenny’s Candy Co., Tuffy’s Pet Foods and NutHeads Chocolate Factory.

Nelson, who graduated from Notre Dame, started his dynasty in 1964, when he came back from the Army Reserves and joined his dad’s poultry and livestock food business. Together they started a new pet food company called Tuffy’s Pet Foods (named after his father), which they built up and sold to the H.J. Heinz Company in 1971. Nelson continued to work for Heinz for two years.

In 1973 Nelson left Heinz and started Barrel O’Fun Snack Foods, which, he never forgets, would not have survived in the first three years without his father’s help. Those years weren’t a barrel of fun. In 1981 Barrel O’Fun was acquired by the G. Heilemann Brewing Company. Nelson worked for Heilemann until 1986, when he decided to get back in the game on his own with Kenny’s Candy Company, which he started in 1987. In 1988 Nelson and three friends bought Barrel O’Fun back from Heilemann. In 1995 he bought the other investors out and put Kenny’s Candy and Barrel O’Fun into a company called KLN Enterprises. In 2001, 30 years after selling Tuffy’s, he bought Tuffy’s back, and 10 years later in 2011 he started KLN’s fourth division: NutHeads Chocolate Factory.

The More the Merrier

It is considerably challenging to manage a product line as expansive as Barrel O’Fun’s. “We probably make 2,000 SKUs,” says Nelson, who names just a few of Barrel O’Fun’s offerings, which are a mix between its own brands and private-label items for other companies.

Tuffy’s Pet Foods includes Tuffy’s, Tuffy’s Gold, NutriSource, Pure Vita and Natural Planet Organics. Barrel O’Fun offers a seemingly endless array of potato chips, kettle chips, tortilla chips, corn chips, popcorn, cheese puffs, pretzels and crisps. In addition of the Barrel O’Fun snack items the company also produces more of its own labels, including the popular Vic’s Gourmet Popcorn, Beer Chips, Larry The Cable Guy and Dale Jr. potato chips.

NutHeads Chocolate Factory produces the wonderful “Kookamunga” line of chocolate-dipped items that includes pretzels, red licorice and potato chips, perfect for a salty-sweet fix. The company also produces glazed caramel corn and fruit inclusion popcorn. Kenny’s Candy produces licorice and (soon) gummy items. Some of the brands are Juicy Twists, Wiley Wallaby Liquorice, and Kenny’s bites and twists. A few new items will include 100-percent fruit twists and fruit snacks.

It takes effort and some substantial square footage to keep pace with snackers’ demands. “Each one of the four companies has its own facility in Perham; Barrel O’Fun also has a plant in Phoenix,” explains Nelson. “And we are looking to also have a plant in the eastern U.S.! All of our companies are national, plus we do a nice business in Canada.”

An Organic Process

Of course, it’s not all a party in the world of snacks. There are challenges in the sector. “Particularly in the snack food area, there’s been an explosion of new products,” shares Nelson. “It’s sometimes hard to develop products that fit into those intriguing categories. Most of the time you need a lot of marketing money to get traction. We also continue to concentrate on the organic categories that have more than tripled in the past 10 years.”

Frito-Lay represents 60 percent of the snack market in the U.S. To compete, KLN is establishing niche-targeted brands. “We’re developing specific good-for-you type products, like popcorn items under Vic’s label – a pumpkin spice flavor, and a cranberry flavor,” shares Nelson. “We have introduced Salveo, meaning ‘good health’ in Latin, as our newest line of healthy snacks.”

Snack Attack

Even after all he has achieved, Nelson is not content with his success. “We want to be a billion-dollar company!” he shares. To that end, KLN has expanded and upgraded over the past 12 years and plans to continue to push into new territories with new products to be developed within the 4 companies.

Nelson enjoys building KLN and is grateful to be in the Midwest. “We have such good people at all of our companies; I don’t lose any sleep over the companies or any money we might owe,” he says. “No matter what the market likes or needs, I feel like we’ll get ’er done. The guy who runs Tuffy’s has been there 48 years. Some of our Barrel O’Fun management staff started when they were 14 years old!”

“We are very family oriented,” continues Nelson. “My son Charlie is V.P. of sales and marketing. Being a competitive athlete [he played four years of baseball both with the U of M and the LA Dodgers minor league teams] he brings the same competitive attitude to KLN Family Brands. We have my son-in-law, a step-son and step-son-in-law, two sisters, a brother, four brother-in-laws, a couple cousins and even an uncle working with our companies.” So, feel free to buy all the snacks, licorice and pet foods you want, but not the businesses; Nelson has no interest in selling his companies again. “We want to keep them in Minnesota,” he says. “We’ve been blessed here in Perham with such an awesome aggressive community.”

According to various industry journals, U.S. snacking is up and the niche markets of organic and better-for-you snack options have seen steady growth in the past few years. As long as the companies keep making delicious good-for-you selections, it looks like a good-for-KLN Family Brands future. As Barrel O’Fun celebrates its 40th anniversary, it’s clear who will bring the snacks.