Dick Youngblood: Route 29 filled holes on road to sweet success

From the beginning, Kim Kalan's foray into the candy business did not bode well for success.

After lengthy negotiations to buy the struggling Maud Borup chocolate business, for example, a business partner who had pledged to cover half the purchase price failed to show up for the closing.

The 2001 deal would have died of shortness of cash had her brother-in-law, Mark Kalan, not stepped in.

Then, after weeks of remodeling Maud Borup's St. Paul store, they didn't see a single customer on opening day.

The date: Sept. 11, 2001.

And two years later, the candy manufacturing plant they'd purchased from Nelson's Confections in Perham, Minn., received an unwelcome visitor: An empty lumber car detached itself from a passing freight train and crashed through the building, crushing walls, breaking water and gas pipes and damaging specialized equipment.

Worse, it destroyed 7,000 pounds of finished product and more than $200,000 worth of raw materials on the brink of the Christmas season. Insurance covered much of the damage, but not the estimated $500,000 of lost business during the crucial holiday period.

Here's the good news: The Kalans not only survived, but their Minneapolis-based business is headed for $5 million in sales this year, seven times the $700,000 grossed by the three acquisitions they made to serve as the company's foundation.

But it took a $200,000 loan to get back into production and an investment by 22 friends and family members to restart the company's growth.

Say howdy to Route 29, Napa, a well-known name in the candy business that the Kalans bought from a bankrupt California company in 2003 to help establish credibility for a national wholesale business for their caramel, chocolate and licorice confections.

So how did she talk a bank out of $200,000 for a wounded candy business?

"I'm a very good salesperson," she said.

Which is how she built sales to their present lofty level: "My sales manager and I did it with e-mails, phone calls and samples -- then repeat, and repeat again," Kalan said. "And throw in a bit of begging and pleading, too."

The key, however, might just be Kalan herself: "I never, ever, give up," she said.

The result is a client list that includes Safeway, Macy's, Nordstrom, Borders Books and Caribou Coffee. The company also developed two holiday lines for Williams-Sonoma.

In addition, Kim is working with the Martha Stewart organization to develop recipes for a new caramel line.

Route 29 offers more than 100 products ranging from white chocolate-and-coconut snowballs, caramel-covered nut rolls and almond toffee to cinnamon licorice, chocolate-covered peanut butter sticks and milk chocolate bunnies.

And the product line keeps expanding: Future additions include licorice shaped like barnyard animals for the children's market and sugar flavored with spicy cocoa, citrus or vanilla for the gourmet market.

A guy could gain five pounds just writing about this stuff.

Nonetheless, "our caramels probably are what are getting us the most notice," Kim said.

Why? Beyond a variety of flavors ranging from vanilla and chocolate to raspberry and orange to a combination of chocolate with nougat or maple, "we use fresh cream and butter delivered every day, and cook small batches in copper kettles under fire rather than steam," she said.

The result is "a wonderful, creamy texture and homemade taste that reminds you of an old-fashioned candy shop," said Heather Sawdey, a buyer for Caribou Coffee.

In addition to the aformentioned travails, the Kalans were hampered at first by a flawed business plan: Kim's dream was to build a large chain of Maud Borup retail outlets. Which is why they opened two more stores in the metro area before figuring out that it takes a whole lot more cash than they had to build a successful chain. So they sold the stores and focused on wholesaling.

Kim Kalan is what you might call a chronic entrepreneur: Capitalizing on her experience as a components buyer, seller and manager for several computer-related companies, she started a series of companies that brokered or assembled electronic products.

A job as an Internet consultant for a gift-basket company led her to start her own business peddling candies, bath and other consumer products in fancy gift baskets. That's how she found out that Maud Borup was for sale.

So how did someone who knew nothing about candy manufacturing get so good at it? By applying the expertise offered by the acquisitions -- most importantly the recipes and processes that won Maud Borup an international reputation, Kim said.

While she is the face if not the heart and soul of the business, the two owners form a partnership with an ideal mix of opposites: She's the "crazy one," as she puts it, forever coming up with ideas for new products and other advances.

Mark is the finance and production chief who guards the checkbook and reins in her enthusiasm with reality checks.

The result is a business that has nearly doubled its sales in two years, to a projected 2007 total of $4.9 million.

Dick Youngblood • 612-673-4439 • yblood@startribune.com