Snack firm KLN Enterprises goes major league

KLN Enterprises in tiny Perham, Minn., won the contract to sell snacks at Twins home games

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Kenny Nelson, CEO of KLN Enterprises, sunk his teeth into Juicy Twists, one of the goodies his hometown firm is shipping to Target Field. The company, which also makes Barrel O’ Fun snacks and Vic’s Popcorn, has a three-year snack food-and-candy concession from the Minnesota Twins. Nelson started Perham-based Tuffy’s dog food in 1963. In 1973, he began a snack food company that has grown to $300 million in revenue and 1,000 employees in the 3,000-citizen town of Perham, Minn.

Photo: Glen Stubbe, Star Tribune

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Few noticed when KLN Enterprises announced this spring that it had won the snack food and licorice concessions at the Minnesota Twins' new ballpark.

KLN who, you ask?

Well, for starters the Perham, Minn.-based manufacturer of Barrel O' Fun Snacks, Juicy Twists and Vic's Popcorn edged out household name Old Dutch.

Frito-Lay, the national goliath owned by PepsiCo, need not apply.

Moreover, KLN, with more than 1,000 production and other employees in the northwestern Minnesota community near Detroit Lakes, is about twice as big as the Twins by sales.

"We've been kind of quiet," conceded Kenny Nelson, 68, a Perham boy who founded the snack food company in 1973. "The Minnesota Twins are a class organization. And we are at the point where we need to get the word out."

Nelson expects that he'll spend more on the three-year, $1 million Twins contract than he'll take in at Target Field. But the deal, including Twins logo on product and radio spots with Twins manager Ron Gardenhire, already has been a "significant sales generator" in stores.

And that's good for KLN's world headquarters in Perham.

"In Perham, we make more potato chips, tortilla chips, pretzels, popcorn and licorice in one location than just about anybody," Nelson said. "KLN brands expect to be a $300 million-revenue company this year. And we aspire to be a $500 million operation by 2015."

Started with pet food

Not bad for a kid who hitchhiked partway home from Notre Dame in 1963, wondering if there would be work for him at his late father's 15-employee feedmill.

"My dad, Tuffy, said, 'Let's try pet food,''' said Nelson, a soft-spoken entrepreneur with a yen for sales.

He started peddling Tuffy's pet food in nearby counties and eventually in the Twin Cities. In 1971, H.J. Heinz bought Tuffy's. The elder Nelson, an equipment tinkerer and operations man, spent more and more time at the golf course. Kenny Nelson, meanwhile, stayed with Heinz as a regional salesman for a couple of years. In 1973, he started Barrel O' Fun.

"We had started Tuffy's with one truck, and I really liked direct, door-to-store sales, and ... chips and snacks filled the bill," Kenny Nelson said. "Dad helped me get started financially and operationally. We bought a cheap fryer, some other equipment, put up a 10,000-square-foot facility and started making potato chips, popcorn and cheese curls."

Today the KLN Enterprise campus contains nearly 1 million square feet. Construction is underway on a 20,000-square-foot headquarters building, succeeding the old one that sits above a factory floor.

KLN Enterprises has established a 100-person plant-and-sales operation in Phoenix under Kenny's son, Charlie, 38. And the company is looking to expand production to the Twin Cities. Perham, a town of nearly 3,000 in Otter Tail County in farm and lakes country, boasts KLN Enterprises as its largest employer, followed by Memorial Hospital and the Perham Public Schools.

Golf and giving

Nelson, a competitive golfer, is the corporate strategy guru, inspirational leader and lead salesman. And he can still beat most of the young ones at the local muni golf course. Nelson, who is a light snacker, notes that the only "Kenny's" candy is no-fat licorice.

"Kenny knows how to sell product," said Charlie Cavanagh, president of Perham's United Community Bank, and who grew up caddying for Tuffy Nelson at the local golf course. "They had their best year ever last year and added more people in a tough economy.

"They pay well ... white-collar and blue-collar. They have a profit-sharing plan and they are always at the front of charitable giving. Last year, Kenny gave the Perham Public Schools enough money to defray budget cuts so they didn't have to lay off any teachers. That's Kenny. He is dedicated to Perham and the surrounding communities. And he always leads the charge and leads by example."

Nelson can tick off many names of 30- and 40-year employees, and those of their kids and cousins.

Mike Holper, a recently retired officer of KLN Enterprises, said "Kenny is unique in most ways, including his drive, his compassion and most of all the way he treats people. His desire to help people is more important than his desire to do business."

In 2001, Nelson bought back Tuffy's pet foods, his dad's namesake company, from an absentee owner who had bought it from Heinz and was threatening to close the plant. It employs 125 in Perham.

Tuffy Nelson, who died in 1986, was more excitable than his son. Kenny has memories of Tuffy, muttering and sputtering, as he tinkered with a packaging machine that seemed to always produce a flawed bag or two for every 20 good ones it produced in a minute.

Kenny Nelson said his dad "would think this plant was so phenomenal and that we've got machines now that produce 100 in a minute without a bad one." Chief operating officer Kurt Nelson, Kenny's 50-year-old cousin, is the guy who now worries about production lines.

Barrel O' Fun gets about half its revenue producing snack foods under store brands for several Fortune 500 retailers. Nelson, true to his contract, will not disclose those private-label customers. But any visitor to the plant will notice the Target trucks waiting to be loaded.

Nelson, who spends about a quarter of his time on the road, has no plans to retire.

"My exit strategy is to do a gradual sale of the company to employees through an employee stock ownership plan, starting with about 30 percent," he said. "I want to make sure the ownership and company stay in Perham."

Neal St. Anthony • 612-673-7144 • nstanthony@startribune.com

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