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Wednesday, 09 October 2013 21:00

Q&A: Nick Nicolay, Kar's Nuts

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Nick Nicolay Nick Nicolay COURTESY PHOTO

Kar’s Nuts, an 80-year-old Detroit snack food company, has been slowly growing to national success. What began as one woman roasting peanuts to sell outside the old Tiger Stadium has now turned into a national operation. Kar’s has about 175 employees and expects to do more than $90 million in sales this year. With a facility in Madison Heights, the company is in all 50 states, but has been putting a strategic focus on West Michigan lately due to the large retailers and the cluster of food distributors in the region. President and CEO Nick Nicolay spoke with MiBiz about the company’s growth and the changes it’s made to its business model.

What’s your most popular product?

[O]ur Sweet ’n Salty Mix, which has become our flagship item. That’s what really gave us more of a national presence.

How do you keep up with manufacturing and distribution from just one location?

Our move in 2004 took us from a 50,000-square-foot facility to a 130,000-square-foot facility, so we gained a lot of capacity doing that. You also have to manage your SKU count. We try to be tight on that. But we are turning our inventory over probably every 14 days. Distribution is now more common carriers. We have some customers come pick up. (National accounts) like Sam’s Club come pick up because logistically it makes more sense for them to do that.

How has your distribution model changed as you got into the grocery store segment?

We realized that a distribution model in our category wasn’t going to give us long-term success, so we have circled back and become more of a manufacturer than a distributor. We don’t have to send out a lot of small orders. We send out large orders that then get broken down. A good example of that (in Grand Rapids is with distributors) like S. Abraham and Son or Hackney. They are coming to pick up truckload quantities, breaking it down by the box and sending it to their retailers in their distribution area.

Food companies don’t always get thought of as manufacturers. What’s going on on your plant floor on any given day?

We start out with about 75 different raw ingredients that we use to make up about 200 SKUs — probably about 150 of our own and maybe about 50 that we do for private labels. Several times per week, we are bringing in truckloads of raw materials. Various nuts come out of the south and west. Certain items like cashews we buy through importers. They have the relationships in distant countries. We get dried fruit from Graceland Fruit Inc., a Frankfort, Michigan company. We have two large (nut) roasters. That was the main reason we moved — we needed more roasting capacity. We are basically an around-the-clock operation in this facility.

Describe the evolution of Kar’s distribution model.

We began as a DSD (direct store delivery) and then we moved into vending and that became a national play for us. Out of there, we moved into club (business) because Sam’s Club was doing a lot of focus groups with their own small business buyers and they asked for our Sweet ’n Salty product. We now service all 600 Sam’s Club stores across the country. We have never had a play in grocery so our most recent play is to move into the grocery category. We are targeting the top 75 grocery retailers in the country. In the last three years or so, we have relationships with probably half of them. We are entering them with either our Sweet ’n Salty or our Second Nature brand, which is more of an upscale, all-natural brand.

So where’s the growth happening currently?

A lot of the growth is in retail because of the nice relationships we’ve developed with people (in West Michigan at) Meijer, Spartan, Gordon Food Service, S. Abraham. Those have been a key part of our growth here in the Michigan market in the last few years. These are partnerships we didn’t have for many years. They are good partnerships to have.

And those relationships are what brought you to visit West Michigan.

It’s interesting how all of the Michigan retailers, their headquarters are over here. We are quite pleased to have developed those partnerships in West Michigan.

Read 6667 times Last modified on Wednesday, 09 October 2013 16:54

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