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Published August 30 2013

Business and family mix at Perham-based KLN

PERHAM, Minn. – For Kenny and Charlie Nelson, working side by side to grow their business isn’t just a metaphor.

This father-and-son team head up the Perham-based snack and pet food company KLN Family Brands, out of the same office. Their desks sit next to each other.

“We hear many stories about some of the challenges that families can have in business,” said Charlie, 42, vice president of sales and marketing for KLN.

But he says he and his father work “very well” together, and they’re blessed that they take a “very similar” approach to business.

“We have the same mentality about how to go about business. I mean, being very ethical, community first, taking care of our employees the best we can, and, again, I think we both have that mentality of sales … growing our business, growing our labels,” Charlie said.

KLN produces a variety of snack foods as well as candies and pet foods through its subsidiaries – Barrel O’ Fun, Tuffy’s Pet Foods, Kenny’s Candy Company and NutHeads Chocolate Factory. Along with its own brands, KLN makes products for other labels.

Kenny, KLN president and CEO, is the majority owner. Charlie and his sister, Tina Rasmussen, are minority owners.

Kenny said he doesn’t think he and Charlie have had an argument since his son joined the company in 2001.

“I think that we respect each other so much, and love each other, that we get through anything that is a challenge,” said Kenny, 71. “I mean, we have different opinions on things obviously, but it seems like at the end of the day, it’s pretty easy to resolve them so that we’re on the same page.”

A big part of what’s on that page is growth.

“We just want to keep growing, No. 1,” the elder Nelson said. ”And, you know what, we’re a $500 million company roughly this year. We’d like to be a billion-dollar company in five years.”

Is that realistic?

“It’s possible,” he said.

History

KLN traces its roots to 1964. Kenny’s father, Darrell “Tuffy” Nelson, owned a feed mill business in Perham. Kenny graduated from Notre Dame in 1963, and the next year he and his father decided to try the pet food business. That was the beginning of Tuffy’s Pet Foods. Tuffy’s was purchased by H.J. Heinz in 1971.

Kenny started Barrel O’ Fun Snack Foods in 1973 in a 10,000-square-foot building. It now occupies 500,000 square feet.

Kenny tips his hat to his late father for helping him get through some of the difficult early days at Barrel O’ Fun, and he speaks of him with reverence.

“I want my legacy to be, I was almost as good as dad,” Kenny said.

G. Heileman Brewing Co. purchased Barrel O’ Fun in 1981. In 1988, Kenny and three friends bought back Barrel O’ Fun. Kenny purchased his friends’ shares in 1995 and bought back Tuffy’s in 2001.

KLN also produces a line of licorice, twists, sour twists and other candies under the name Kenny’s Candy Co., which was founded in 1987. NutHead’s Chocolate Factory was founded in 2012, and produces sweet-salty treats such caramel popcorn and nut snacks.

It’s a long way from 1964 when Kenny was selling pet food out of an Econoline van. Today, KLN sells internationally.

The company is in the fourth year of a five-year contract to supply snacks and candy at Target Field, home of the Minnesota Twins’.

Among the items KLN produces are snacks that bear the names of comedian Larry the Cable Guy and racecar driver Dale Earnhardt Jr.

It employs about 1,250 people in Perham, Kenny said. There is also a Barrel O’ Fun facility in Phoenix. Plans are in the works to build another snack food production facility out East.

Family legacy

This year, Ernst & Young named Kenny entrepreneur of the year for the Midwest in the family business category. It means he’s a candidate for national Entrepreneur of the Year in November in Palm Springs, Calif.

Kenny takes pride in KLN being a family business. Having the company continue to be in the family is important to him.

“Well, that’s it for me. There’s just no other way,” he said. “We have a lot of offers to sell our companies, and we’re just not going to do that, you know. ... Want to keep them here. That’s the main thing. We want to keep these companies here and keep the employment here and keep our company growing.”

Kenny’s daughter, Tina, lives in western Wisconsin, but she and her husband, who already works as a sales rep for KLN, plan to move back to Perham in 2016. Tina said she hopes to work with KLN in some capacity at that time.

Kenny’s step-daughter and her husband, Amanda and Justin Henke, are also in the snack and candy business. They own Annie B’s, a Kellogg, Minn.-based company that makes caramel products and flavored popcorn. Kenny provides guidance and mentoring in their effort.

Charlie’s journey

Charlie wasn’t always sure he wanted to be in the family business.

“I always had a ton of respect for my father,” Charlie said, “but I wasn’t sure this business was for me.”

After playing baseball at the University of Minnesota, Charlie spent about five years playing baseball in the Los Angeles Dodgers farm system. Later, he sold suites for the Minnesota Vikings and worked for Merrill Lynch for a time.

“But when we bought Tuffy’s back in 2001, (that’s) when the timing was right for me,” he said. “It seemed to kind of strike a fire to jump into the mix again.”

He said he always felt he would be back in Perham one day.

Kenny is happy to have him, saying it’s “just been a pleasure.”

“He’s the best negotiator I’ve seen; I know that,” Kenny said.

Carrying on the family tradition and the business is something Charlie takes seriously.

“You know what, I view it as a big responsibility, but an exciting one,” he said. “I mean, again, part officing with my dad is not just learning as much about business as I can every day, but (also) just learning about how he works with people every day, how he works with people in the community every day. I realize that those are things that I’ll be doing more and more of, and I look forward to it.”

KLN and the community

KLN and the Nelsons’ effect on the community goes beyond providing residents with employment. According to information provided by KLN, Kenny and the management team at KLN donated $1 million to the Perham Hospital. Other organizations that have benefited from Kenny’s generosity are the Boys and Girls Club, Mayo Clinic, Concordia College and the Perham Area Community Center.

Perham Mayor Tim Meehl glows about how KLN has affected his town.

“Kenny is just, you know, he helps out in just about any way he can,” Meehl said. “When the school had a little problem, he put out some money for that year to help out. KLN is just amazing.”

“If something happened to KLN, I’m sure we’d survive, but it would be pretty tough,” he said.

Charlie and Kenny see it as a two-way street.

Charlie described the relationship with Perham as “absolutely a partnership.”

“The work ethic we have with our employees, it’s absolutely phenomenal,” he said.

“We like giving back, because the people that are here have made our companies,” Kenny said. “So whether it’s the hospital or the PACC (Perham Area Community Center) or whatever fundraiser or whatever comes up, we want to be involved.”

Readers can reach Forum reporter Shane Mercer at (701) 451-5734.