By Brian Hartz
EDMONTON – This is one dot-com bubble that never burst. In fact, it’s
gotten only bigger and better for Edmonton’s Kinnikinnick Foods.
| The lab where Kinnikinnick’s products are tested to ensure they’re gluten- and allergen-free.|
EDMONTON – This is one dot-com bubble that never burst. In fact, it’s gotten only bigger and better for Edmonton’s Kinnikinnick Foods.
What began in a stall at the Old Strathcona Farmers’ Market has evolved into one of the most successful gluten-free (GF) food makers in North America – and the world.
“The most inspirational thing,” says Kinnikinnick president and CEO Jerry Bigam, “is that when we started we were at 3,000 square feet, and now we’re at 150,000 square feet. When we had huge demand for products, not being able to supply that demand was excruciating. It’s been a real pleasure to grow and take on additional challenges.”
The grassroots company with the funny name has come a long way in a short time, starting with its founder, Ted Wolff Von Selzam, in the late 1980s. By the mid-1990s, von Selzam was busy supplying the Edmonton market and a few outlets in Saskatchewan and British Columbia with GF buns, breads and cookies.
|A batch of gluten-free chocolate chip cookies fresh out of the oven and ready for packaging at Kinnikinnick’s plant in Edmonton.|
|Kinnikinnick Foods president and CEO Jerry Bigam|
That’s when Bigam and his wife, Lynne, who has celiac disease, entered the picture. They’d been avid Kinnikinnick customers for years due to Lynne’s condition, and in 1997 they decided to invest in the company.
Soon after that, Bigam’s son Jay, who also has celiac disease, came up with the idea of using the Internet as a way to get their products to people who were clamouring for them but couldn’t find them at their local stores due to their limited distribution at the time.
“When I got involved it was basically a local specialty bakery for Edmonton, with some shipments to Western Canada,” Bigam says.
“We had these good products but needed to find a way to distribute them. We had no idea how to do that, but Jay, who’d done some work in the music business and was familiar with the new technology, like Napster, said we should take a look at the Internet. That was a key moment.”
But there was more to it than just setting up a website and taking orders from customers. Kinnikinnick needed to meet new technological and logistical standards.
“In terms of perishable product, no one was doing this at the time,” Bigam says. “We were faced with huge demand from people all over Canada, so we started using modified atmosphere packaging, which gave [the products] a two-week shelf life. We began shipping product via Canada Post then expanded to the U.S. One thing led to another and we started using DHL and UPS, and that became the model.”
There was also the challenge of taste, Bigam says.
“It used to be that GF food was pretty bad. But now you’re not paying a taste penalty. It might taste different, of course, but it’s going to be tasty.”
Web-driven sales, Bigam says, have dropped from “about 80 to 8 per cent” of Kinnikinnick’s business as the company has grown into a large-scale, bricks-and-mortar food maker and wholesaler – but the marketing strategy remains staunchly progressive.
“We introduce people to the product online and get them to walk into their local stores requesting that they stock our product,” he says. “In that sense, the Internet is still a very important part of our business. So we don’t do a lot of traditional media advertising as most of our marketing is targeted directly toward the consumer.”
Community outreach is also a crucial part of the Kinnikinnick image: In 2008 it supported nearly 1,000 support group events with $225,000 worth of product.
Kinnikinnick is active on Facebook, Twitter and the Gluten-Free Registry – a database of GF businesses around the world – and communicates directly with customers through its blog, the Gluten-Free Insider.
“We have a large educational role to play,” Bigam says. “You’re far more than just a manufacturer; you’re a confidant, you’re an educator helping people through a very difficult transition time in your lives.”
Clearly, the word-of-mouth approach has worked. Kinnikinnick product has steadily moved from specialty and health-food stores to mainstream grocery chains – and even into major sporting venues such as Turner Field, home of the Atlanta Braves, which recently opened a gluten-free concession stand featuring hot dogs and hamburgers on Kinnikinnick buns.
But demand for nut- and dairy-free products has also been rising. So, in June this year, they made the difficult decision to make Kinnikinnick an entirely allergen-free food manufacturer.
“The demand got so large that we merged our two lines,” says Bigam. “It was just a matter of dropping a couple of products like cookies that had almonds. When you start adding up all the people with specialty diets, not just gluten-free, it works out to a sizeable chunk of change to sacrifice if you’re not paying attention to the trends.”
Taking these extra steps has propelled Kinnikinnick into new markets, such as school-lunch programs, that are conscious of becoming allergen-free to avoid the risk of anaphylactic shock or other adverse reactions.
Bigam says parents of autistic children have also become a major segment of thecompany’s client base due to the rise of the gluten-free, casein-free (GFCF) diet. Casein, a protein found in milk and cheese, is believed by some to be a contributor to the so-called “leaky gut syndrome,” a condition common to autistic kids.
“In some kids,” Bigam says, “proteins from both dairy and wheat don’t process in their guts and this can cause all kinds of behavioral problems.”
However, Bigam cautions, “There’s a schism between people who think diet affects behavior and those who don’t, and the scientific connections haven’t been made. I’ve had many parents tell me how much the GFCF diet has helped their kids. A lot of these parents want to get their kids off drugs and are looking to diet changes. There’s been quite a significant anecdotal response about what happens when you make these kinds of dietary changes, and we don’t argue with that, but neither can we demonstrate the science.”
Canadian funnyman Jim Carrey is a notable subscriber to this theory and has modified his diet in support of his autistic stepson. Several other celebrities, including the diet goddess herself, Oprah Winfrey, have helped popularize the GF lifestyle – leading some analysts to speculate that the rapid annual growth (28 per cent over the past four years, according to NutraIngredients.com) of what’s become a US$1.6 billion market will slow as the “fad diet” phase of its development dies out.
In fact, the Hartman Group, a consumer research firm, recently said that although less than 1 per cent of the U.S. population is diagnosed with celiac disease, anywhere from 15 to 25 per cent of the population is interested in gluten-free products, and 13 per cent reported buying a gluten-free food product in the past three months.
“The gluten-fee market will be more reminiscent of fad dieting in the long-term and does not represent an enduring trend,” the Hartman Group’s Melissa Abbott and Jarrett Paschel reported in a recent webinar. “A small permanent marketplace for gluten-free goods will remain but does not represent an opportunity for large manufacturers.”
Kinnikinnick seems to respectfully disagree with that outlook.
“We balance our promise with what we can deliver,” says Bigam. “Sure, we’ll probably get knocked backed in some areas. We might lose in a certain regional market but our objective is to maintain a national distribution program with national products that we’ll always be on top of. We’re also diversifying into Europe, the U.K., and the Middle East.”
Also, Kinnikinnick has so many products in so many different categories that it can afford to experiment as tastes and trends dictate.
“We have at least four or five new products coming out every year, and that works to our advantage – we can keep it fresh,” says Bigam. “One of the benefits of a family company is that you can make decisions almost instantly.
We’re getting feedback on new products within days because they’re available on the Internet prior to going to full-scale production. And with Jay and Lynne being diagnosed celiacs, we have the two most critical people you’re going to find, in our senior management. So for us, it’s a personal and a business satisfaction.”