King Nut Company



31900 Solon Road
Solon, Ohio 44139
U.S.A.
Telephone: (440) 248-8484
Toll Free: (800) 860-5464
Fax: (440) 248-0153
Web site: http://www.kingnut.com

Private Company
Incorporated: 1937
Employees: 150
Sales: $35 million
NAIC: 311423 Dried and Dehydrated Food Manufacturing; 311911 Roasted Nuts and Peanut Butter Manufacturing; 311423 Cookie and Cracker Manufacturing; 311919 Other Snack Food Manufacturing; 206401 Candy and Confectionary Manufacturers; 206801 Salted and Roasted Nuts and Seeds; 544101 Candy and Confectionary; 594713 Gift Baskets and Parcels

King Nut Company processes, packages, and distributes nuts, dried fruits, pretzels, and snack mixes to supermarkets, drugstores, food service companies, convenience stores, gift companies, mass merchandisers, and airlines. Its products sell under the Kings, Peterson's Nut, and Summer Harvest brands. The company also produces private label nuts and snacks.

A Small Regional Company: 1937–89

Husband and wife, Earl and Edna Balliette, founded King Nut Company in Cleveland, Ohio, in 1937. They ran their small nut roasting and packaging business together, with Edna managing the office and Earl in charge of other business functions. During the late years of the Depression, King Nut sold nut products to local restaurants and taverns.

When Earl died in 1952, Edna Balliette took over the company, assisted by her brother, Michael Krempa. Balliette later became president of the Peanut Butter and Nut Processors Association, a position she held until she retired in 1989, when she was over 80 years of age.

King Nut grew slowly during its first five decades, and its sales remained regional. In the 1970s, it moved from Cleveland to Solon, Ohio. When Balliette sold the company to Kanan Enterprises in 1989, the company's account list consisted of mostly local retailers, a few national vending firms, and the Cleveland Municipal Stadium. King Nut's annual sales of nuts and dried fruits totaled about $5 million. Its annual growth was less than 10 percent a year, and its employees numbered fewer than 30. Local rival, Peterson Nut, which had been founded by Charles Peterson in Cleveland, Ohio, in 1927, was twice the size of the King Nut Company.

Michael Kanan, the company's new president and chief executive officer, set about to create a national profile for King Nut. Kanan had been an executive vice-president of the Michigan-based Everfresh Juice Company. Upon purchasing King Nut, he moved to Bainbridge, Ohio, with his wife and persuaded his son, Martin, to leave his job with a Detroit automotive-parts supplier to become King Nut's vice-president and director of sales and marketing. Another son, Matthew, joined the company in 1997.

King Nut under New Ownership

During the Kanans first seven years in charge of the company, King Nut's sales increased to $14 million, and its peanut volume increased more than six times to five million pounds. The number of employees more than doubled to 70. By 1996, King Nut's snacks were in vending machines throughout the country and sold at major retailers, including Revco, Finast, Drug Emporium, and Stop-N-Shop. Martin Kanan went after business with the major airlines aggressively, and, after five years, King Nut landed its first airline contract with US Airways in 1994. When Anheuser-Busch closed its Eagle Snacks subsidiary, the company got the break it had been seeking. Agreements with Trans World Airlines, Northwest Airlines, and Continental Airlines followed. By 1995, King Nut had contracts with five national airlines, which accounted for 150 million bags of peanuts and pretzels a year.

In the mid-1990s, King Nut modified its equipment to handle the snack mixes (nuts and pretzels or nuts and sesame sticks) that were becoming more popular with airlines as customers' tastes changed and concern arose about peanut allergies. In addition, King Nut began to produce private label items for companies, such as Amish Farms, and non-nut snacks for retail sale under its own Kings Delicious and Summer Harvest brand names.

By 1997, King Nut was processing one million pounds of nuts (cashews, peanuts, almonds, pistachios, and more) as well as other snack items such as pretzels each week at its plant in Solon, Ohio. However, the American public had begun to perceive nuts as an unhealthy snack, and supermarket sales of jarred, canned, and bagged nuts fell. In fact, only unshelled nuts saw an increase in sales in 1995, as consumers shied away from nuts as a high-fat, and therefore unhealthy, snack food. In 1997, the Snack Food Association, which had been founded in the early 1940s, reported that snack nuts and party mixes were two of only a few product types that had experienced significant sales growth that year. Nut manufacturers, in an attempt to combat the public's negative perception of nuts, sought to educate consumers about the differences between the fatty acids found in nuts and the saturated fats of junk foods. They also sought to win contracts with the airlines to supply in-flight snacks, some of which included items other than nuts, such as pretzels.

In 1998, King Nut Company, whose contracts now included American, Delta, and America West, in addition to other carriers, supplied 250 million bags of peanuts to the airlines. The company built a 10,000-square-foot addition, which it almost immediately outgrew, that included additional storage space and converted a loading dock into a retail store. In 1999, it experimented briefly with storefront retailing. However, according to Michael Kanan in a 2000 Inside Business article, the "location was not good. We didn't get a lot of foot traffic."

A Major Provider of Nuts and Snack Foods in the 2000s

By 2000, King Nut Company had grown to become a major player in the lucrative airline in-flight snack market, several times larger than its local competitor, Peterson Nut Company. The latter had been owned by Fairmont Snacks Group since 1988. Some 60 percent of King Nut Company's business came from its snack sales to airlines. It employed about 100 people in its 60,000-square-foot facility and produced about 300 million bags of nuts, pretzels, dried fruit, and snack mixes annually. Sales had tripled throughout the 1990s. Still, the more visible Peterson Nut overshadowed King Nut in the minds of many northeast Ohioans.

In fact, Peterson Nut had been foundering since the early 1990s after being acquired by Fairmont Snacks Group. In the summer of 1998, employees complaining of low wages and poor working conditions at the company voted to be represented by the AFL-CIO. In addition to its union problems, Peterson was letting some of its accounts fall by the wayside, and King Nut readily took these over. Nevertheless, Peterson Nut continued to outstrip King Nut in catalog and fund-raising sales and at the local ballpark.

In the late 1990s, King Nut began to sell the front panel on its in-flight snack packages as advertising space. It reserved the back panel for its own branding information. The approach, which its creator, Los Angeles-based food broker Harvey Alpert & Co., called "brand in the hand," provided for a split in proceeds between King Nut and the airlines. Most often, the space was sold to Internet marketers that targeted the typically high-income, educated air traveler.

"Unlike watching a TV commercial, you can't walk away from this, when you're on an airplane, you sit there and eat the whole snack," Martin Kanan explained in a 2000 BrandPackaging article. Kanan estimated that his company's snack packages held air travelers' attention for at least 30 seconds, which was plenty of time for them to look at both front and back panels. In 2000, King Nut's front panels advertised the Weather Channel, the Winter Olympics, and Kenneth Cole. The company was now supplying in the vicinity of 300 million snack packages to the airlines each year.

In the summer of 2001, King Nut, with 98 employees, expanded its operations again, moving its edible nuts and snacks roasting and packaging operation to a building it purchased on Solon Road. In addition, the company also introduced resealable, stand-up pouches for its nuts, snack mixes, and dried fruits. It was also planning to increase its work force to 120 employees by the year 2009. However, after the terrorist attacks against the United States on September 11, 2001, the decrease in air travel led the airlines to default on their orders for in-flight snacks. King Nut, in turn, laid off close to 50 people that fall.

Once air travel started up again, the demand for snacks resumed and even increased. With the major airlines no longer offering in-flight meals, they instead turned to supplying passengers with additional snacks. King Nut, which in 2001 was the snack supplier for United Airlines, American Airlines, Delta Airlines, Continental Airlines, US Airways, Trans World Airlines, America West Airlines, and Southwest Airlines, began packaging not just nuts but nut mixes, pretzels, granola mixes, and breakfast snacks for the airlines.

Company Perspectives:

To be the best tasting, value-priced, fastest-selling supplier to the supermarket, drug, mass merchandise, vending, airline, food service, convenience store, soft serve, ingredient, gift, and private label industries—ultimately serving the consumer with the value added snack products we produce and supply. We will achieve our mission by having imagination and vision; challenging ourselves everyday to be the best and to always offer the better value.

In March 2003, Kanan Enterprises purchased Peterson Nut and Fairmont Snacks brands from the Peterson Nut Company of Cleveland, Ohio and added most of Peterson Nut's 30 employees. The acquisition meant expansion into the upscale gifts market and additional sales to grocery and convenience stores. It also brought with it the business of Jacobs Field, in downtown Cleveland, home to the Cleveland Indians, and a store directly across from the stadium.

King Nut's and Peterson Nut's combined markets promised a future of continued growth for the company. In 2004, King Nut supplied more than 500 million packages to most of the major airlines in the United States and several international carriers. Peterson Nut's retail business moved to a new store with four times more parking and signed a five-year lease on the space.

Principal Subsidiaries

Kanan Enterprises Inc.; Kanan Realty LLC.

Key Dates:

1927:
Charles Peterson founds Peterson Nut.
1934:
Peterson sells Peterson Nut to Don Kelling.
1937:
Edna and Earl Balliette found King Nut Company.
1988:
Fairmont Snack Group buys Peterson Nut.
1989:
Edna Balliette retires and sells King Nut to Kanan Enterprises.
2003:
Kanan Enterprises buys Peterson Nut and Fairmont Snacks and merges it with King Nut.

Principal Competitors

Diamond Foods Inc.; Frito-Lay Company; Kraft Foods, Inc.

Further Reading

George, Jim, and Jim Peters, "The 'Billboard' on Packages Yields Advertising Revenue," BrandPackaging , November 2000, p. 12.

Hitt, Jack, "Are Brands Out of Hand?" Fast Company , December 2000, p. 51.

Johnson, Terrence L., "King Nut Out of Its Shell: Father and Son Use Contracts with Airlines to Turn Sleepy Distributor into Booming Company That Has Tripled Revenues in Just Seven Years," Plain Dealer , June 21, 1996, p. 1C.

Sweeney, Shari M., "Working for Peanuts," Inside Business , June 2000.

—Carrie Rothburd



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