Hicks on Biz: Local bakery grows into gluten-free juggernaut BY GRAHAM HICKS FIRST POSTED EDMONTON SUN: FRIDAY, JULY 21, 2017
How did a tiny Old Strathcona bakery become North America’s second-biggest producer of gluten-free baked goods?
Ten semi-trailers a week roll out of Kinnikinnick Foods’ mega-bakery just off the Yellowhead Trail, bound for 65 distribution warehouses and 15,000 grocery stores.
Simultaneously, Kinnikinnick loads its gluten-free bread, cookies, donuts, buns and bagels onto giant pallets heading to Europe on KLM’s non-stop flight to Amsterdam. A distributor whisks the pallets to Kinnikinnick’s British distribution centre.
An Internet-sales office handles online orders, ensuring quick delivery the world over.
How did Kinnikinnick overcome distance-to-market and labour costs?
How did the company succeed in a world of highly competitive corporate food giants? It currently has 160 employees and grosses over $25 million a year in sales.
Why does it make all its products in Edmonton? Why hasn’t the Bigam family cashed out and sold Kinnikinnick to a big corporation – as happens so often with Edmonton-founded companies?
Joining forces with founder and baker Ted Wolff Von Selzam in 1997, President and CEO Jerry Bigam came to Kinnikinnick with a major skill – big-time business experience. With partners, he had previously co-founded Alberta agri-food companies Ceapro and Westcan Malting.
Jerry knew about the benefit of gluten-free baking. His wife Lynne was celiac – her digestive system allergic to the gluten in most grains and cereals. The only place they could find gluten-free bread was at Ted’s bakery.
“It was terrible bread,” says Jerry, “but it was the best gluten-free you could buy at the time.”
Bigam foresaw gluten-free growth: 1.5% of western world population has gluten allergies. He knew the big bread-makers weren’t interested. For them, the market was too small for the effort involved.
At the same time, Jerry’s son Jay had researched opportunities on the then-brand-new Internet.
Kinnikinnick created the first perishable-food sales website in the world. Orders poured in. Celiacs, who cannot eat any food with gluten, finally had an alternative.
Jerry negotiated a deal with a North American delivery service – filling excess cargo space on aircraft leaving Edmonton at a serious discount. “That deal allowed us to have a competitive sales price. In the early ‘00s, almost all our sales were to online customers.”
Plus, as Jerry had sensed, gluten-free was becoming a trend. “More and more (non-celiac) customers were saying they just felt better going gluten-free.”
The biggest health-food distributor in the USA, United Natural Foods Inc., came to Kinnikinnick cap-in-hand, asking to distribute its products. “Having our bread in all those health-food stores gave us brand recognition,” says Jerry. "Sales shifted from the Internet to retail."
Just as Kinnikinnick was outgrowing its small plant on the South Side, a mega-food company went bankrupt. Its giant (120,000 square feet, acres of land) commercial bakery in Edmonton had to be sold.
“It was a helluva deal,” says Jerry of the 2005 expansion, the same year Wolff Von Selzam sold his interest to the Bigams. “Our manufacturing capacity grew five-fold but it took six months to decontaminate the plant. We’ve grown by 25% to 30% every year since and we still have space.”
Along the way, Kinnikinnick has faced competition – specifically an American company out of Colorado. “Udi’s had a better gluten-free product and big volume,” says the straight-shooting Bigam. “We were forced to improve and expand – we set up our first product development centre.”
Today, Kinnikinnick is pivoting from being gluten-free to being almost all-allergy safe.
Its slogan will change from “gluten-free never tasted so good” to “free from”.
All Kinnikinnick products will soon contain no gluten, dairy, nuts or soy. Kinnikinnick breads will also be free of any GMO (genetically modified) ingredients.
Free from, explains Jerry, expands the potential global market for Kinnikinnick baked goods from the 1.5% gluten-intolerant to the 4.5% with serious food allergies.
Products meeting these dietary restrictions could have vast new markets – like China and the European Union. And, as Jerry notes, the gluten-free “fad” is gently subsiding.
“We have to modify the composition of our popular products. But we’re uniquely positioned. Our bakery is at the highest level of food safety in the world. Very few commercial bakeries can be as “free from” as ours. We have brand recognition, we’re trusted. At the plant, we have room to grow.
“The only possible allergen we still have to include is eggs,” says Jerry. “We can’t do without eggs.”
Jerry’s advice to Edmonton entrepreneurs starting off: “Find a specialty product. If you are generic, you will be slaughtered. Cooperate within your industry. In Edmonton 10 food companies work together to ensure efficient freight transport. A full truck leaving Edmonton for the USA means a transport price of $350 a pallet – a partial load means $800.”
As for selling …
“We’ve had offers,” shrugs Bigam. “Why? As a private, family-owned company we’re not beholden to investors. We can manage growth on our own terms. Celiac disease runs in our family. We’re doing some good in this world.
“Besides,” he says with a grin. “It’s all kinda fun!”