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Kinnikininnick FoodsDaniel Wood

Despite a tough-to-pronounce name (kinnick-inick), this low-profile, family-owned company has long been the salvation for gluten-averse consumers starved for baked products that taste like their wheat-laden counterparts.

Launched in 1991 to service a farmers' market customer base, the company was christened Kinnikinnick by its founder, Ted Wolf von Selzam. He borrowed the historic word from the stories of Algonquin natives, who used it to refer to a concoction of tobacco and wild bearberry leaves that they used to treat a host of ills, both spiritual and physical.

When Jerry Bigam and his wife, Lynne, purchased half of Kinnikinnick in 1997, the business took off after the couple's son Jay suggested they use the Internet to expand sales. (The Bigams took over the company in 2005.) When the couple first bought in, the potential scope of the slow-growing gluten-free market was unclear. Both Lynne and Jay had been diagnosed with Celiac disease—an autoimmune disorder in which gluten causes the immune system to attack the small intestine—but health officials thought that only about one in 5,000 North Americans had it.

The Bigams' success with online sales, though, helped to confirm their hunch that the number was actually much higher. By 1998, their online sales of gluten-free perishable foods, which Kinnikinnick could deliver overnight anywhere in North America, made up 80% of revenue. Even more critical to their success than their tasty products (often the toughest hurdle in the gluten-free sector) was Jay's computer programming wizardry. After 9/11, the United States Food and Drug Administration forced companies to file "prior notice" documents for every food item that entered the country. Kinnikinnick would have needed 16 people labouring 24 hours per day to keep up with the paperwork, but Jay was able to design a work-around program to automate the process, saving the company from shutting down sales to the U.S.

More daunting hurdles are on the horizon. The booming gluten-free market that once delivered 30% annual sales increases—the U.S. market alone has grown from $100 million in 2003 to an estimated $2.6 billion in 2012—has attracted a flood of competitors in the past two years, and sales growth has shrunk. The challenge ahead for Kinnikinnick, which won an unsolicited seal of approval for its pancake mix from star chef Rachel Ray this year, is to keep from getting stale.


Employees: 200 People who have Celiac disease: 1 in 133 Year that Kinnikinnick launched online sales: 1998 Figures in the company's annual sales: 8 Company sales in U.S.: 65% Square feet in its production space: 150,000


Lessons Learned

1. Find a niche. "If you're a commodity, you're going to be in real trouble," Jerry Bigam says. "You've got too much competition."

2. Innovate—constantly. "If you only have one or two products, it can be a real chore getting into a major chain, says Bigam. His company sells about 30 products.

3. Invest in logistics. "One of the main barriers to market entry is getting products positioned at reasonable prices. Maximizing efficiency in transportation is key."

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