Snack Food Company of the Year: Kangaroo Brands.
Family-owned Kangaroo Brands, Milwaukee, strives for consistent quality and value when it comes to all things pita. Passionate about baking and snack production, Kangaroo uses quality ingredients to provide quality products, including its popular line of light, crunchy pita chips for retail and foodservice. It’s for these and other reasons that Kangaroo is our Snack Manufacturer of the Year.
John and George Kashou grew up eating pita bread. As chief executive officer/president and vice president, respectively, the two brothers own Kangaroo Brands, Inc., Milwaukee, and started out with a small retail bakery in 1979. The brothers wanted to bake “a better pita bread,” and came up with a way to cut pitas open to create “pocket” breads.
Even though they still consider themselves “the little guys,” today, they never imagined that their company would employ 150 people, operate two production facilities and become a national pita bread and pita chip supplier to supermarkets. In fact, the Kashous say since introducing their pita chips in 2007, Kangaroo has quickly gained market share and is now the largest producer of store brand pita chips in the United States and Canada.
Everyone asks, why the name Kangaroo? The answer lies in the pocket. “The pocket pita has the same unique feature as a kangaroo,” says Salem Kashou, John’s son and the company’s marketing manager. The pocket is also one of the family’s secrets to success.
“Finding the perfect pocket technology was how we started this company,” explains John. “We wanted to make a better pita with a better pocket, that would open consistently and easily without tearing. Easy-open pita pockets are Kangaroo’s trademark. Before we got into this business, most pocket breads in the industry had all kinds of flaws. The pita bread stuck together and could easily tear. So the technology and production systems we developed give us the ability to produce a consistent shape and a consistent pocket in the bread.”
The brothers moved into their present headquarters bakery location in 1986. There, Kangaroo currently produces more than 20 varieties of pita breads in white, whole wheat and multigrain varieties in several sizes. In late 2011, the company added frozen sandwiches to the product mix. Kangaroo then developed several all-natural pita products for retail and foodservice markets that have taken it nationwide. Soon, the pita bread plant tripled in size. The brothers added more employees and production equipment and recently developed and registered the tagline, “We Bake Really Good Stuff.”
Consumers like the pita breads so much because they’re made with healthful ingredients and they have reduced sodium (approximately 25% less than other pita chips per 1-oz. serving) and fat (40% less) and zero trans-fat. They also work well with many deli foods and salads. Packaged nested in resealable bags, the pocket breads are available nationwide in deli sections and salad departments.
Chipper about chips
But it’s another recently introduced product that has consumers clamouring for more: Kangaroo Pita Chips baked pita chips. Further developed from the pita bread concept, the tasty baked chip snacks won consumers over quickly. And consumers easily recognized Kangaroo’s price/value/quality factor. Every baked chip is light and crunchy yet sturdy enough for dipping without cracking. Suitable for snacking right out of the bag or used with various dips, the pita chips offer reduced sodium (approximately 25% less than other pita chips per 1-oz. serving) and fat (40% less) and zero trans-fat. The baked snacks are also generously sized at 1.25 x 2 in. per chip.
The explosive growth of the chip category prompted the Kashou brothers to open a separate 74,000-sq-ft. pita chip plant a few miles away from their headquarters site. Already expanded three times, the headquarters building, which has 55,000 sq. ft. of space, had no room left for another expansion.
Since the chip plant opened in 2007, Kangaroo has continued to double its production capacity. A former bagel factory, the plant sits on five acres of land with plenty of room.
“When we moved to our first big plant in Milwaukee in 1986 as young entrepreneurs, we thought it was a huge place compared to the little bakery we first ran,” George remembers. “We quickly outgrew it, however. We wanted our second plant to be close by when we decided to take it on, and it gives us plenty of room for expansion opportunities.”
The popular crunchy snacks include six basic stock-keeping units (SKUs) in bags from 1.25-30 oz. Flavors include Sea Salt, Multi-Grain Sea Salt, Multi-Grain Garden Herb, Zesty Cheddar, Garlic Herb and Salt ‘n Pepper. Additional flavors are in development. Shelf life of the baked snacks is guaranteed for at least 150 days to the first receiver.
In addition, after looking at how people eat snacks, the Kashous decided there’s a place for yet another baked snack chip made from corn and wheat in a single product. Last summer, they came up with new Corn-Fusion Crisps, which they say contain 40% less fat than fried corn chips. Launched at the International Dairy-Deli-Bakery show in June 2011, they come in two varieties: Chili Lime; and Sea Salt.
Cashing in on the chips
Kangaroo’s chip business has been averaging double-digit growth during the past several years and the company expects more growth to come. Available in various supermarkets and other retail outlets across the United States and Canada, the chips are also copacked for private-label customers and distributed to foodservice and industrial outlets, explains Salem.
“We are very happy with our market share growth and production in the pita chips category,” he says. “We continually post gains in our target areas. The breakdown of our products in terms of contribution to sales is pita chips, pita breads and sandwiches, which were just launched, but are growing rapidly.”
Salem admits that business has changed tremendously over the last five years. “We started our baked snack division about five years ago, and have been adding jobs and capacity since day one,” he points out. “Our progress is unmatched in the category,” he says.
“The pita chips line really usurped everything else we make so far,” George continues. “It was the right category at the right time to meet consumer and trade demand. The category is experiencing tremendous growth. We have seen that growth and garnered a huge share of private-label business across the country and in Canada.”
The pita chip plant, Kangaroo’s second production facility in Milwaukee, is equipped with three production lines. The plant is spanking clean and Kangaroo pays close attention to food safety. Each production line is outfitted with specialized machinery and systems including extruders, sheeters, cutters and other equipment designed and built in-house, primarily by a staff of mechanics and engineers led by John himself.
“We design and build most of our own equipment,” points out John, who’s engineering talents serve the company’s technical needs. “It’s one of our core strengths and allows us to bake products customers want and to build flexibility into our lines. We are currently committed to baked snacks. Our lines are segregated depending on the allergen.”
Both of Kangaroo’s plants have received an “excellent” rating on recent Safe Quality Food (SQF) Level 2 audits. The SQF Program is recognized by the Global Food Safety Initiative, and links primary production certification to food manufacturing, distribution and agent/broker management certification. SQF is administered by the Food Marketing Institute.
Currently, Kangaroo produces more than 100 SKUs. Its top-selling pita chip snacks are Sea Salt and Multi-Grain varieties.
It’s almost ironic that all of this has been going on despite the bad economy, Salem points out. “We added a second plant and all of this took place during an economic downturn, so was kind of incredible,” he says. “We always see ourselves as the little guy walking among the giants.”
Quality signature products
“Kangaroo is one of the few remaining family businesses in a food world dominated by giant companies,” observes George. “We like it that way, because we can make decisions that reflect our commitment to producing the highest quality and most innovative products in the pita category and beyond.”
Kangaroo pays close attention to value, and its competitors, which are national brands. “We think one of the reasons for our success is that we were able to introduce a new line of chips in hard economic times, and hit the market with a premium product at a value price,” says George. “We responded to retailers’ needs and captured a lion’s share of private-label business in North America.”
What also sets Kangaroo Pita Chips apart from the competition quality of the pita bread made from a family recipe. “To make a great tasting chip, you must start with really good tasting pita bread. That becomes the foundation,” adds George. Toasted immediately after baking to lock in a hearth-based flavor, the pita chips are then seasoned with sunflower oil and/or safflower oil and natural flavorings, which give them a pleasing taste and make them a healthy choice.
Another distinction from competitors is the proprietary bakery equipment the Kashous developed, which they believe is unmatched in the marketplace. “In addition, we have a well-groomed management team,” adds John. “We provided the base by which we operate, but the entire management team we have is really a good one. That’s important in terms of expansion and growth. We can’t continue to do things all by ourselves any more, so our focus in terms of growing sales, production and facilities is on pulling together and nurturing and growing the management group we have in place. Our team has been dedicated to our company for many, many years.”
His brother, George, echoes that statement: “We must give kudos to all of our employees. They are our most valuable asset. We have a great group of people who know what they’re doing and love what they’re doing. We’re very proud of them and wouldn’t be here without them. Recently, we created a reward program for the outstanding work they do.”
In general, staying nimble and being able to make wise decisions every day keeps the company ‘hopping.’
“We’re not afraid to rely on the entrepreneurial business instincts that got us here,” adds Salem. “While committee may work for others, we prefer our own way of doing business.”
Watching the emerging trends in the snack and bakery industries, the Kashous notice that that their core consumer, the health-minded shopper, continues to demand better-for-you baked snacks, with very clean ingredient lists at a value price.
“Economic shoppers also now realize there are premium products on the shelf at value prices,” says Salem. “And there’s a better understanding and sourcing out there and of unprocessed, natural ingredients. But the game-changing impact we see is top-quality store brands competing squarely with national brands. That’s where our pita chips have made a significant impact and realized significant growth.”
He continues, “More importantly, while we keep a close eye on certain trends, we don’t like to chase them. Instead, we prefer to be leaders in product innovation. We like to set the trends. It’s more fun to follow our own vision and to create products with our signature,” Salem adds. “We also have a top-level commitment to quality and safety, which guides all of our day-to-day business decisions.”
The Mediterranean diet movement and its healthful benefits have finally caught up with the Kashous’ way of living.
“We’ve been creating that kind of food since we were little kids, and had home-cooked meals each day,” says George. “At special events, the food would be incredible. So we know that kind of quality, healthy food, and are happy to see the Mediterranean way growing. We’ve been eating hummus, lentils and chickpeas long before they became popular. We like to see the trends toward healthier foods continue.”
And the gluten-free segment is another area we might be looking at, George adds. “We’re not a player yet in that segment, but we’re thinking hard about it. Gluten-free products would require a totally separate production facility, and would mean another plant expansion at our pita chip facility. Gluten-free production would have to be segregated from everything else because of the [wheat gluten] contamination issue.”
Kangaroo also has latched onto the popularity of multigrain breads and baked snacks as well as the “less-bread-is-more concept.” Adds Salem, “Our multigrain products have a really delicious profile, and we’ve been told [our pita chips] are one of the best multigrain snacks on the market. But we see trends in breads going thinner, with cleaner ingredients, less white breads and healthier whole wheat, multigrain breads. The trend started at the tail end of the low-carb fad, and it continues to grow.”
Adds George, “After all, pita is the original thin bread.”
To target new consumers and broaden its sales base, Kangaroo continually updates its packaging because it’s the most visible and important interaction with consumers. The matte opaque white finish of the metalized polyester pita chips bags has a fresh, clean appeal. The bags are color-coded according to flavor and pose a striking contrast against the myriad of orange, red, black and metallics in the snack aisles.
“We liked the clean look of the opaque white bags,” says George. “The bags have a natural look and you can easily locate them on the store shelf, because consumers want to get in and out of a store. You can’t miss our bags from 30 feet away.”
At this time, the company is gauging the products it has and won’t consider entering any more product categories just yet, because it just entered the frozen hand-held sandwich arena. “We have many new products and categories on the table at this time,” says Salem. “More will follow.”
So how does the company keep everything together while it’s going through some pretty heavy-duty growing pains? It all starts with the foundation, according to George. “Our products are based on our high-quality, great tasting pita bread. John and I grew up eating pita bread and we know what a quality pita bread should be. That was the whole basis on which we started our company.”
The brothers were only 27 and 28 years old when they began their business, he says. “We were just were naïve enough not to know anything about the food business and thought we could make a better pita and we did,” George says. “So we started out with a very high quality product base. You can toast and season it any way you like, but if you don’t have quality pita made the right way, the taste isn’t going to be there.”
John knew that the company made a great pita, so why not add pita chips to the mix? “If we make good quality bread, we thought, why can’t we make good quality chips and further extend pita into good, quality sandwiches? We have good recipes in producing breads, so that helped us move into other product segments and make them into quality items.”
The last three years have been exciting, though the bigger Kangaroo gets, the more critical it is to have the right management structure in place, George admits. “And we’re just about there. We have added many people at the top level, and a whole new quality assurance department that didn’t exist before. And we have a self-sufficient maintenance crew that can fix anything, with a production facility in place to meet demand. We never imagined we’d be getting multiple truckload orders from many customers like we do now.”
The company receives lots of consumer emails and letters, complimenting the products on their clean, unique flavor. “That’s really our reward and what we strive for,” George adds. “The unsolicited validation from customers who take the time to write us and say our products, especially our pita chips, are the best they’ve had, tells us we’re on the right track.”
George indicates that this is a major period of growth and growth of distribution for Kangaroo. In the future, John says that the company will continue to look for double-digit growth as it continues to expand distribution of its current products and develop new ones.
“It’s not easy to do, but with every indicator we’ve seen so far, we believe we can do it. As George puts it, the hard part seems to be over, and we have the right things in place. Now it’s just a matter of continuing to sell and grow our distribution.”