With Focus on Innovation, Kar’s Nuts Forms New Second Nature Brands Platform

What’s in a name? For Kar’s Nuts, shifting its Kar’s, Second Nature Snacks and Sanders Chocolate brands to a new corporate platform is less about what the company is called and more indicative of a new path forward. Now operating together as Second Nature Brands, the Michigan-based company plans to embrace a more trend-focused innovation strategy and pursue investments and acquisitions.

The rebrand and consolidation is aimed at creating a unified structure to house new products and brands but still capitalize on the capabilities of the company’s heritage brands Kar’s Nuts and Sanders Chocolates (which launched in 1933 and 1875, respectively). It’s a strategy that should allow Second Nature to more closely resemble an emerging, innovative brand, while still building on its experience, CEO Victor Mehren said.

The move comes after Kar’s Nuts, owner of the Kar’s brand and Second Nature Snacks, was acquired by private equity firm Palladium Equity Partners in 2017. Kar’s Nuts then merged with Morley Candy Makers, maker of Sanders, to create a salty snack and treat platform in 2018.

The name change was set in motion in the fall of 2019, when Mehren, a former Mars Wrigley executive who most recently served as COO for its U.S. confectionary business, joined Kar’s Nuts as CEO. At this time, Mehren said that Palladium and the company’s board decided to adopt an “accelerated growth agenda” driven by innovation, starting by expanding the company’s R&D capabilities with new equipment for processing and packaging and building out its sales and marketing teams. The last piece of the puzzle was the new name, which better reflects the company’s portfolio of products, mission and values, and new environmental efforts such as agroforestry and local beautification projects, he said.

“[The name] acknowledges that the products that we make all are sourced from ingredients directly from nature,” Mehren said. “But secondly, it also speaks to the instinct or a habit, the actions or behaviors who do in helping all of our stakeholders, whether it’s our team members, or our supplier partners, or customers, the community, or even providing back to nature itself.”

With the new name in place, the company is laser focused on innovation, particularly playing in the “intersection between treats and snacks,” two categories that Mehren noted have begun to blur together with ingredients like dark chocolate, fruit, and nuts often serving as crossover ingredients that unite the two. The company plans to launch 25 new items across its three brands this year, keying into trends like keto, plant-based and low-calorie indulgence with products like Second Nature Smart Mixes, Sanders Organic Dairy-free Sea Salt Caramels and Sanders Sea Salt Caramel Thins rolling out in the second quarter of 2021.

The company is relying heavily on consumer feedback to inform these new product launches, Mehren said, and has begun construction on a new Innovation Center located in Sanders’ Michigan facility to support this innovation push. The center, which will include a recipe development lab and consumer testing facility, will be operational in the second quarter of this year, Mehren said.

“It’s really part of our innovation ecosystem, where daily we’re making new recipes and new formats and then we can bring them right out to the store and get reactions and then quickly scale up,” Mehren said. “We either take them directly to the stores for sale, we put them online or we partner with one of our key customers to bring them quickly to market.”

With an existing retail presence in stores like Albertsons, Kroger, Walmart and Safeway, Mehren said the company now aims to connect more closely to its consumers, launching DTC platforms for Second Nature Snacks and Sanders Chocolate, and also selling the three brands on Amazon and its retail partners’ platforms.

Beyond its own internal R&D, the company is also looking to grow the platform’s product offerings through acquisitions, Mehren said. Ideal candidates would play in the snack and confectionary categories but in a “complementary way from our existing portfolio,” he said, offering the company new capabilities or new product formats. Mehren said the company doesn’t currently have a preference for company size, as long as it fits within its “strategic focus.”

The company has also added several new board members to help them with this journey, including Edmond Sanctis, co-founder and former CEO of Sahale Snacks, as the company’s new chairman of the board of directors. Mehren said Sanctis brings an “entrepreneurial mind and spirit,” as well as a culinary innovation skillset, while also lending an investor perspective as a partner at Reason Venture Partners. The company has also added Keira Krausz, CMO of health insurance agency HPOne and former CMO and EVP of Nutrisystem, to its board of directors to help support its direct-to-consumer business.

The key to Second Nature Brands’ success going forward, Mehren said, is its adoption of a “really unique type of model,” in that its century’s old legacy brands are operating in a way that allows them to be more “agile and lean” like a start-up when it comes to innovation. The focus now, Mehren said, is capturing and balancing the benefits of both sides of this approach.

“It’s the best of both worlds, where we’re reimagining our legacy brands and leveraging the scale of those while having a much more ‘emerging brand’ approach to our innovation,” he said. “It’s been a lot of fun to find that sweet spot between those two things.”