Pet food manufacturers expanding in Minnesota - Finance and Commerce

August is shaping up to be a big month for furry friends in Minnesota as two pet food companies plan to launch projects that will bring a combined 330,000 square feet of new manufacturing space to Delano and Little Falls.

Tuffy’s Pet Foods, a subsidiary of Perham-based KLN Enterprises Inc., will officially break ground Wednesday on a $60 million, 170,000-square-foot pet treat manufacturing plant at 141 McKinley Parkway in Delano.

The project, which represents the company’s second major expansion since 2015, promises to create 150 jobs for the city of about 5,400 people, said Charlie Nelson, CEO of Tuffy’s and KLN Family Brands, and a third-generation leader of the family-owned company.

Also in August, Brainerd-based Barrett Petfood Innovations plans to kick off construction of an estimated $20 million, 160,000-square-foot facility just north of Highway 27 and east of Highway 10 in Little Falls.

Jon Radermacher, Little Falls’ city administrator, said the Barrett project will deliver about 85 jobs to the city over two years. On average, the jobs pay $15 per hour and come with company-paid health benefits, he said.

“We are very excited about this. We have found the Barrett family to be a great employer, very good to their employees, and they provide a high-quality product,” Radermacher said in an interview.

In support of the project, the Little Falls Economic Development Authority is providing $350,000 in gap financing. The city is also kicking in about $673,000 in tax increment financing over nine years, Radermacher said.

Radermacher said the city did “major infrastructure improvements” to the project area to make it shovel-ready for new development.

As for the Tuffy’s project, the Delano location is appealing in part because of its close proximity to transportation infrastructure and a strong workforce, Nelson said. The site has good access to Highway 12 and a major metropolitan area.

While Perham is roughly 180 miles from the Twin Cities, Delano is only about 30 miles outside of Minneapolis.

“There are more jobs than people in our community [Perham], so one driving factor in choosing a different location was as simple as workforce,” Nelson said. “We weren’t interested in robbing Peter to pay Paul. We felt the best thing to do was look elsewhere for our pet treat facility expansion.”

Nelson added that the city of Delano was “very hungry for business. We got a fair price for the land and the city was very open to working with us.”

Delano Mayor Dale Graunke said he welcomes the Tuffy’s project. At least two other major businesses, Landscape Structures and Randy’s Environmental Services, are also expanding in the city, he noted.

“If you have more people working here, that means people are buying gas here, groceries, moving here, renting here. That is a great ripple effect,” Graunke said.

Scheduled for completion in November 2020, the project comes four years after Tuffy’s completed a $70 million, 130,000-square-foot manufacturing facility in Perham. The company employs about 500 people in Perham, Nelson said.

Both projects tap into a bourgeoning pet food industry.

U.S. pet owners purchased $27 billion worth of dog and cat foods in 2018, up 4 percent from the previous year, according to a January 2019 report from Packaged Facts, a market research firm. Industry trends include growth in online sales and products that promote a pet’s overall health.

“It’s a hot sector now,” Nelson said. “You are seeing a lot of private equity people getting in. We are family-owned with no interest in selling.”

Tuffy’s is named after Darrell “Tuffy” Nelson, who owned a Perham-based feed company called Pine Lakes Feed. Nelson and his son, Kenny, got into the pet food business in 1964, according to the company’s website. Charlie Nelson is Kenny’s son.

KLN Enterprises, the parent company, was founded in 1995. KLN divisions include Tuffy’s and Kenny’s Candy & Confections. Between 1996 and 2007, the company branched out with new products that include dog treats, organic pet food, and Wiley Wallaby Australian Style Liquorice.

Pet food manufacturers expanding in Minnesota - Finance and Commerce

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