A ‘game-changer’ for Giant Snacks - Sunflower seed company hit by lack of sports & travel

Tom Young, Pierre, S.D., farmer, in 2019 was able to plant about 1,300 of 1,500 acres of sunflowers. He typically markets on a “base contract” for Giant Snacks and others, which leaves some seed for marketing in the open market.

The COVID -19 pandemic has disrupted outdoor activities ranging from Major League Baseball to summer youth athletics to road trips and trucking.

That’s been a “game changer” for Giant Snacks Inc. and its single roasting and packaging plant at Wahpeton, N.D. Giant Snacks is one of the region’s most visible players in sunflowers, one of the Upper Midwest’s iconic specialty crops.

Approximately 75% of the sunflowers raised in the United States are grown in the states of South Dakota, North Dakota and Minnesota. Typically about 75% of the annual sunflower crop consists of oil-type varieties. About 25% are confectionery, the striped types used in snacks.

The 24-year-old Giant Snacks company sells its “GIANTS” brand sunflower seeds and other snacks in 44 states (except the far Northeast) as well as Canada, Mexico and South Korea.

Business has grown steadily over the years. Annual sales grew by 20% in 2019. Quarterly sales were up 70% early in 2020.

“And then COVID hit,” Jason Schuler said.

Family entrepreneursThe Schuler family have a business tradition. Jay Schuler, 67, founded the company as Giant Snacks Inc., in 1996. Jay’s father, Robert Schuler in the 1970s had been in the sunflower processing business, with Sigco Sun Products. Jay, who had started crop breeding companies Sigco Research and Seeds 2000, formed the company as Giant Snacks in 1996.

Jay remains on the board of directors. His sons — Jason Schuler, 44, and his brother, Robert, 41 — are leading the company day-to-day.

In 2002, Jason was studying at the University North Dakota. He left Grand Forks to intern at the family business and never quite finished his degree. Robert, who also studied at UND, joined the company in 2007. They work interchangeably.

In Jason’s first years, the company sold 130,000 bags of seeds, at about $1 a bag. Today, they package about 200,000 bags a day.

As the story goes, things took off when the Schulers approached Minnesota Twins management about whether Giant Snacks could “sponsor” the team or put the baseball logo on the snack packages.

“At the time, we were just breaking into the Minneapolis market,” and this connection “made our company looked more legit,” Jason said.

Dave St. Peter, president and chief executive officer of the Minnesota Twins and a University of North Dakota alum, and Chad Jackson, senior account executive, were key to this success.

Five years later, the New York Yankees came looking for seeds, and today GIANTS are found in 28 out of 30 Major League dugouts.

“It’s great public relations” for baseball fans to “see players with a bag of GIANTS sunflowers in the dugout,” Jason said. “It’s made here in North Dakota. I think that’s really cool.”

‘King’ and courtAmong Jay’s innovations was to develop what was known as “jumbo” seeds for the U.S. market, the ones that would go over a 22/64th inch round hole screen. Up to that point, the traditional sunflower seed snack market was dominated by the stubbier (18/64 to 20/64 screen) seeds sold by other established snack companies.

People seem to prefer the bigger seeds, Jason said, in part because they’re perceived to be easier to crack open, and in part because they provide a “fuller meat,” to eat. Today, more than half of the confection market in the U.S. is the large-sized seeds.

“Roasted and salted” was the only flavor Giant Snacks made for the first seven or eight years.

That’s still “the king,” but Giant Snacks has a “court” of six other flavors, including “dill pickle” and “salt-and-pepper” flavors.

“We’re always looking for new ideas,” Jason said. “We kind of look at the trends, nationally, about what we’re going to do.”

About six years ago, many of Giant’s distributors started asking for pumpkin seeds, and then pistachios. Today, 30% of Giant’s snack foods are other than sunflowers.

Twin challengesGiant Snacks dealt with a 2019 production nightmare and now a market demand shock in 2020.

The company historically has used U.S. seeds only, with growers from the Red River Valley, to Minot, N.D., to Wyoming and Pierre, S.D. Because of excessive, untimely rain last year, seven out of nine contract growers couldn’t make the company standards.

Tom Young, Pierre, farmer, in 2019 was able to plant about 1,300 of 1,500 acres of sunflowers. He typically markets on a “base contract” for Giant Snacks and others, which leaves some seed for marketing in the open market.

Excessive rains last spring delayed 2019 planting. Cloudy, cool weather reduced growing-degree days and delayed maturity. Young was able to finish a harvest that ran to Thanksgiving, but the seeds came in at about 13% moisture, instead of the 10% needed for contract. He conditioned the seed and air-dried it through spring, but that added up to 70 cents per hundredweight to his costs.

For some, wet conditions led to sclerotinia disease.

“For the time ever, we had to import sunflower seeds,” Jason said. “We got most of our sunflower seeds from Bulgaria,” he said.“That was expensive. We’ve never dealt with ships. We’ve always dealt with semis.”

As a result, about 70% of the seeds sold this year will be imported. That should change back in 2020, as the company has increased contracts slightly to about 4,000 acres.

In 2020, Young planted the sunflower crop on time. The young sunflower seedlings are doing well but would benefit from timely rains until they can access subsoil moisture.

“We think things will bounce back,” Jason said, noting that seeds can be kept fresh in storage safely for a few years.

And then, the pandemic.

The impact of COVID-19 started sinking in on March 12, when the NCAA announced it would cancel its Division I men’s and women’s basketball tournaments. Jason remembers hearing the news while traveling for business in Wisconsin. He immediately knew shelter-in-place rules would mean no travel.

“If people are not traveling, they’re not buying gas,” he said. “If they’re not buying gas, they’re not buying products in the convenience store.”

Convenience store sales account for up to 90% of Giant Snacks sales. Today, Giant brand appears in most of the major convenience store groups. PetroServe USA, based in West Fargo, N.D., and the Simonson stores, based in Grand Forks, N.D., are big distributors.

Sales declined more than the company expected but are rebounding, Robert said.

April 2020 sales were down 60% from April 2019. But May sales picked up and were down only 15% and June looks to be only 5% less than last year. (Internet sales, run by their uncle, Tom Schuler, have increased but remain a small part of the whole.)

Things started perking up, first in Texas, Oklahoma, Nebraska and Iowa. That has meant the company could continue employing about 30 people in a community that includes Wahpeton, N.D., (population 7,700) and Breckenridge, Minn. (population 3,200). The company has had to cut hours but didn’t have to lay anyone off.

Jason and Robert said they think the COVID countermoves are a “big overreaction,” and Jason hopes that “for the mentality of the human race, we need to get back to normal.” That means outdoor activities, including fishing, kid games and sports.

“People want to do something,” he said, adding, “They’ve just got to get outside.”

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