Locally-made fudge has turned out to be a great way to raise funds for youth groups and others and it keeps a three-generation business busy. Klein Foods has been successful in Marshall and is also popular in 39 states.
After becoming one of America’s best known manufacturers of locally based honey products, the Klein family of Marshall has gained national success for its wide assortment of fudge.
They branched out into fudge manufacturing as part of the establishment of the Walnut Grove Mercantile next to the Minnesota Highway 23 bypass in 2001. The mercantile was designed as both a gift shop and a manufacturing facility, one that could easily accommodate locally-based food production.
Owner Steve Klein, a 1971 graduate of Marshall High School and 1975 graduate of Southwest Minnesota State University, said the inspiration for a fudge product line began with a recommendation from a regular honey customer. While the honey business was still located at its former site, which was part of the block now occupied by the Marshall Area YMCA, the customer recommended trying to enter the fudge market.
“I hadn’t thought about it,” Klein said. “The more I checked into it, the more I thought fudge had potential. It’s involved some of the same food production basics as honey products.”
At first the fudge venture had only a handful of flavors that were produced at a rate of about 10 to 12 pans a week. The first fudge was sold at the mercantile along with gifts that reflect a regional theme such as books, games, home decor and an old-fashioned candy counter.
While fudge remains an important gift shop item 18 years later, direct sales now account for only a small percentage of Klein’s fudge income. Most of the fudge produced in 2019 goes to customers located in 39 different states.
“I’m amazed by how much it’s grown,” Klein said. “Whenever we’ve scaled up, we’ve continued to see additional demand.”
He said one of the marketing factors that’s worked in favor of fudge manufacturers is the appeal of chocolate as a luxury but also as something that’s affordable. It lends itself to a variety of special occasions like Valentine’s Day, anniversaries and birthdays.
One of Klein’s greatest sales successes involves nonprofit organizations that want to raise funds by earning a portion of fudge sales in return for distributing the product directly to individual customers.
He first began to work with that concept when the Rev. Jeremy Kucera, a former pastor of St. Edward Catholic Church in Minneota and St. Eloi Catholic Church in Ghent, asked if his youth group could raise money by selling fudge.
Since then other youth groups, schools, colleges, churches and hospitals have chosen the same fundraising opportunity. Their business accounts for about half of Klein’s total sales volume.
He said one of his biggest non-profit accounts is the Marshall High School band program, which has sold about $150,000 worth of fudge altogether. The program’s sales share has gone toward expenses such as travel to national competitions.
As a result of overall market demand, fudge production now totals about 100 pans each day. Seventeen employees are responsible for making fudge in accordance with state and federal food handling regulations.
It takes about half an hour to handle prep work for a new batch. Another 90 minutes are needed to make fudge in large kettles and then transfer it to individual pans.
After the pans are prepared, they’re placed on racks where they sit overnight until they can be packed for shipments.
“It’s structured as a 24-hour system,” Klein said. “We finish one batch and then move on to a new one for the next production day.”
The choice of flavors has grown along with the volume. Customers generate new ideas through a yearly contest, one that consistently leads to creative concepts. Only a small percentage of flavors are available at the store counter at any given time, but by using a rotation regular in-store customers have a variety along with the chance to choose fudge that matches each season or holiday.
The Walnut Grove Mercantile continuously looks for ways to offer the best possible flavor, texture and visual appeal. The process has shifted from recipe basics toward finishing touches as the fudge sales have grown.
“It takes time for a new food business to arrive at what seems like the best possible recipe,” Klein said. “It takes a lot of tweaking and taste testing to reach that point. Now almost every change is for added visual appeal. Details like chocolate swirls or sprinkles can sometimes create more interest.”
The fudge business is often influenced by its supply side. Klein has found that cocoa derived from the cacao bean is one of the biggest variables in production costs and pricing.
Only very large companies such as Cargill and Nestle import cacao beans to produce their own cocoa. The rest of the cocoa is imported mainly from African countries along with some from South America. The availability is sometimes affected by events such as the civil war in the West African nation of Sierra Leone.
“It’s a main reason why candy bars cost more at vending machines, and why the size often gets reduced,” he said. “The only way to counter supply factors is by having products with the kind of quality that earns a good reputation among consumers.”
Past success with the honey business, which Klein originally ran with his father Ray Klein, is displayed in the Walnut Grove Mercantile’s office area. The Kleins have won 16 national championship awards from the American Beekeeping Federation.
Ray began the business in 1951 with the name Klein Honey Farm. It was given a new name, Klein Foods, in 1992.
Joette Remme of Ghent, who started at the Walnut Grove Mercantile and now works as a counter salesperson and bookkeeper, said she sees on a daily basis how people from Marshall and a wide surrounding area will stop at the store for freshly baked fudge.
“It’s sometimes the main reason people stop,” Remme said. “They’ll pick up fudge and usually also check out the other store items.”
Klein’s son, Nick Klein, moved back to Marshall about 18 months ago to be part of the Walnut Grove Mercantile. He intends to at some point take over management of the business from Steve and his wife Kay, which will make him a third generation manufacturer.
“I’ve always wanted to run a business,” Nick said. “I especially was interested in this one because of family ties. It goes back to when I used to help out as a kid. I look forward to our future opportunities.”