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A unique twist Featured

6:05am EDT January 27, 2006
Fifteen years ago, Kim Holstein was obsessed —with chocolate chip pretzels. The problem was that chocolate chip pretzels were hard to come by.

Holstein’s solution? Create a company that offers a variety of flavored pretzels not offered by most pretzel chains.

Holstein soon learned that starting a company was not going to be easy. But things started to look up when she met Scott Holstein, her future husband, at a book signing 12 years ago. He helped her get her idea off the ground and, in 1995, Kim & Scott’s Gourmet Pretzels was born. Shortly after, the couple got engaged.

The company grew at a modest pace but really took off after its products appeared on QVC home shopping network. Today, the pretzels are sold at a variety of locations, including bookstores, airports and coffee shops. Sales increased 468 percent from 1999 to 2003.

Smart Business spoke with Kim Holstein about how she turned her obsession into a career.

How did you and Scott start your company?
We started making pretzels in a studio apartment and came up with some different flavors and took them around to get feedback from coffee shops, bars, grocery stores and places like that. One thing just led to another.

How did you finance the company?
We started with a credit card and then put a business plan together and raised some financing from family and friends. Having the capital to grow has been a challenge.

We have been lucky that we’ve had products that people are really excited about and want to get. There is huge interest in our products, but it is really critical that we have the resources to expand to service our customers.

How do you get those resources?
In the past 10 years, we have had to be very creative. I think that having a can-do attitude and having a vision for growth ... is instrumental.

We have a wonderful banker who has supported us, and I think that is a critical component of building and expanding. We have also networked and really tried to seek out people who could support us, whether it’s getting leasing support, terms with our vendors, etc.

How did you expand your staff as you began to grow?
It happens over time. It’s getting the support we need to get the equipment in place and to get the people in place and being smart about it. It’s not hiring too many people. It’s hiring the right amount of people to get the product made that we need.

How did you get stores to agree to sell your product?
It has been pretty easy. The product sells itself. People are always looking for a unique alternative to a bagel or even a sandwich.

We used to just have different flavors inside the dough and on top, and then we started (filling) them with a stuffing in the middle of the pretzel. It really created a meal out of the pretzel. We compete against sandwiches and other meal options. They are a great alternative.

How did you get onto QVC?
QVC found us through a product search. It started when the Illinois Department of Agriculture sent us a letter saying that QVC was looking for products if we wanted to fill out an application. We did that and then QVC called us to the Mall of America in Minneapolis to show our products.

It turned out it to be an event called a product search where they get thousands of people to come and show their products and do a demonstration. We did that and they loved our products. Probably six months after that, we were on the air.

How did that appearance influence your business?
It’s had a huge impact. Before QVC, a huge percentage of our business was with one customer doing more private label business. We transformed our business to be more diversified with more branded business.

QVC sells to individual customers on TV, so it has had a huge impact on building our brand and helping us as we position ourselves as a national consumer product brand.

In what other ways are you building your brand?
We just opened our first caf, our own branded caf. It’s called Kim & Scott’s Pretzel Bakery and Twisting Caf. It’s at the Kohl Children’s Museum.

It’s a great opportunity for us to offer our pretzels, and we also introduced PretZiolas, which is a pretzel sandwich. We have signature salads and pretzel croutons. Kids can twist their own pretzels.

It’s really taken our brand and our products to another level.

HOW TO REACH: Kim & Scott’s Gourmet Pretzels, (800) 57-TWIST or www.kimandscotts.com