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Enjoying the fruits of our labors - smoothies are becoming America's favorite fast food.

No one can dispute that the world has changed a great deal in the last 10 years and so have the lifestyles of Americans. At MK Holdings we have been interested in trends concerning the healthful eating and other habits of the public that affect eating patterns. It is those trends, along with the great taste of our smoothies and yogurt, that has fueled the growth of our company into double digits over the past five years.

When everybody is so busy watching their fat and cholesterol intake, a change in their eating habits is not far behind. In fact, as a result of these trends, Entrepreneur Magazine in its December 1997 issue named smoothies as one of fastest growing industries.

At Miss Karen's, we developed a high quality frozen yogurt as our first product, some 25 years ago. Yogurt sales continued to be brisk, but we realized when the present management came into the company in 1994 that it was time to invigorate our markets by introducing new products.

In the 1990s, smoothies and juice bars were introduced at strip centers, malls and gyms. Starting primarily as a West Coast trend, smoothies have now spread Eastward and we're seeing aggressive growth throughout the country.

So what exactly is a smoothie? There's a lot of confusion in the category and you'll see a range of products calling themselves "smoothies." We define it as real fruit blended with fruit juice and either a dairy or nondairy base to make it creamy. The ideal smoothie has large quantities of fruit and a lush, non-icy texture.

We took two years to develop, test and introduce Frozen Fusion, our retail smoothie concept, into the marketplace. Our first location was at the Phoenix Sky Harbor Airport, and from there we have quickly spread and opened shops in Washington D.C., Philadelphia, Boston, and multiple locations in Phoenix. We are developing stores in the San Francisco Bay area, Los Angeles and Chicago. Within the next five years, we anticipate opening some 300 Frozen Fusion locations, which will be a combination of franchised and company owned.

Our goal at MK Holdings is to provide healthy fast food to people in a way that's convenient to their everyday routine.

This mission fits with the trends we see in the emerging market. Our customers work longer hours and are better educated about eating choices. They take advantage of our healthy fast food in a manner consistent with the way they want to eat.

With the launching of Frozen Fusion, Miss Karen's saw another opportunity that had yet to be tapped. This opportunity was addressed by Frutazza, a blended smoothie product that is geared to the foodservice sector. Our Research & Development Department developed a unique, proprietary formula for smoothies that the foodservice sector can offer which rivals those smoothies sold at juice bars.

Outfitting a juice bar/smoothie store can easily cost close to $200,000, making blended smoothies too costly and too labor intensive for most foodservice location.

For the institutional foodservice market (hospitals and corporate cafeterias, universities, colleges, schools and other venues) and quick-serve restaurants or full-serve restaurants, we developed a smoothie formulation that requires absolutely no mixing. With Frutazza, whether it goes into a blender or smoothie machine - you just shake and pour. In addition to its creamy texture, Frutazza contains large chunks of real fruit that people can see and taste.

Some estimates place annual smoothie sales around $340 million and growing. We estimate that there are 3,500 locations domestically that can support a viable long-term smoothie shop, making the opportunity in this segment of the food industry enormous.

To further fuel the growth, we have formed a number of strategic alliances that have been extremely beneficial in the areas of distribution, logistics and equipment. The Taylor Company has been our partner, supplying machines to our customers. This is something that we started with Miss Karen's and have continued with Frutazza. Next Generation Logistics, our logistics partner, has been instrumental in helping us ship frozen products expertly and efficiently. Our regional and national sales have been bolstered by strong relationships with a number of distributor partners across the country. Distributors can enter this new category by carrying Frutazza while generating good case sales with high margins.

One last factor, which has perhaps been the most crucial to our uniqueness and success, is the partnership we have formed with the Salt River Maricopa Indian Community. MK Holdings is one of eight enterprises owned by the Salt River Pima Maricopa Indian Community, and a portion of the profits go back into the Community to fund their social, educational and tribal programs. As a tribal enterprise, MK Holdings is a certified DBE/MBE company which has many advantages. Using a DBE/MBE company, distributors - as prime government contractors - can meet government requirements for suppliers and potentially obtain extra financial incentives.

In the last several decades, consumers have become better educated about what they eat and seek to eat healthier, more wholesome foods. These societal shifts have caused a chasm between what people would like to eat and what they actually eat. At MK Holdings, Inc., we're bridging this gap with thousands of Americans every day.
COPYRIGHT 1998 Frozen Food Digest, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1998 Gale, Cengage Learning. All rights reserved.

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Title Annotation:MK Holdings Inc.
Author:Buckstaff, Dan
Publication:Frozen Food Digest
Date:Apr 1, 1998
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