Low-tech NitaCrisp snatches piece of snack market

When the Colorado region manager for Texas-based Whole Foods Market took a stroll through a Fort Collins farmers’ market two summers ago, he stumbled upon a booth run by Paul and Nenita Pellegrino.

He sampled NitaCrisp, the deliciously simple flatbread snack cracker that the two had invented in the course of running their catering business, All Occasions Catering of Fort Collins.

He liked it. In fact, he liked it enough that he asked the Pellegrinos if they could supply enough for six Whole Foods stores in Colorado and 14 in Texas.

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It was a turning point for a business that the Pellegrinos, in the beginning, never intended to take to the mass market now hoping for a share of the $3.7 billion U.S. market for snack crackers.

“This all started with our catering business,´ said Paul Pellegrino, who shares with his wife the 2005 Bravo! Award for emerging entrepreneurs. “We produced this specialty cracker just for our use. Then people started asking where we got them.”

Nenita Pellegrino began making the crackers by hand in the kitchen attached to the family’s northwest Fort Collins home in 1996.

Demand from catering customers during the next five years resulted in a scattering of random sales, but the couple refrained from moving their product into retail stores, focusing instead on their core All Occasions business.

But when the economy tanked following the terrorist attacks of September 2001, the Pellegrinos had to change their strategy. Their catering business dropped by a third, and they turned to humble NitaCrisp to help prop up their family income.

“After 9-11, we had two years of declining business, and we were looking for supplemental income,” Paul Pellegrino said. “We started going to the farmers’ markets. People there were pretty receptive, we found.”

Step one was to give the simple, no-name cracker a brand. It began with word play in the couple’s kitchen.

“Nita and I just kicked it around,” Pellegrino said. “Need a cracker? Nita Crisp! It just stuck.”

The first market for NitaCrisp was strictly local. Two Old Town outlets – the Fort Collins Food Coop and Beaver’s Market – were the first to put the crackers on their shelves. Paul and Nenita also forged piggyback relationships with Bingham Hill Cheese and New Belgium Brewing Co., both of which feature NitaCrisp in retail stores and tasting rooms.

Ingredients in NitaCrisp, and the nutrition numbers posted on the package, are the reasons natural-food retailers Whole Foods and Wild Oats have embraced the product.

Two flavors – traditional and spelt – combine flour, soybean oil, sesame seed, yeast, sugar and salt. Fat? Almost none. Calories? Eat all you want.

With Whole Foods and Wild Oats on board, the Pellegrinos were suddenly faced with a new wrinkle in their business. For years, getting their product to market meant loading a catering van for a drive across town. But by 2004, NitaCrisp’s destinations were as far-flung as Houston and Seattle.

The U.S. snack-food industry is populated by some of the biggest consumer product manufacturers in the world. Nabisco and Keebler, for example, together lock up 60 percent of the snack-cracker market. And crackers that retail stores stock on their shelves are almost always the products of a technology-driven, automated process.

NitaCrisp’s production system is about as low-tech as such things can get.

“I started with a manual pasta maker,” Nenita Pellegrino said. “It was all done by hand.”

It still is. While an electric roller squeezes out uniform, flat sheets of dough, every other step in the process is hands-on.

It’s part of the product’s market positioning, Paul Pellegrino said.

“We’ll never automate,” he said. “We think our idea of building jobs and keeping it handmade is the key to our success.”

The cracker venture employs a full-time sales manager, a production manager and a customer service representative and six part-time workers.

NitaCrisp also provides jobs for developmentally disabled clients of Foothills Gateway in Fort Collins, who package and ship the product.

“We’re handmade. We use local ingredients wherever possible. We’re creating jobs for disabled people,” Paul Pellegrino said. “This is a community cracker. It’s a cracker with a cause.”

Tom Hacker