How Acquisition Entrepreneurship Turned Country Archer Into One Of The World’s Fastest Growing Brands
Entrepreneurship is often about celebrating the founder. Names like Phil Knight, Steve Jobs, and Elon Musk can’t be separated from mentions of Nike, Apple, and Tesla. But there is a different sort of entrepreneur that made companies like McDonald’s a household name. They were able to identify an existing company with untapped potential, acquire that business, and then lead it to tremendous growth. It is called entrepreneurship through acquisition or ETA for short. Eugene Kang is just that type of entrepreneur. Kang is the CEO of Country Archer, a business that he bought for $500,000 in 2010 and over the last decade, has grown into one of the largest jerky companies in the world. I sat down with Eugene to talk about his journey, how retail is changing, and the challenge of driving innovation in a category.
Dave Knox: Entrepreneurship runs in your blood. What was it like growing up surrounded by that?
Eugene Kang: My parents are immigrants from South Korea. They migrated here in the '80s. The first business that they got into was retail. It's the easiest business to get into when you're an immigrant with English not being your primary language. So my father first opened up a gas station when he was like 18 years old and as early as I can remember I was working at the gas stations and convenience stores learning the ropes of the business at an early age. Wherever there was an opportunity, my parents moved. We were always mobile and never stayed stationary in one area. Entrepreneurship was just learning from my folks and seeing the small business run through them.
Knox: What lessons on entrepreneurship did you learn from working with your parents in those entrepreneurial endeavors?
Kang: Obviously the big relevancy for Country Archer is the convenience store formats. Early on, I was doing a lot of stocking the shelves and saw so many brands sort of evolve throughout the store. Whether it was Gatorade buying Propel and you start seeing the bottle look like Gatorade bottles, or it's Coke buying Vitaminwater. I remember when I first saw Pop Chips coming into the stores. Seeing the evolution of brands and categories within the C-store format was my early experience and exposure there.
Knox: Country Archer is a different journey from other brands were the entrepreneurs started it from scratch. What was the origin story of discovering the brand and buying the business?
Kang: How we came across the brand was a little serendipitous. In 2010, we were on a road trip up to the Grand Canyon and my partner and I stopped at this small roadside stand. It had this billboard on the freeway that said "Fresh Jerky" so we stopped by since for me, jerky is nostalgic with road trips and going to national parks. It was a husband and wife just selling bags of jerky in a plastic bag with a sticker label slapped over it. It's no preservatives, all natural, and I thought just way ahead of its time because I was so used to those chemically laced sort of gas station snacks that everyone kind of grew up on.
The first thing I asked is where are you guys making this? They were very transparent and said "no, we buy from the small little plant out in Southern California called Country Archer.” I immediately tracked the owner down, and turns out he was a 80 year old gentleman, butcher by trade, Italian heritage. He kind of grew up in the art of making meat snacks. He had this little 2,000 square feet facility in Grand Terrace, and he was primarily a co-packer. He was making it for all these little small roadside mom and pop stores throughout Southern California.
He had no succession plan, and we kind of said, "Listen, I think this product is way ahead of its time. I think this deserves to have a more national presence. Let's talk about maybe buying you out." He was obviously very interested because he wanted to retire. So that's kind of how it started out.
Knox: How did you go about not only buying a company, but then going figure out how to take over this artisanal trade?
Kang: First things first, I needed funding. We bought the business for half a million dollars, property included. The business was doing maybe $50,000 a month and it was all all co-packing. With property and tangible assets, it's so much easier to get a commercial loan from a bank than starting something from the ground up. But I was still in my early 20s and wasn't sure what I wanted to do with my life, but I knew that school wasn't it for me. I went to my parents and said, "Listen, I can get a commercial loan on this business, but I need some down payment. Can you help?" They looked at me like I was half crazy, but they knew that it was serious. And being that my father came as an immigrant to the country and he understood that entrepreneur pathway, and he said, "Okay, I'll support you with this." He gave me $50,000 and my partner put in $50,000, and we went out and got a commercial loan.
So with that we bought the co-packing business but with the intent that we really wanted to push the brand at some point. In the two years after we bought the business, it started morphing into effectively two businesses. We were no longer just a manufacturing business, but now we had this huge sort of effort to push a brand. At some point we were just not interested in co-packing for these small mom and pops, but really pushing more of the branded side.
Knox: How did you make that decision to walk away from the revenue of co-packing to invest in building your own retail brand?
Kang: We phased the co-packing out over time. Co-packing was effectively paying the bills. And so when we first launched Country Archer, we didn't have any sales. It was literally me going in the back of my trunk and just going around to local stores and selling it. And so it was really tough to sort of feed off that revenue entirely. It was a little bit of a phase out process but we were hedging that if the brand doesn't ever take off then our business model is just purely co-packing.
And co-packing really did pay the bills for awhile. Around 2015 is when we started seeing a huge inflection point where the brand Country Archer really started taking a big chunk of our revenue, and it started actually interfering with our operational side of the business. When you start producing a lot more Country Archer and having to fit in these smaller co-pack businesses, at a point it just didn't make any sense. So around 2015 is when we approached most of those small mom and pops and told them this is where the business was headed. We helped them transition because we didn't want them to lose any business. Everyone ended up with a good co-packing home and from there we just never looked back and went all-in with Country Archer.
Knox: What was the tipping point for the Country Archer brand?
Kang: When we launched the brand in 2013, we went out to some of these retailers and had our first category meetings. It was a rude awakening. I fell in love with the brand through the product that I tried at the original roadside stand, so I thought this is going to be easy. There's nothing like this in the marketplace. I'll go to my first category meeting, and this will be just a slam dunk. And that's not the case. You don't have any selling data. You don't have any velocity numbers. You're just non-existent. Turns out there's a couple other jerky brands that are coming out of the woodwork because Krave got acquired by Hershey's at the time. We looked at the landscape and said, "Okay, how are we going to differentiate ourselves in the category?"
Back in 2014, Sriracha was just the crazy, hot flavor of that year. Huy Fong, the original rooster bottle sauce of Sriracha, was having that Sriracha apocalypse where they were shutting down the factory in California. Retailers were fighting over who would get the last pallet of Sriracha. And Rick Perry, the governor of Texas at the time was recruiting them to come to Texas. They were just hitting the new cycles like crazy.
So I just contacted Huy Fong, and I was like, "Hey, look, Asian-American entrepreneur down the street from you guys, trying to be aspire to be a food and bev guy. Would you ever give me a licensing deal?" And they said, "Well, let's try it out. R&D a product, if we like the taste then we'll definitely give you the approval." I went to the grocery store, bought a couple of hot sauces, and made some sample batches. They loved it, and they gave me the license.
So with that, we put the rooster bottle right on the bag on front of pack, and went back to these same retailers and said, "Okay, we've got a Sriracha product, official licensed Huy Fong. It's like nothing else in the category." And they're like, "Absolutely, we'll take it." But we were obviously smart about saying, "Listen, you can't just take Sriracha. We also need you to bring in our original teriyaki. And they were like, "Sure, no problem." So that just sort of seeded the brand block, and from there just kind of snowballed.
Knox: What advice do you give to entrepreneurs that are aspiring to create the next consumer brand like Country Archer?
Kang: For me, when I do talk to aspiring food and beverage entrepreneurs, it's tough because a lot of them are starting something from the absolute ground up with no infrastructure. For us, we bought a business that had tangible assets. But there are a lot of these smaller family owned businesses throughout the country that a lot of people don't know about that have just been really under the radar for the last 40 years because the older generation is still running them with the old business practices. Their kids just don't want to take over the business and they have no succession plan just like Charlie with Country Archer.
And so my advice has been to find categories where there is some sleepy sort of players that are much smaller revenue base, and evaluate their product line and see is there any tangible asset. Because those are typically ones that you're able to get funding through a commercial loan and you don't have to give up a ton of equity right off the bat. There are tons of business like that. They aren't always brand aspirational, consumer facing products. But there are a lot of these sort of small businesses throughout the country that just don't have any homes and no succession plan. So my advice is to go find those companies and see what you can build upon.