Jolly Time: Not Just Popcorn but a Unique Way of Business

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JOLLY TIME Popcorn Shares Profits With Employees

Sioux City, Iowa, once promoted itself as a metropolis-in-the-making, a new Chicago straddling the westward bend of the Missouri River.

It was a natural crossroads for grain and livestock. The city's scales weighed innumerable tons of wheat and corn. Rail yards fanned out across the flats off downtown, connecting meatpacking plants with stockyards that, at one point, processed more animals per day than any other in the world.

Grain brokers winnowed down to a handful by 1980. The stockyards closed in 2001. Only one major meatpacker remains in town. The city's fortunes ebbed as family-owned businesses gave way to corporations and the consolidation of American industry.

But for 100 years, the American Pop Corn Co., and the Smith family that runs it, has stood against that tide.

Chapter 1: All in the Family

At Sioux City's northwestern edge sits a cluster of storage bins and cleaning towers, one bearing the red Jolly Time pennant. Some buildings are newer, but the facility has been churning out popcorn since 1916 when Carlton and Garry Smith's great-grandfather moved his just two-year-old American Pop Corn Co. here.

A small-town entrepreneur from Odebolt, Iowa, Cloid Smith invested in local land after selling a fledgling regional phone company to Bell Telephone in 1912. He took a job with Bell in Sioux City, but leased the land to a tenant farmer, who put in a crop that grew famously well around Odebolt: popcorn.

Credit: Daniel Iske
Most corn, called "dent corn," goes back into the agrarian cycle to fatten livestock or, in the case of sweet corn, to people's tables. Popcorn is a different plant, with traditionally smaller stalks and ears bearing distinctive tiny, round kernels with super-dense shells. Those shells pack in internal moisture, the key trigger that, upon heating, explodes and turns a kernel inside-out.

Back then, popcorn sold at the general store in bulk, unprocessed, and had yet to be exploited as a branded product. Cloid Smith would change all that.

In 1914, when a buyer lowballed his tenant on a crop, Cloid stepped in. With the help of his teenage son Howard, he processed and brokered the harvest. The father-and-son team began selling popcorn wholesale to street vendors, carnivals and, of course, movie theaters.

But in 1925, Cloid found the point of differentiation that would make his fledgling brand, now called Jolly Time, a household name. He commissioned a proprietary canister designed to seal in kernels' all-important moisture. The packaging promised: "It's guaranteed to pop!"

Other brands arrived on the shelves, but Jolly Time pioneered marketing popcorn to consumers. In the 1930s, the company sponsored its own NBC radio variety show, General Jolly Time and the Pop Corn Colonels.

Danny Kaye and Bob Hope hawked Jolly Time, and as television brought entertainment increasingly into homes, the company deftly utilized the new marketing opportunity. It put bowls of Jolly Time in the hands of Ozzie and Harriet Nelson. It became a mainstay on daytime game shows as a prize giver and sponsor. The company also bolstered home use with on-pack promotions offering $1 electric poppers.

The Smith family remained at the helm throughout. In 1939, Howard took the reins of the company. Then, in 1966 his sons Chesley and Wrede split the chairman and president positions. By 2002, their respective sons, Carlton and Garry, took over those same positions. Garry's two sisters and a brother all sit on the company board.

Now, a fifth generation is at work at American Pop Corn. Carlton's daughter Kendra consults on marketing. Garry's niece BJ spearheads Jolly Time Koated Kernels, a boutique sub-brand of pre-popped corn with ultra-indulgent toppings. Garry's sons Rett and Alex work in sales and logistics.

"The only reason I can imagine selling this business is if we couldn't compete as a family-owned company, didn't have enough money, enough advertising, I don't know the circumstance," Garry says. "And we've had some downtimes when it's been tough, but there's just no desire."

Chapter 2: Field to Living Room

When Carlton and Garry joined the family business in the 1970s, it was still a lean outfit. The entire Jolly Time line had consisted of a blue canister for white popcorn and red one for yellow popcorn until 1957, when Howard finally agreed to add plastic bags.

The advent of the microwave changed everything, and Wrede Smith saw its potential. Popcorn went from the occasional kitchen-intensive family treat into a handy snack people could make in a few minutes and eat every day. "We transformed overnight from grain handlers into food processors," Carlton says.

In 1984, the company brought out its first microwave popcorn. It worked initially with a specialty packager in Chicago instead of investing in machines that might wind up gathering dust if the category didn't take off.

But it did. Sales grew 20 percent a year through the 1980s and early 90s. In 1988, American Pop Corn built a dedicated microwave popcorn plant to keep up with the demand and the competition.

Credit: Daniel Iske
That competition became fierce as waves of mergers and acquisitions remapped the packaged goods business. One of the biggest names in popcorn, Orville Redenbacher, sold out to Hunt-Wesson Foods in 1976 and changed hands four more times, eventually landing at food giant ConAgra. By the mid-1990s, Redenbacher settled in as the No. 1 brand, General Mills' Pop Secret at No. 2.

Jolly Time, at No. 3, started drawing suitors.

Buyout offers come weekly, Garry says. "We get a letter or an email, ‛I represent a client who has an interest in an acquisition of your company,' and we have a form letter that says ‛no.'"

"It never went to a Step Two," Carlton says.

Third place is fine with the Smiths. Corporate competitors' sales may triple those of Jolly Time, but the Smiths' independence allows them to invest in farmers and factories uninhibited by pressures to slash overhead, "realize efficiencies" and show quarterly dividends.

"We have nobody to answer to, so if our quarterly number is bad, nobody knows it," Garry says with a big laugh. "And, y'know what, if my brother bitches, I'll give him the keys and he can run the place."

Chapter 3: Kitchen Table Connection

At it's heart, The American Pop Corn Co. is a field-to-factory operation dependent on relationships with farmers like Pat Green, who grows popcorn outside Homer, Nebraska.

His grandfather was famously the first farmer to sign a contract with Cloid Smith in the 1930s. Pat's father continued the tradition. Pat helped work the farm as a kid, but after earning an accounting degree in the early 1970s, he took a job with Terminal Grain in Sioux City buying corn and soybeans from farmers.

The company changed hands twice during his tenure, and he wound up working for an agribusiness giant. Green found himself training MBAs who "didn't know the first thing about farming," he says. "At the time I started, there were 22 grain companies, and when I got done working in Sioux City, there was only three. It was pretty stressful."

When his dad wound down full-time farming in the late '70s, Green returned to the farm. This year he committed to 81 acres of popcorn. As his grandfather and father did, Green signs a contract to grow Jolly Time popcorn each spring.

"They would come out and sit at the kitchen table," Green recalls, "and if dad wanted to plant one acre or a thousand, didn't make any difference to them. One is as important as a thousand."

Jeff Naslund, the company's field department manager, is the man across the table these days. He matches hybrid strains to methods and soil conditions of each farmer and monitors the crops through the summer.

The hybrids, the result of a program American Pop Corn began in the '70s, showed their mettle in late June. A violent storm came through the region bringing softball-sized hail. It ravaged some nearby Jolly Time growers' fields, and Naslund wrote off unsalvageable acres and penned letters for the growers' crop insurance.

Green avoided the worst of it. Where earlier generations of popcorn might have "gone over," he says, the sturdier hybrid plants weather big storms better. Their backend payoff is palpable too: the hybrids yield 6,000 pounds of corn per acre versus 2,500 pounds in generations past.

"Somewhere along the line when you're doing business, something's going to go wrong," Naslund says. "And not everybody handles it with integrity. And doing the job I do, you can do that, knowing you've got full support and you don't have to be someone you're not. If [farmers] make money and do well, we normally get quality popcorn -- they kind of go hand-in-hand."

When they took the helm in 2002, Gary and Carlton wrote a vision statement to codify the company's longtime operating philosophy. The prime tenet: "The culture of our company is family." That didn't just mean the Smith family.

American Pop Corn expends few resources on training because turnover is rare, Carlton says, and that's because the company reinvests in its workforce. In addition to a profit-sharing program, it gives employees a 100 percent family-coverage health insurance plan -- kicking in after only three months on the job -- and a choice of two retirement packages.

"Nobody has a benefit package that can match American Pop Corn Company," Garry says proudly.

That resonated with Kelly Golden. A machine operator in the microwave plant, Golden came to the company after being laid off from a local cleaning service. Her husband's job at a Sioux City construction firm came with a decent healthcare package, but it was going to cost $300 a month to add her to his plan.

This summer, Golden marked five years at the company. Some weeks before the bonus meeting, she was called in to Carlton's office to choose her service award. She started to pick the Wii console for her grandchildren, but Carlton advised otherwise.

"This is for you," the company chairman said. "Pick something for you." She settled on the Bose speakers. Carlton personally buys the awards for every recipient each year.

When she'd hired on, a co-worker told Golden, "If you're here a year, you'll be here forever." Now, she says, "I'll probably retire from here, because there's not too many places anymore that you get what you get here."

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Jolly Time: Not Just Popcorn but a Unique Way of Business
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