Snack Foods: Kettle cashes in with chip off the old crisp - The pace is hotting up in the market for adult premium brands

FROM an anonymous trading estate on the outskirts of Norwich, Chris Barnard is preparing to offer British consumers another taste of adult snacking American-style. His company's kettle crisps, or 'chips', have already become one of the food industry's rare, if unlikely, success stories. Now, Kettle Foods is preparing to add a savoury popcorn range to its menu.

'We have been warned against it, because popcorn is a confectionery market here,' says Mr Barnard, the company's general manager, as he prepares for next month's launch.

There was similar cynicism from the industry in 1989, when the company was planning to unveil its exotically flavoured, hand-cooked crisps in jumbo packs.

Pre-Kettle, the crisps market consisted of 'bog-standard crisps' aimed at children, he says. Kettle introduced crisps for adults - at a premium price that consumers seem to have been happy to pay despite the recession.

Having started with a workforce of six, the company now employs 96 people, and production runs for 20 hours daily except Sunday. The so-called 'Kettle Masters', who do the frying, get through 120 to 150 tons of potatoes a week.

The human touch is in sharp contrast to highly mechanised production from PepsiCo (with the Smiths and Walkers brands) and United Biscuits (KP), which between them account for two-thirds of crisps sales. 'It is heavily labour-intensive, but there are still ways of making it work,' Mr Barnard insists. In just three years, annual turnover has risen from pounds 2m to a claimed pounds 7m (and profits of pounds 700,000) this year. 'We have been able to get through the recession because we have invested carefully. Everything we have made we have put back.' That includes the purchase of six more pounds 70,000-plus fryers to augment the original two.

An American health foodie, Nirbhao Khalsa, who founded Kettle a decade ago in the US, set up the UK operation with a partner, banker Tim Meyer. A distribution deal with another snack success from the regions, Derwent Valley Foods (of Phileas Fogg fame) gave it immediate access to supermarket chains at a fraction of the cost of going it alone.

Some observers feel the two companies have conflicting products. The relationship has worked for both sides, but there may well be pressures in the future as more snacks emerge from Norfolk. The speed of Kettle's growth - it also has a thriving own-label business supplying supermarkets - has surprised many.

The crisp giants have responded with a batch of new premium brands, such as KP's Roysters, backed by heavy advertising (a luxury Kettle has never been able to enjoy), but minus the authentic hand-cooking that Mr Barnard feels is crucial. 'Perhaps the margins don't meet their criteria,' he says.

Besides product quality, he believes, pressures of recessionary living have been a factor in the rise of Kettle. 'People will not go without their small luxuries even in the recession. When they are down, the odd treat still applies. Although a premium product, it is not just for the cocktail- party set, but for adults to have after putting the kids to bed.'

Kettle remains a small potato, however, in a crisps market valued at pounds 814m in 1991 by the research company Mintel, which forecasts adult snacks will more than double their market share by the turn of the century.

Food industry observer Frank Kays, of the PA Consulting Group, is in no doubt. 'Snacking is the opportunity of the decade. It fits in with people's lifestyles and interests. All the major companies are interested in the snacking arena, but small companies can respond and move more quickly.'

He says 'technical insulation' is important for niche operators. 'One of the reasons Kettle Foods continues to be successful is that people can't suddenly start making that sort of product, particularly given the longer decision- making process, in big companies.'

But competition is getting tougher. 'The snacking business is being aggressively targeted by the world's leading companies - people like Unilever, PepsiCo and BSN - names not to be trifled with. As a small player, they need to be fast on their feet. They should always be working on the next product and must keep moving,' Mr Kays says.

Chris Barnard has got the message: 'We have to keep innovating to maintain interest.' Besides its foray into savoury popcorn, the company is developing new crisp flavours to keep customers loyal in those snacking moments of the Nineties.

(Photograph omitted)