THE rise in Union Snack's fortunes has mirrored a growing consumer awareness about healthy eating.

Relatively low in fat compared to crisps, the pretzel is a dieter's dream nibble and Union Snack is Britain's only manufacturer.

The factory, on the Tanfield Lea industrial estate, near Stanley, County Durham, has supplied pretzels to all the major supermarkets for the past six years.

Nut and GM-free, they are branded as a healthy alternative to crisps and other fried products, and are already established in major retailers' ranges.

Calum Ryder, managing director, said: "The baked snack arena is certainly the right place to be at the moment. People are buying them for these sort of attributes."

It has used the same baking technology to branch out into other lines, such as flavoured crackers and breadsticks.

The company was formed in 1996 by Mr Ryder and colleagues George Wilkie and John Pike.

Mr Ryder said: "We all worked in the snack business and were aware that pretzels represented a massive sector in the US, and there was no manufacturer in the UK."

The trio raised £2.2m to build a factory and started production with eight staff.

Winning their first orders was not easy.

"It was great fun when there was eight of us, but we didn't have any customers," said Mr Ryder. "It is difficult to get new products launched in the market."

They started off supplying in-flight snacks to airlines. The first major retailer to show an interest was Marks & Spencer, which remains Union Snack's biggest customer.

From making a loss of about £660,000 in its first 18 months, Union Snack posted a record turnover of £6.4m for 2003. Last year's sales are expected to top £7.5m.

"Turnover has risen 20 per cent each year, for the past three years," said Mr Ryder.

"It won't happen forever, but we are not anticipating that growth to drop in the foreseeable future."

The factory can produce 3,000 tonnes of pretzels a year and, with all three lines running, can turn out 16,000 pretzels a minute.

The second production line was bought in 2001, filling the remaining factory floorspace.

This was expanded with a 1,600sq m extension, costing £3m, which officially opened in March. It includes warehouse space and another production line, and should create 50 jobs over the next three years.

The firm has grown by developing products to order for retailers including Boots and the supermarkets.

Mr Ryder said: "Our niche in the marketplace is our ability to innovate and be flexible.

"We are not in a unit cost market and have to be prepared to live with the wastage cost of the development process.

"There is no scaling down of a trial. You have to put 100 kilos of dough in the back of the line and see what comes out at the other end. A great deal of our focus is about developing products, today more than ever before.

"It is no coincidence that M&S is our biggest customer, because that fits in with their strategy. It is a good marriage."

This sense of imagination included capitalising on the role of the pretzel in almost claiming the life of George W Bush. When the US president choked on a pretzel in the White House in January 2002, sales at Union Snack rose by 60 per cent.

The firm also cheekily sent some pretzels to Tony Blair's home in Trimdon for the US president's visit in 2003.

Mr Ryder said: "We are a small company in a snacks sector worth £2.7bn a year. The only way we could survive is if we innovated and were prepared to do things that the big boys were not."

Its own brand, Penn State Pretzels, is a market leader and will be re-launched this summer.

The re-branding, the first in its eight-year history, came about after market research revealed that the product needed tweaking for its core customers, professional working mothers aged between 30 and 50.

Mr Ryder said: "We had made a lot of assumptions about who our target market was. We have shifted the focus to that age group."

It is also launching individual sized bags and a Penn State Pretzels multi-pack, after the success of lines for other retailers.

Mr Ryder said: "We sell around 35 million packets a year for airlines, so we are no strangers to this sort of production."

And the firm is introducing a very English flavour to an all American product, Cheddar cheese.

Jen Scott, brand manager, said: "The introduction of a Penn State Pretzels multipack will provide consumers with more flavour options and will mean that Penn State Pretzels enters the lunchbox and impulse snacking market for the very first time."

The factory extension also provided space for plant machinery for a new range of expanded cereal-based snacks, made from Cassava, an Indonesian root vegetable.

The line was introduced solely for M&S and the first bags hit its shelves last month.

The snacks are made in much the same way as other rice-based nibbles, by expanding the raw material.

Mr Ryder said: "Nobody has made this product in the world before. We spent 14 months getting it right and are really proud of it.

"We have the same ambitions for it as we had for pretzels and see a great deal of growth in it.

"We went out on a bit of a limb, but we believe it augments our credentials in the baked snack arena.

"We bought a test machine and had all sorts through it, from bananas to prawns. It was very difficult, doing something for the first time, but then it was the same with the pretzels. Difficult is what we are good at.

"In time, we see not necessarily other Cassava snacks, but other snacks coming out of that technology."

He believes the company's flexibility remains its most prized asset.

"We are experiencing our most pressurised environment. Supplying the supermarkets has always been difficult, but it is tougher than ever now.

"There has been a fall in prices in the past six months at the major retailers and a lot of that price pressure is coming to bear on people like us.

"It is difficult being the small guy between large suppliers and large customers. If we didn't innovate and went into bat every week with just a salted pretzel, we would be in trouble."