BRITAIN'S only pretzel manufacturer is to create 50 jobs after investing £3m in the region.

Union Snack, at the Tanfield Lea Industrial Estate, near Stanley, County Durham, has expanded its factory by 1,600sq metres to introduce a new production line.

The development includes the installation of manufacturing and packing equipment for pretzels and other baked snack products.

The company expects it will create 50 jobs over three years.

Director and co-founder John Pike said: "We are introducing a new line for one of the major multiples and will start production next week."

Mr Pike was a production manager at the successful Phileas Fogg snacks manufacturer in nearby Consett, which was sold to United Biscuits in 1993. He helped to establish Union Snack in 1996. The £2.2m plant, which employed eight people, was backed with venture capital from Northern Ventures Managers and 3i, plus grants from regional development agency One North East, Derwentside District Council and Durham County Council.

After losing more than £660,000 in its first year, it has grown to provide products for all the leading UK supermarkets, with Marks & Spencer its largest customer. It also has contracts with airlines that include BA and Virgin Atlantic, supplying BA alone with 20 million bags of snacks a year.

It has established a market-leading brand of pretzel, Penn State, and sales have doubled in the past two years.

Last April, the company reported a record annual turnover of £6.4m. Mr Pike, its largest shareholder, said: "We are already well ahead of that figure this year."

The new factory development was part-funded by a £245,000 Regional Selective Assistance (RSA) grant from One NorthEast.

Union also received £17,000 from the County Durham Development Company and £44,000 from Derwentside District Council.

Calum Ryder, Union Snack's managing director and company co-founder, said: "Pretzels have become an extremely popular snack, not only in the UK but in various overseas markets.

"Everyone at Union Snack is excited about the expansion and it is thanks to One NorthEast we were able to progress it so quickly."

Ian Williams, head of business and finance at One NorthEast, said: "We are delighted that One NorthEast can assist innovative companies like this, which are expanding operations and building on an already successful skills base in a specialised area."