In Dominated Snack Industry, Find Your Own Bag

The aroma evokes nothing so much as a carnival midway, composed as it is of roasted corn, burnt sugar and too many spices for the human olfactory system to process neatly.

Around me on the factory floor, machines are kneading, stamping, extruding, popping, blowing, coating, sprinkling, heating, steaming and drying all means of chips and puffs. A mist infusing the air, part steam and part aerosolized cooking oil, coats every surface with a faint sheen.

“Watch your step,” Barry Levin, chief executive of Snak King tells me as we clamber up a flight of gleaming metal steps to a catwalk overlooking the production process. “It might be slippery.”

From our perch, we can see conveyor belts laden with merchandise disappear through slots in a distant wall, on the far side of which everything is poured into cellophane bags and packed into cartons. The entire scene is reminiscent of the old Popeye cartoon in which Swee’Pea, loose in an ironworks, narrowly escapes getting flattened or filleted by the thumping machines.

This is what it takes to survive in a world ruled by a leviathan. The snack foods industry is one of those businesses where one company’s domination reduces all rivals to the stature of minor principalities. In this case, there’s Frito-Lay -- and everybody else. Frito, a division of PepsiCo Inc., racked up $8.5 billion in sales last year, a period in which no other snack manufacturer even approached half a billion dollars in revenue.

Over the years, Frito has crushed such estimable marketing juggernauts as Keebler Foods Co. and Anheuser-Busch Cos., which tried to build its Eagle Snacks brand into a nationwide player but bailed out after a few dismal years.

On the West Coast, regional snack-food brands such as Laura Scudder and Granny Goose have disappeared. They were unable to keep out of the crossfire between the big national marketers or to keep up with phenomena such as supermarket slotting fees, which manufacturers pay to secure shelf space for their products and which, obviously, play to the strengths of big companies with huge marketing budgets.

Under Levin, 45, City of Industry-based Snak King has grown to its current size of about $70 million in annual sales by working its way around obstacles, just like Swee’Pea in the forge. The only way to thrive in such an environment is to do what the company has turned into a science: develop niche products and move ferociously to develop brand loyalty before Frito-Lay can gain a foothold in the market.

“We do organic products; we do kosher products; we do natural products,” says Levin, whose company’s brands include Snak King, Jensen’s Orchard, El Sabroso and Healthy Bites. “We’ve always gone after those niches.”

By far its biggest niche -- if “big niche” is not an oxymoron, like “jumbo shrimp” -- is the Latino market, for which Snak King has rolled out a succession of variations on the humble tortilla chip: salsa chips, three-cheese chips and cinnamon-and-sugar churro chips. The champion of this line is the guacamole chip, which the company rolled out about a year ago after a long gestation period in its R&D; department.

Under the El Sabroso brand, the guaca chips have even proved a crossover hit, reaching shelves in such upscale markets as Gelson’s and Bristol Farms. The company’s Latino niche products also have landed it valued space on Wal-Mart shelves across the country.

“R&D;’s a big project here,” Levin remarks as he walks me through the lab nestled into a corner of the company’s 175,000-square-foot building. He stops in front of a storage case and prods a plastic bag filled with chips the color of poi. “These are sweet potato chips we’re testing for a company in Japan,” he explains.

“You can’t just walk in the kitchen and say, ‘Try it,’ ” he adds. “You get a lot of iterations of a product. Not only do you have to come up with the right base product, you have to come up with the right seasoning, use the right oils, make sure you get the right shelf life and the right package.” There are prototypes, aesthetic judgments, focus-group sessions.

Take the guacamole chip. The idea came from a sales executive who remembered a similar product that bombed in

the marketplace a few years before.

His recollection launched Snak King on what Levin calls “a mad scientist tinkering thing.” The earlier product had failed because the manufacturer had coated plain tortilla chips with a greenish powder. “We found that if you just had the avocado on the outside, the green contrast with the corn color made it look like the chip was moldy,” says Joseph Papiri, vice president of sales and marketing.

The solution was to make the whole chip green -- but that raised its own conundrum. “We thought, who’s going to buy a green chip?” recalls Levin.

Similar considerations, some deriving from chemistry and others from psychology, are part of the marketing of every offbeat product. To make the churro chips palatable, the company had to tone down the corn flavor of the underlying tortilla chips to avoid an off-putting clash of tastes.

Knowing which niche to pass on is as important as knowing which to go after. Snak King, for instance, forwent the brief national experiment with snacks made with artificial fat. “Something about a food that’s not metabolized by the body freaked people out,” Levin observes. The company does market some low-fat products today, but quietly, by placing the low-fat information on the back of the package. “The consumer thinks if it’s ‘low fat’ it won’t taste good,” says Levin.

Levin joined the company in 1979, fresh from the University of the Pacific, as its third employee. At the time, Snak King occupied 1,200 square feet of space in downtown Los Angeles. Its sole product was pork rinds, slices of deep-fried pigskin that exert a mysterious allure on a sizable segment of consumers.

A couple of years later, Levin bought one-third of the company and oversaw its expansion. By 1994, having broadened into a range of salty cereal-based snacks, the company relocated to much larger quarters in the City of Industry. There it not only produces its own chips, puffs and popcorn, but also manufactures house brands for retailers. (It hasn’t forgotten its roots, either; pork rinds, which are considered a meat product, still account for so much of its production that an inspector from the U.S. Department of Agriculture keeps a permanent office on the premises.)

Meanwhile, the search for the next niche product continues, Snak King being fully alert to the fact that someone is probably gaining on them, most probably Frito-Lay. “Anything that starts selling people will emulate,” Papiri says. Frito-Lay, he recently heard, has started test-marketing guacamole-flavored potato chips.

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Michael Hiltzik can be reached at golden.state@

latimes.com.