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Monday, September 17, 1990 - Page updated at 12:00 AM

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Strategies

Tim's Cascade Style Potato Chips -- Chip-Maker Pleases Northwest Palates With Hot New Idea

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tIM'S CASCADE STYLE POTATO CHIPS

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- CEO: Tim Kennedy

- Employees: 60

- Headquarters: 1520 Pike N.W., Auburn.

- Business: Potato chips producer.

- 1989 sales: $4 million.

- Major customers: Safeway, Albertson's, QFC, Olson's, Costco.

- Major competitors: Frito-Lay, Nalley's.

- Strategy: Targeting regional tastes by developing unusual

flavors of chips aimed at the Northwest market.

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AUBURN - On local tongues and grocery shelves, Tim's Cascade Style jalapeno potato chips are hot.

With a potent pepper flavor borrowed from a Texas potato-chip company he operated in the early 1980s, Tim Kennedy has been producing these light-your-mouth-on-fire chips and several other varieties in a small Auburn warehouse for three years.

In that time, sales and production of the local chips have skyrocketed, earning the snacks some prestige along the way. Taste testers at The New York Times, for example, judged Tim's Cascade Style one of the nine best potato chips in the country earlier this summer.

Half the recipe for Tim's Cascade Style success can be found in the six kettles of peanut oil frying large potato slices at his 25,000-square-foot warehouse. The other half is found one floor up, where Kennedy plots a regional marketing strategy that was new to the Northwest potato-chip industry.

``Frito-Lay used to have this attitude that whatever was good for one part of the country was good for everybody,'' said Kennedy.

He disagreed.

Dissenting with Frito-Lay, the granddaddy of the chip industry, took courage. As producers of nearly 30 flavors or shapes of chips, including Doritos, Fritos and Ruffles, Frito-Lay boasted 1989 sales of more than $4.5 billion.

But based on the success of Groff's, the Texas chip company he co-owned, Kennedy returned to the Northwest in 1986 with optimism and a jalapeno recipe.

``Nobody else was doing (jalapeno chips) here and it was very popular in Houston,'' said Kennedy, also a former Nalley's employee. ``With the support for `Buy Washington' cheeses and wines, I figured we could hit on the right theme.''

Kennedy first toyed with ``Rainier Chips'' and ``Puget Sound Chips,'' envisioning an advertising concept of ``mountain men stirring black cauldrons of alder-smoked chips.''

He finally settled on Tim's Cascade Style, a brand he sells in seven varieties in bags featuring outlined maps of Washington and Oregon. Though marketed in both states, 90 percent of sales are in Western Washington.

The average American already munches more than 11 pounds of chips a year, so Kennedy didn't have to convince Northwesterners to develop a taste for the salty snacks. He only had to persuade them to eat his chips.

The local chip company's sales figures seem to show he has.

During a four-week peak period in July in Western Washington, shoppers spent $3 million on chips; Tim's cornered 15 percent of that market. The company averages about 18.5 percent of Western Washington's chip sales. Tim's Cascade Style will likely top $6.3 million in 1990 sales, up from $1 million in 1987. About 11 percent of that is profit.

The company now makes five other flavors year-round besides regular and jalapeno: garlic and dill; alder-smoked barbecue; Cajun; unsalted and sour cream and onion.

During football season, Kennedy goes a step further.

The Oregon junior college graduate and Vietnam veteran has a deal with the University of Washington to sell Tim's Husky Chips - crunchier, salted chips packaged in purple- and gold-striped bags featuring the Husky mascot on the front. The UW receives 5 percent of the profits from these sales.

With Husky chips, Kennedy hopes to ``create excitement about the UW and not have any layoffs'' associated with the off-season production lull.

Again, figures seem to bear that out. While other potato-chip sales drop after the busy summer picnic/barbecue season and before the winter holiday party season, sales of Tim's Husky chips rise.

Kennedy laughs when he looks back at the changes in Husky chips.

``The first year we did them (in 1987) we had several dental claims filed,'' said Kennedy.

So last football season, Tim's made Husky chips less crunchy.

``Then we got letters saying they were too soft,'' he said. ``So this season we're going back to the crunchy chips and we're going to use a sticker on the bag that says ``dippers.''

Tim's also will be a more visible sponsor at football games beginning this month with potato-chip giveaway contests.

Tim's chips are produced from Atlantic and Norchip potatoes brought in a single truckload six days a week from a farm in Ridgefield, Clark County.

At Tim's, 50 employees divide two cooking shifts, six days a week to produce 200 pounds of chips an hour. Sliced potatoes sizzle in 310-degree cookers filled with peanut oil for 10 minutes to give the chips their crisp texture. Workers rake the floating chips to keep the pieces from sticking together.

Another crew picks out broken or dark pieces as the cooked chips rush by on a conveyor belt. The chips are moved to another room where they're spiced and bagged.

After packaging, the chips are shipped to grocery-store shelves by 20 independent truckers who work on commission.

``It's kind of unique,'' said Kennedy. ``We hire the small businessman who runs basically only our product for direct store delivery six days a week.''

These drivers deliver Tim's chips to more than 800 stores in two states, where their average price is about $1.53 for a seven-ounce bag.

It strikes Kennedy how much the company has grown when he considers that less than two years ago, the chips were flavored by workers who stood on top ladders and shook seasoning on top of the fried potatoes by hand.

Now that task is performed by machines Kennedy bought second-hand.

By next year, Kennedy hopes to sell 4 million pounds of chips a year - translating to sales of about $7.9 million - without many more changes.

He is preparing to add another 7,000 square feet of warehouse space, but he doesn't think his company will branch out into dips or corn chips the way some larger snack-food companies have done.

Tim's probably won't be adding any new flavors, either.

Said Kennedy: ``You can't do that too long before you start cannibalizing on what you've already got.''

Strategies appears weekly in the Business Monday section of The Seattle Times.

Copyright (c) 1990 Seattle Times Company, All Rights Reserved.

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