JERSEY CITY, N.J. – Jim Ehlen doesn’t mind paying extra for canola oil with which to fry his potato chips.
In fact, he thinks it’s his competitive advantage against the giants.
“The larger key commodity players aren’t focused on this niche, because they’re terrified of the high price of the monounsaturated canola,” said Ehlen, who uses high stability canola oil to make his Madhouse Munchies kettle potato chips in New Hampshire.
“This is a very traditional commodity game in the salty snack set,” he said.
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“We see it very much as a natural governor of their interests.”
Ehlen’s chips sell for a lot more than bulk potato chips – about double, he says. They even sell for more than other “healthier” potato chip brands, such as a 40 percent reduced-fat potato chip that sells for $3.88 per large bag at Costco. The Madhouse Munchies bag sells for $4.88.
“The one distinction and the one reason that we’re able to get from a 25 to 35 percent premium for our product versus any of our likely competitors … is canola,” said Ehlen, who left a career in finance to start up his “micro-company” near his New England family.
The premium isn’t making him rich, he said. Canola oil is more expensive than cheap, bulk oil usually used for frying potato chips – about double the price. He needs the chip premium to compensate for the oil premium.
“If you have a higher cost of (production) and you can’t land the premium, it doesn’t work,” he said.
“We’re getting away with it.”
Ehlen said he was surprised to find out canola is a healthy oil when he first considered using it seven years ago.
Blind tests with about 35 different oils had discovered that chips deep fried in canola oil were by far the most popular with his family members and other test subjects. He called his canola supplier at Cargill Specialty Oils and asked: “How bad is this stuff for you?” He expected to hear that it was as unhealthy as palm oil or one of the other “bad-fat” oils.
The company faxed him the fat breakdown and “I sort of fell out of my chair. Nobody on our end could really believe (that the best tasting oil was so healthy),” he said.
The combination of tastiness and high health value allowed him to launch his chips in the U.S. eastern seaboard states. Distribution is now spreading to parts of the U.S. Midwest, such as Chicago. The packaging draws attention to the chips’ canola content, describing it as “100 % Pure, High Mono, Non-Hydrogenated Canola Oil Ð 70 % Less Saturated Fat than Leading Brands.”
Ehlen and other speakers at the Canola Council of Canada’s annual convention told canola producers, processors and marketers that consumers increasingly want high quality healthy food and they’re willing to pay premiums to get it. This trend may not dominate the market – Wal-Mart is the world’s biggest grocer – but natural, organic and healthy food categories are taking up a bigger part of the grocery business.
Food journalist Maureen Christian Petrosky said the growth of the Whole Foods Market chain of specialty food stores is proof that some consumers care a lot about what ingredients go into their food.
“More and more consumers are paying attention to where their foods are coming from,” she said.
“People are changing how they feed their children.”
Even though there is a retail split between specialty food stores, traditional grocery stores and big box grocery stores, Christian Petrosky said the trend affects more than the perhaps one percent of the grocery market that now goes to stores like Whole Foods.
A shopper may buy a few specialty items at Whole Foods, then drive a few kilometres to Wal-Mart to buy their bulk grocery items, she said.
Ehlen said the public’s worries about trans fats come at a perfect time for his canola-promoting company and for the canola industry.
“There’s a wide open door for us all to run through, but I think we need to keep positive, very realistic about the fact that the more proactive we are in addressing the benefits of canola, and doing it quickly . . . we (will) have a real opportunity to do it.”
John Garner of Cargill, who supplies canola oil to Ehlen, said he’s happy Madhouse Munchies is succeeding. It proves how quality canola oil can be specially marketed.
“It’s all about what he’s done with the oil,” he said in an interview. “This is part of canola as a whole succeeding.”
