Potato chip company hopes starting small means success

ANCHORAGE (AP) The neighbors knew Ralph and Darcy Carney were up to something interesting when aromas of toasting potato chips wafted out of a makeshift test kitchen the couple built in the garage of their south Anchorage home.

Ralph Carney had been cooking up test batches of new potato chip recipes made with Alaska potatoes in the family's kitchen. It was part of a plan to develop an Alaska gourmet chip, which the couple hopes to market.

Darcy Carney soon exiled the test cooking operation to the garage, where Ralph installed a potato chip factory in miniature. After cooking up batches to try out with family, friends and neighbors, the Carneys felt they had finally developed the chip, and flavorings, they wanted.

Following that, Ralph Carney built a small commercial-scale production kitchen, sorting and bagging plant on Potter Street.

The couple have now launched their venture, the Alaska Chip Company, and the first chips hit the sales racks in Carrs markets in Anchorage July 22.

People have been trying to manufacture things in Alaska for years, usually with mixed results. Can a potato chip manufacturing in a small market make it?

Darcy Carney thinks it's possible. The Carneys' analysis shows they can make money if they can get 2 percent of the local market, which they believe is quite possible.

The key is to first produce a good product, and second to keep the operation small and low-cost. ''We're a Mom and Pop operation,'' Darcy Carney said.

Quite literally, it turns out. Ralph Carney will cook chips three days a week and deliver two days. Darcy Carney's mother will run the office. Darcy Carney will manage the business end, and keep her day job as chief financial officer of Alaska Growth Capital, a commercial lending firm.

The couple is also bankrolling the venture with their own money, and have between $150,000 and $200,000 invested so far. Northrim Bank has also agreed to provide a line of credit for operating expenses.

Ralph and Darcy are Certified Public Accountants, ''but we have always wanted to share a small business, and we were looking for something that was appropriate,'' Darcy Carney said.

Ralph Carney grew up on a family-owned dairy farm in the Matanuska Valley, where the Carney family was well known. His father, Pat Carney, served in the state Legislature. Darcy Carney was born and raised in Anchorage with parents who owned and operated a small business.

In planning the business the couple got the benefit of lessons learned from an earlier, unsuccessful venture in making potato chips in the 1980s, from those who attempted it.

There were two flaws in that business: One was it was a larger project, with a 16,000-square-foot plant, so that 15 percent of the local market had to be captured, which wasn't achieved. The Darcys are starting small, with a 2,800-square-foot plant.

Secondly, the chip-making plant was in the Matanuska Valley, which raised transportation costs.

Product quality is top priority, however. That's borne out by the example of Alaska Brewing Co., the successful brewing company in Juneau that started out with a micro-market in the state's capital city. It now exports 70 percent of its beer to the Pacific Northwest, and has now become the second top-selling microbeer in Washington state.

That company's success is due to relentless attention to quality, which created a loyal local customer base and word-of-mouth advertising among commercial fishermen traveling back and forth to Seattle.

The Carneys felt they had created a great-tasting chip with no cholesterol and low salt. The ingredients are all natural, and cooking is done in peanut oil, which adds to the taste. But the couple needed extensive testing to convince themselves they could maintain consistency of quality. That is another lesson from the success of Alaska Brewing Co., Darcy said.

Inspiration for the Alaska chip came to Ralph 12 years ago when he encountered Maui Chips while on a Hawaii vacation. Like Tim's Chips, of Seattle, this was a quality gourmet chip made mostly for local residents, although both brands are now shipped and sold elsewhere, even in Alaska.

On a return vacation to Hawaii in early 2002 the Maui chips were just as good. That was it, the couple agreed.

By coincidence, the Alaska Science and Technology Foundation which was shut down this year by Gov. Frank Murkowski had sponsored some research on the suitability of Alaska-grown potatoes for making chips. The work was done by the University of Alaska's cooperative extension service. That work gave the Carneys the basic information they needed.

The Carneys realized they would have to slowly grow their sales through local retail stores and gas station outlets, but they got a big break when they met J. Webb, the Alaska retail sales manager for Carrs Quality Foods.

The company has always supported local growers and food manufacturers, and buys extensively from local farmers in season.

''These people have a great product and it should be a big hit,'' said Webb. ''We do as much as possible to support local businesses, particularly when they produce a good product.''

''Good suppliers are important to us, and this has the added advantage in that it's made with potatoes grown locally,'' he said.

Webb has agreed to stock the chips in the nutrition section of the stores, which is where products made with natural components are usually introduced.

There are now several flavors of chips planned: Two being produced now are the lightly-salted ''Matanuska Thunder Chips,'' and the ''Denali Grizzly Chip,'' which has a barbecue flavor. Soon to appear are ''Katmai Volcano Chips,'' with a spicy jalapeno flavor, and ''Seward Tsunami Chip,'' which has sea-salt and vinegar.