Inside the 2016 Snack Producer of the Year, Unique Pretzel Bakery
Pretzels and Pennsylvania are forever intertwined like the instantly recognizable, unique “pretzel loop” shape seen in the classic Old World snack. Pretzels trace their origin to Medieval Europe, and when German emigrants made their way to the U.S. in the 17th and 18th centuries—many with sights clearly set on William Penn’s new Province of Pennsylvania—pretzels came along for the ride.
German Quaker and Mennonite families, among others, settled the Borough of Germantown in 1683, an area that eventually became a neighborhood of Philadelphia by the late 19th century. Years passed, and German-Americans spread their roots across Pennsylvania. By this time, these settlers had grown tied to the ethnic moniker “Pennsylvania Dutch,” with “Dutch” derived from Deutsch, meaning “German.” The hardy Pennsylvania Dutch people wove an undeniable influence into their newfound home, and the pretzel is the quintessential icon of their culinary heritage.
Pennsylvania remains the heart of U.S. pretzel production, with many current companies tracing their roots back to those early German settlers. Unique Pretzel Bakery, Reading, PA—the 2016 Snack Food & Wholesale Bakery Snack Producer of the Year—is one such pretzel producer, now in its sixth generation of operation by the Spannuth family. The popularity of Unique Pretzel Bakery’s Original Splits—and more recently, Original Shells—has spread throughout Pennsylvania and the country, and even into international markets.
Unique Pretzel Bakery is a snack producer with one foot squarely set in Old World artisan tradition, and the other strategically positioned to advance in the New World. This combination of historic Pennsylvania Dutch pretzel integrity and strong, forward-thinking, modern-day innovation has catalyzed significant growth for Unique Pretzel Bakery in recent years—and likely for many years to come.
Six generations of pretzels
The Spannuth family started baking pretzels in the late 1800s, moving from Philadelphia to the Reading area. William J. Spannuth, president and CEO, grew up in Laureldale, PA, making pretzels with his dad. His grandfather registered the Unique Pretzel name in 1921, and by that time, three generations of the Spannuth family had already immersed themselves in the pretzel business.
William recalls his father, William P. Spannuth, talking about the day the “mistake” occurred. “In the 1930s, when they were making hard and soft pretzels in Laureldale, they had a pretzel that ended up being coined a ‘Mistake,’” he says. “It was a split-open pretzel.” His father still sold the “Mistakes” to his customers.
Like other moments of fortuitous brilliance—akin to the accidental origins of the chocolate chip cookie or potato chip—this was a turning point for the Spannuth family. The customers liked the Mistakes more than the regular pretzels.
“Once they became so popular, they decided to get rid of the name Mistakes in the late 1950s or early 1960s and give them a real name,” says Justin Spannuth, vice president and COO. “That’s when we started calling them ‘Splits.’”
Baking Splits involves letting the raw, twisted pretzel dough sit and proof, and—at just the right time—the pretzels are placed into the oven, where they burst open, creating bubbles and flavorful, crispy crevices. Through the years, Splits eventually became the company’s best-selling products. Many have tried to replicate Splits, notes Justin, but none have succeeded. The line includes Original Splits, Multi-Grain Splits, Extra Dark Splits, Extra Salt Splits and Unsalted Splits.
Both traditional smooth hard pretzels and Splits were made by the Spannuth family for years. “I remember my dad twisting a pretzel and putting it on board, letting it rise, using fishing string to loosen and remove it from the board, and then putting it in a vat of lye,” says William. “Then he would put them on a peal, sprinkle them with salt and put them in an oven.”
Over the years, the Spannuth family streamlined its process with the addition of an automated cooker, conveyor belts to the cooker and the oven, and a rolling machine. “I remember my mom and dad standing on each side of the rolling machine—each had their own board—and they would twist the pretzels and then they would put them on racks,” says William. “Those racks opened and they would take them off and flip them onto the conveyor.”
The business grew through the years, and in the 1980s, the Spannuth family bought the current facility in Reading. The family invested in a twisting machine, dryer and dough extruder. Soon, one extruder had grown to 10, and the company traded its hearth oven for an efficient screen oven. Today, highly efficient, customized Reading Bakery Systems pretzel lines grace the facility.
Not willing to settle for the success of its Splits, the Spannuth family used a similar carefully timed proofing and baking process to create the industry’s first hollow pretzel, dubbed “Shells,” in 2011. Shells—another truly unique creation—stemmed from a desire to create a bite-sized, kid-friendly product. Shells quickly superseded Splits as the company’s best-selling product, significantly broadening Unique Pretzel Bakery’s reach and business scope.
While much has changed at Unique Pretzel Bakery through the years, some traditional remain. The Spannuth family still relies on its original pretzel dough recipe, carried down from generation to generation.
Sales of Unique Pretzel Bakery products have seen notable gains in a category that has lately remained flat. As reported in the 2015 Snack Food & Wholesale Bakery State of the Industry article covering the pretzel category, Unique Splits were up 25.82 percent in dollar sales to $5.02 million for the 52 weeks ending May 17, 2015, per IRI, Chicago. During that same time frame, the pretzel category as a whole was down 0.99 percent in dollar sales (see “Pretzels stay competitive: State of the Industry 2015”).
Unique Pretzel Bakery has seen considerable growth through development of new product lines and a strategic distribution growth plan that has seen the products gain prominence throughout the Northeast. “We are becoming increasingly saturated and very competitive in the Pennsylvania, Ohio, New York, New Jersey and Maryland areas,” says Justin.
The company has also entered select markets throughout the U.S. and exports some products. Most distribution goes to grocery stores, but Justin notes that the company conducts some business with warehouse/club stores, convenience stores, airports and foodservice at select college and corporate campuses. A partial list of the retailers and banners that currently carry Unique Pretzel Bakery products includes Weis Markets, Giant, ShopRite, Redner’s, Wegmans, Whole Foods, The Fresh Market, Central Market, Kroger, World Market, Piggly Wiggly and Albertsons. The Spannuth family is working to actively expand into more retail banners.
While its Splits products put Unique Pretzel Bakery on the map, the Shells are driving unprecedented growth. “Over the last seven years, we have grown wholesale over 500 percent,” says Justin. “With our facility expansion now at full tilt, we plan on seeing this significant growth continue.” The company only sells Unique branded products and does not conduct any private label business despite numerous requests through the years.
“We have had many significant changes over the last seven years,” says Justin, “In 2008, we completely updated our entire line of packaging by changing the image, package sizes and price point.”
This was a strategic move to grow more competitive. “We changed the size of the packaging to all to compete with the other major brands,” says Bill Spannuth, vice president and CFO. “We wanted to utilize our shelf space the right way. From 2008 to 2011, we more than doubled the company just by reinventing ourselves and rebranding. And then we came out with the Shells and it instantly took us to running seven days a week, around the clock, on the line. So we needed to expand.”
By the end of 2012, Unique Pretzel Bakery had run out of production capacity. “We had to shut down all new sales until we expanded our facility,” says Justin. An addition brought 75,000 square feet of new space, which allowed for five times more production volume and significantly more warehouse space. Now one line is completely dedicated to creating Shells products.
“In 2014, while the expansion project was almost complete, we again completely overhauled our Splits line packaging to emphasize the ‘Unique-ness’ of the product and really promote the simplicity of the ingredients,” says Justin. “This is when we came up with the tagline, ‘More Flavor – Fewer Ingredients – Smarter Baking.’”
Unique Pretzel Bakery also added a new product line in 2014, expanding its Shells line with Flavor Shocked Shells, available in Honey Mustard, Bacon Cheddar, Buffalo and Tangy Ranch flavors.
While all of its pretzels are exclusively baked in its Reading facility, the company currently relies on another vendor to season its Flavor Shocked Shells products. A separate partner also handles its chocolate-coated Splits, products sold primarily out of Unique Pretzel Bakery’s public retail space attached to the production facility.
Planning for the seventh generation
The recent expansion of the Unique Pretzel Bakery facility can accommodate two more lines, and select steps in the pretzel-making process could benefit from further automation. Operations currently rely on batch mixing, but the Spannuth family notes that continuous mixing could help further streamline throughput. Automating end-of-line case packing and palletizing could also be in the future.
Unique Pretzel Bakery is currently working on broker and distribution networks to effectively represent its brand in new markets across the U.S. “We have spent significant time building our team internally, finding the highest-quality management with many years of experience in the industry,” says Justin. The addition of new distributors interested in carrying the products has proved instrumental to the growth of Unique Pretzel Bakery through the years.
The company really wants to focus on the Northeast U.S., notes Justin, and particularly its own backyard of Pennsylvania—and adding another bakery is potentially in its future. “We foresee the need to start looking for more land for another expansion,” he says. “In Eastern Pennsylvania, and a few other major territories, we have been the only pretzel with any substantial growth in the category.”
After all, Pennsylvania is pretzel country. “With so many other food manufacturers and pretzel companies located within 100 miles of our plant, we take a lot of pride in being one of the best-selling pretzels in Pennsylvania,” says Justin. “Eighty percent of the nation’s pretzels come from eastern Pennsylvania, and we have a growing stake in that number. If we can compete here, we can compete anywhere.”