Niche marketing also is important for the state's meat processors. Kessler's Inc., a Lemoyne-based meat processor, manufactures about 60 different items for a market that encompasses most of Pennsylvania. Kessler's specializes in high-quality pork products, such as Stadium Ham and Nittany Lion Franks. Bob Kessler, president and CEO of the company, explains that Pennsylvania is second only to California in the number of meat processors in the state. However, he notes that most of Pennsylvania's processors are small operations serving brand-loyal consumers. "These processors can do well serving localized niche markets," says Penn State's Dunn. "Most of the country has never heard of Lebanon bologna, but a lot of people eat it in Pennsylvania. For all the talk of international markets, I don't think it's very important to export our food products. Our true advantage is closeness to consumers and meeting their needs."

Small companies serving niche markets are at a disadvantage when it comes to finding capital for research and development, but modifying or creating products to meet changing consumer demand is something that both large and small processors must master to survive in today's marketplace. Hershey Foods, for example, has grown by spinning off variations of traditional products. Dick Zimmerman, retired chairman and CEO of Hershey Foods, estimates that Hershey bars and Hershey kisses comprised 70 percent of the firm's sales for decades. Nowadays, the company has added almond and white chocolate kisses, product spinoffs that have been instituted in various incarnations throughout the company's candy brands.

A Kessler's employee feeds a string of Nittany Lion Franks into a machine that removes casings from the hot dogs so they can be packaged for sale.

John Cope's Food Products, Inc., packages 1,100 different products under its own label and for a variety of private-label customers. Traditionally known for its dried corn and other canned vegetables, Cope's has stayed ahead by introducing products that add value in new ways. For example, the company has developed unique frozen products such as tiny peas, tiny corn, and a Mexican medley mix. This year, the company will introduce packaged fresh corn under the Cope's brand name to capitalize on consumer demand for fresh produce and convenience. "With controlled atmosphere packaging and rapid chilling, we can get two to three weeks of shelf life," explains Tom Cope, president of the Rheems-based company. "We think customers will be willing to pay a little more when they see four ears already husked and trimmed with a brand name on the package that they associate with quality. Another product we envision is a create-a-meal line–various frozen vegetable mixes with sauces. Using one of these packages, you can put together a meal in less than 15 minutes."

To compete with several strong regional companies and Frito-Lay, a leading national processor owned by the conglomerate PepsiCo, Bachman's has tempted consumers with various new products, such as flavored pretzels, Kidzels (a pretzel mix for children), Thin'n Right pretzels, and black bean tortilla chips. Bachman's is riding a wave of pretzel popularity, but the competition is heating up. "Frito-Lay recently built 14 new ovens in Aberdeen, Maryland, making it the largest pretzel manufacturer in the country," says Joe Welch, chief executive officer of Bachman's. "Five years ago, Frito-Lay wasn't even in the top 10." But Welch feels that Pennsylvania companies can thrive in such a competitive market by becoming more efficient and innovative. His company just spent $7 million for two new production lines at its Reading facility. "I believe our economy fosters entrepreneurs and offers rewards for innovation," he explains "That's a role that can be played by regional snack food companies, but only those willing to invest in efficient production and new equipment so that they can respond quickly to consumer trends."

Bret Treaster, a Lewisburg-based route salesman for Utz Quality Foods, stocks potato chips at a store near State College. Utz ensures product freshness by using its own delivery trucks, guaranteeing that the products are on store shelves within a day and a half of leaving the manufacturing line.

Jack Corriere, vice president and general manager of Utz Quality Foods, a manufacturer of potato chips, pretzels, and corn snacks, says Utz differentiates itself from competitors by emphasizing product freshness. While most other snack companies sell through distributors, shortening shelf life by a few days, Utz distributes its products more quickly by using its own trucks, guaranteeing that its products are on store shelves within a day and a half of leaving the manufacturing line. To capture a larger share of the domestic market, snack companies across the country are racing to develop products for the healthy-eating market niche. But Utz does not want to trade taste for trendiness. "You don't want to put out a low-fat or no-fat snack that consumers may not accept and will associate with your stable and accepted brand name," Corriere says. "For regional chippers, it's also a question of production technology. You can make about 5,000 pounds of chips an hour on a regular production line. With low-fat chips, which are microwaved or baked, that production drops drastically. Right now, our best bet for health-oriented products is pretzels."

About 5,000 pounds of chips are made in an hour at Utz Quality Foods' potato slicing and baking facility in Hanover. Utz is a regional company specializing in potato chips, pretzels, and other snacks.

After decades of eating canned and frozen foods, the Baby Boom generation is turning back to fresh products of all types, a relatively recent trend that provides a golden opportunity for savvy food processors. The state's mushroom industry is poised to capitalize on the fresh market. "Mushrooms can be grown anywhere, and most of the canned mushrooms sold in the United States are produced and processed in countries where labor is less expensive," says Charles Brosius, state secretary of agriculture and founder of Marlboro Mushrooms in Chester County. Brosius explains that Pennsylvania's mushroom growers regrouped in the 1970s to concentrate on the fresh market, focusing on quality rather than quantity. Growers also have had to become bigger and more efficient or risk falling by the wayside.

Some processing firms form industry partnerships to better serve a market niche or share technology. For example, Campbell's Fresh, a subsidiary of Campbell's Soup, produces 50 million pounds of mushrooms to supply the soup company's ingredient needs. Campbell's also produces 70 million pounds of mushrooms annually for the fresh market, a figure that has grown each year. According to Bob Miller, vice president and general manager of the mushroom operation, the industry today is much more consumer-driven, a change designed to raise the mushroom's profile on America's dinner plate. "Our growth is dependent mainly on increasing consumption," Miller says. "Compared to Europe, U.S. mushroom consumption is still very low."