Clara City, Minn. —Americans happily munch down billions of pounds of chips, puffs, pretzels and the like every year. But it’s common knowledge that fat and empty calories might lead to heart disease and obesity.

How can we have our chips and eat them too?

Ann Kazemzadeh is bringing the answer to health-food stores and fitness centers nationwide — Kay’s Naturals organic protein chips, made in Clara City, Minn.

The small, cracker-like chips are loaded with flavor, from the lively Tex-Mex-style “nacho chili cheese” to the subtly-spiced “crispy Parmesan” and “soya-Caesar.” The most distinctive varieties are the popular, zesty-flavored “lemon-garlic potato” and “gluten-free lemon herb.”

The patented low-fat chips are made from soy protein and whole grains such as high-protein Egyptian wheat. A serving provides 8 to 9 grams of protein, 1 to 3 grams of fiber, 100 percent of the daily value of folic acid and vitamin B-12, and 30 to 40 percent daily value of calcium. You can pick up a six-ounce bag for $2.79 at health-food stores, upscale groceries and Bally Fitness Centers.

Years of work take off

All of this activity started only a year and a half ago for Ann. A lawyer, she never considered managing a food business until she married Massoud Kazemzadeh. Soon after, she agreed to take over the company started in 1997 by Massoud’s late wife, Linda.

The snack foods were Linda’s idea. “She wrote the business plan and brought the people together,” Massoud says. As a diabetic, she “was always looking for products that were healthy.” Massoud, who holds a doctorate in food science, designed products for her. As an extrusion expert for Buhler Manufacturing in Minneapolis, he had spent years helping major food companies create high-value snack foods.

When Massoud left Buhler five years ago, the company “was kind enough” to give him pilot plant equipment in exchange for consulting work. He built his own clientele of cereal product manufacturers and designed his own patented processes and products, including flavorful, organic chips for his wife’s company, Kay’s Naturals (Kay is a nickname for Kazemzadeh).

Unfortunately, “she became extremely sick. The board tried to continue, but it is not the kind of thing you can do on the side,” Massoud says. When Linda died, the company went dormant until Ann took over as CEO in late 1999. She quickly and aggressively sought national markets for the gourmet-tasting snacks that are balanced in protein and carbohydrates.

“I came from Texas with a background in law — no food background — but I decided someone had to devote full time to it and see if we could make it happen,” Ann says. “The fact that Massoud and his first wife did the groundwork diminished the risk.”

Falling into place

Around the same time, one of Massoud’s clients, Clara City pretzel manufacturer Lighthouse Foods, went bankrupt. Tom Condon, a Clara City farmer and entrepreneur who owned the plant building, worried about the town of 1500 losing critical manufacturing jobs. Knowing Massoud’s product-development expertise and business savvy, he asked him to take over the facility and start a new company.

Massoud says, “It was Tom Condon’s original vision to keep manufacturing in Clara City and keep a workforce growing here.” With his industry contacts and food processing expertise, Massoud says he also could see “great possibilities for a successful manufacturing business.”

After spending a “significant sum of money to upgrade the facility” to pass federal inspections, Massoud began operating Clara Foods, Inc. last September. Along with Kay’s Naturals chips, Clara Foods produces pretzels, cereals and other grain-based products under private label for food companies.

The plant can produce about 7 million pounds of pretzels per year and 6 million pounds of cereals and snack chips, which will increase to 17 to 18 million pounds per year if expansion plans are completed.

The rural setting hasn’t caused a problem with distribution, Massoud says. “We’re right on a rail line and major trucking lines on Highway 23 and 7. This is a real salt of the earth kind of place. The community is stable and supportive with a strong labor force that takes ownership in the manufacturing facility.”

Knack for snacks

Kay’s Naturals protein chips have been on store shelves since January. They were first sold in small Twin Cities health food stores, then a major Minneapolis distributor, Gourmet Award, picked them up and distributed to Byerly’s and Lunds.

A natural foods broker in Chicago and a major broker on the West Coast are finding retail outlets around the country, including a nationwide chain of Bally Fitness Centers. Food distributors such as Tree of Life in Texas and BOSS of Pennsylvania have picked up the snacks, and Ann expects the chips to be in HEB Food Stores in south Texas this summer.

“We’re at a point where our growth could be explosive,” Ann says, “but we’re being careful not to move so fast that we can’t keep up with it financially.”

Ann has led the marketing efforts, keeping a focus on natural, organic and sports nutrition markets and listening closely to sales staff feedback. “If we hear a trend, we respond.” Ann has discovered she has a knack for sales but insists there is a caveat: “Marketing savvy could just about kill you,” because the possibilities are infinite.

Nancy Larson, AURI program specialist in Marshall, says AURI is assisting with packaging and advertising design and providing technical assistance in product development.

The company is continuing to design new products including high-protein salad and pizza toppings, stick cookies, cereal and pillow-like snacks filled with creamy flavorings. Tom Nelson, a Condon manager, says they are also considering the vending machine markets, “but we don’t know if we’re premature. … A consumer is prepared to pay more for organics in the grocery store, but are they ready to do the same at the vending machine?”

Ann is cautiously optimistic about the company’s success: “We have been fortunate in that we have had excellent advice from bright people who have protected us from making serious mistakes,” including “people who hold no stake in the company.”

Ann also credits “a terrific board… and a very talented set of investors” from around the country who bring experience in business start-ups, financial strategies and nutrition. “You just have to find the right people so you get the best advice … Nobody can do this alone.”

“There’s always a struggle, but we’ve learned so much — from manufacturing to marketing.”

Although Ann’s time is consumed by her start-up company right now, she hasn’t given up on her law career. In fact, she’ll be wiser when she returns to her practice representing small and medium-size companies, she says. “I will know what they are facing on the other side.”