As demand for pretzels 'flour-ishes,' Pa. bakers are rolling in the dough

The nation's economy may be tied in knots. But you wouldn't know it from talking to America's pretzelmakers.

''Pretzels are spreading,'' says Terry Groff, president of the Reading Pretzel Machinery Corporation. And the man who invented the braided pretzel now marketed by Keebler has figures to prove it: Machinery sales have leaped from $ 300,000 in 1979 to a projected $2.3 million this year. ''This has been our best year ever,'' he says.

Down the road in Lancaster, a user of his 80-foot-long machines agrees. Glenn Hyneman, president of the Keystone Pretzel Bakery, says his operation has doubled in size annually for the last six years. He now produces 150,000 pounds of the twisted crackers each week - big and little, hard and soft, salted and plain.

And while he continues to supply his own local region - where a Germanic heritage puts Pennsylvania at the top of per capita pretzel consumption in the nation - he finds that ''sales are really jumping in the outlying areas.'' Already shipping to an area that includes Vermont, South Carolina, and Indiana, Mr. Hyneman has targeted the industrial South as his next major market.

A survey of the industry in the June issue of Snack Food magazine confirms the trend. According to figures from 24 manufacturers, sales in the Pennsylvania heartland rose 9 percent in 1981 and 19 percent in the rest of the country. The result: The pretzel business is now worth some $242 million in sales, and bids fair to grow even more.

Why the growth? Those in the know cite several reasons:

* Technology. Pretzels, which apparently date from Roman times, began as a labor-intensive product requiring many hands to tie the knots. Even after they came from Europe to America - where the word first showed up in Webster's dictionary in 1879 - they were largely the product of back-alley, mom-and-pop bakeries in Berks and Lancaster Counties in central Pennsylvania.

But according to Mr. Groff, nobody ties pretzels anymore - although his firm began after World War II with an intricate system designed by a local inventor, which mechanically tied the sticks of dough. Nowadays, Groff says, almost all pretzels are extruded - the dough is squeezed through a pretzel-shaped stencil and sliced off as it emerges. From there the pretzels drop onto conveyor belts and move through the long gas-fired ovens and under a salting machine.

Through that technique, the baking of pretzels can be done anywhere - and by such giants as Frito-Lay (the market leader) and Nabisco (in second place). Groff's company, which according to his estimates has captured between 60 and 80 percent of the pretzel machinery business in the country, builds and installs about four machines a year. He sees the Midwest as a promising area of growth. But he also notes that between 20 and 30 percent of his business is overseas, and he ticks off a list of growing markets in Europe, the Philippines, Japan, Israel, Greece, Peru, Venezuela, and South Africa.

* Competition. A spokesman for Snack Food Magazine says the product may have swept in to make up for ''a tremendous peanut shortage'' in the last two years. All the ''savory snacks,'' he says, showed increased sales in 1981 -- popcorn ''grew tremendously.'' And while the business has been growing for a number of years, the increased demand for pretzels in 1981 was, he says, ''quite unusual.''

Part of the reason for growth may lie in the fact that the market has yet to be saturated. In past years, growth came either in Pennsylvania itself or in cities like Cincinnati, with a substantial community of German immigrants. Now the taste has spread -- but, unlike popcorn and potato chips, suppliers have not yet caught up with demand.

* Nutrition. Hyneman feels much of the growth is due to the public perception that pretzels (made of little more than flour-and-water paste) are a healthy alternative to other snack foods. If you sell unsalted pretzels, he says, ''there's hardly any negatives that a government agency can put on you.''

Nevertheless, the industry is apparently anxious to address itself to such ''negatives'' as do arise. Michele Madonna of the National Pretzel Bakers Institute in Lancaster, Pa., says that her group is eager to comply with a voluntary sodium labeling regulation now being promulgated by the federal Food and Drug Administration -- rather than have Congress legislate a mandatory labeling law. Pretzel bakers, she says, are now working to produce low-sodium products.

Meanwhile, Pennsylvania may well remain the heartland of the pretzel business for the immediate future. At times, says Groff, he is tempted to move his headquarters to a Sunbelt location. Instead, he is currently negotiating an expansion of his facilities in nearby Womelsdorf. In accounting for his success, he points to his 25-member work force. ''I have some fussy Pennsylvania Dutch machinists,'' he says with evident admiration.

And with business growing as it has been, he may well have to find more. ''If I could get the per capita consumption of pretzels in the country up to the level of Reading,'' he says, ''we'd have a plant the size of Caterpillar Tractor.''