how to start a potato chips manufacturing business

How to Start a Potato Chips Manufacturing Business

Potato chips manufacturing is a lucrative business, considering the widespread popularity of this snack. This guide provides a comprehensive overview of the steps involved in starting a successful potato chips manufacturing business including machine, equipment, set-up, process, etc.

What are Potato Chips?

The potato chip’s origins can be traced back to the mid-19th century. Legend has it that the first potato chip was created by chef George Crum in Saratoga Springs, New York, in response to a customer’s complaint about thick and soggy French fries.

Over the years, potato chips have evolved from a novelty item to a snack enjoyed worldwide. Different cultures have added their unique twists, incorporating diverse seasonings and flavours.

Potato chips are one of the most popular ready-to-eat snack items in India. And any individual can start a small-scale manufacturing project with a small capital investment. Additionally, from the same unit, you can produce french fries and banana wafers. It will increase the overall profitability of your unit.

Currently, potato chips are available in different tastes and flavours. The list includes salty, sour, sweet, hot sauce, ketchup, light salted, red hot, etc.,

Is Potato Chips Business Profitable?

Potato chips are the most popular salted snack item globally. Additionally, the demand is increasing day by day. As per this report, the global potato chips market size reached US$ 34.3 Billion in 2023. Looking forward, IMARC Group expects the market to reach US$ 43.6 Billion by 2032

Several aspects are directly and indirectly responsible for the rapid growth of the potato chips market. The reasons include easy affordability and availability, increasing young population, growing disposable incomes, and changing lifestyles.

Additionally, the introduction of healthier alternatives, like low-fat and low-sodium chips, in emerging markets also supports the growth of this industry.

Potato chips in the pouch packets are the most popular in the market. Additionally, hotels, restaurants, and caterers are the major institutional buyers of this item. Also, the product has great export potential. Some of the most popular potato chips brands are Lay’s, Pringles, Uncle Chipps, Haldiram’s, Ruffles, Bingo, Tastilo, etc.

11 Steps to Start Potato Chips Manufacturing Business

1. Understand the Market

Conduct thorough research on the potato chips manufacturing industry. Analyze market trends, potential competitors, and consumer preferences. Identify your target audience, considering factors such as age group, demographics, and local preferences.

2. Create a Business Plan

In starting the business, you must have a business plan or project report in your hand. And according to your investment capacity, you will need to craft the project report. Additionally, the project report is a mandatory tool for applying for a bank loan. Generally, a project report has two parts. One is mechanical and another is financial. It is advisable to ask an expert to prepare the business plan document for your proposed unit.

Read: Best Personal Loan Apps in India for Instant Cash

3. Licensing & Registration of Potato Chips Making Business

In starting this business, you will need to obtain several registrations and licenses from the Govt. authority. First of all, you have to register the business with ROC. However, you can also start a mini plant as a proprietorship company. Apply for a Trade License and MSME Udyog Aadhaar registration. Also, you have to get permission from FSSAI.

This type of production unit doesn’t demand pollution clearance. However, it is better to have a NOC from the Pollution Control Board of your location.

You will establish a brand in the market. Hence, you can protect the brand name through trademark registration. Consult with a tax consultant about the upcoming compliance liabilities. You will need to get the GST registration too.

4. Potato Chips Manufacturing Unit Setup

You will need to have a space for the unit operation. Generally, an 800 Sq Ft space is good enough for starting a small-scale unit. However, it depends on the business size. Additionally, you will need to have electricity and a water supply.

Carefully, select the factory location. There are some important aspects that you must consider before selecting a location for the unit.

5. Potato Chips Making Machine

You can start the unit in two ways. Either as semi-automatic or on a fully automatic basis. However, procuring the machinery carefully from reliable suppliers. Some of the basic machinery requirements are

  • Potato washing and peeling machine
  • Slicing machine
  • Dewatering machine
  • Batch fryer
  • Spice coating machine
  • Sealing machine with inert gas flushing unit
  • Stainless steel working tools
  • Weighing scales, dispensers, and fillers
  • Plastic trays

6. Raw Materials for Potato Chips Making Unit

The major required raw material is the potato.  However, you have to procure potatoes carefully. You will need to collect large oval shapes free from disease and fully mature potatoes. Additionally, it must have the minimum number of eyes to cut down the losses by trimming.

Additional required raw materials are oil, salt, spices, preservatives, etc. Also, you will need to procure the packaging consumables. For primary packaging, you will need to have poly pouches. In addition to that, for outer packing, you have to arrange corrugated boxes.

7. Potato Chips Manufacturing Process with Flow Chart

First of all, wash the potatoes thoroughly and peel them. You can peel the potatoes manually with a stainless steel knife or using an abrasive potato peeling machine.

Then wash the peeled potatoes with sprays of water. Then trim them and place them in water to prevent browning. After that, cut them into slices from 0.4 to 0.5 cm thick on a slicing machine. Again place the slices in cold water.

Whenever there is considerable delay in the subsequent operations of blanching, you can keep the slices in water containing 0.05% Potassium metabisulphite to avoid oxidation.

Then blanch the slices for 3 to 5 minutes in boiling water and spread them on trays at the rate of 4.88 kg. to 7.30 kg. per square meter of the tray surface. The blanched chips are then subjected to a hydro-extracting machine (centrifugal) to remove the excess water and fried at 1900°c for 3-4 minutes. fried potato wafers are then

Finally, keep the fried potato wafers in the sieve to remove the excess oil. After cooling, mix the other ingredients like salts, and the spicy mixture as per the required taste. And finally, pack the potato chips in polythene bags and seal them.

8. Quality Specification for Potato Chips

During production, you will need to maintain some of the quality specifications for the potato chips. First of all, you have to maintain the moisture in chips at 2% maximum. Additionally, you must use F.F.A of oil as oleic acid up to 0.1% maximum.

The oil must contain nil Peroxide value. Finally, the potato chips must be free from coliforms, salmonella, and streptococci bacteria.

9. Branding and Packaging

Create an attractive and memorable brand identity, including a logo, packaging design, and branding materials. Differentiate your product in a competitive market. Choose packaging materials that preserve the freshness and crispiness of the chips. Ensure that the packaging is visually appealing and meets food safety standards.

10. Marketing and Distribution

Develop a marketing strategy that includes online and offline channels. Utilize social media, partnerships, and promotions to create brand awareness. Establish distribution channels to reach retailers, supermarkets, and snack vendors. Consider direct sales to consumers through online platforms.

11. Potato Chips Making Project  Cost Synopsis

Plant Capacity: 2000 kgs per day Plant & machinery: Rupees 137 Lakhs
Working Capital: Rupees 91 Lakhs Total capital investment: Rupees 271 Lakhs
Return: 39.21% Breakeven: 40.17%

The actual cost of the project may deviate from the change of any of the assumptions. You can modify the project capacity and project cost as per your requirements.

Frequently Asked Questions

What is the cost of the potato chips manufacturing plant?

Generally, the cost of the project depends on several aspects. These are production quantity, business size, etc. However, fixed capital consists of plant, building, machinery, and other preliminary expenses. The working capital cost consists of raw materials, labour, utilities, etc.

What is the profit margin in the potato chips making business?

Commercial potato chips manufacturing is a profitable business. The business ensures a good margin. However, how much profit you will earn depends on several internal and external aspects. If you want to increase the profit margin, you can think about reducing the cost price. Also, this type of item ensures a better margin if you can increase the sales volume too. Increasing the sales volume ensures reducing transport costs, infrastructure costs, and manpower costs too.

Are there specific regulations and certifications required for potato chips production?

Yes, adherence to food safety regulations is vital. Obtain necessary licenses and certifications, including hygiene permits and compliance with local health authorities. Certifications such as HACCP (Hazard Analysis and Critical Control Points) may also be beneficial.

What types of potatoes are best suited for potato chip production?

Varieties like Russet and Yukon Gold are commonly used for their low sugar and high starch content, which contributes to a crispy texture. However, the choice may also depend on regional preferences and availability.

What equipment is essential for a potato chips manufacturing plant?

Essential equipment includes potato slicers, fryers, seasoning machines, and packaging equipment. Ensure that the machinery meets industry standards and is capable of handling the desired production capacity.