On September 8, 2010

Interview with Proportions CEO Paal Gisholt

Read the full Q&A with Paal Gisholt, CEO of the innovative new dog food program, Proportions

Petfood Industry :  What new brands, products or packaging have you introduced in the past 12 months (or how many)? Can you provide information on how they are doing in the market to date?

SmartPak Canine is a national catalog and web retailer, a division of SmartPak, a 10 year young family-run animal health focused company. The focus of the Canine division is on providing healthy solutions for dogs, in the areas of nutrition, wellness and care products. Most recently, SmartPak Canine has introduced Proportions, the whole food custom canine nutrition program, after over a year of research and development.

In the last year SmartPak Canine has also introduced 10 new canine supplements under the SmartCanine line, in the categories of joint, skin and coat, allergies, senior, digestion and vitamins. In addition, we have introduced two spinoff products from the Proportions business, Hearty Chicken stew and Harvest Mix raw fruits and vegetables under our LiveSmart private label line, complementing our LiveSmart holistic dry dog food available in PortionPaks.

We’ve had an excellent response to all of these products, but in particular the Proportions whole food program. Dogs absolutely LOVE the food and people go nuts over the quality and convenience of these custom home delivered whole food meals.

PI : What are your company’s keys to growth?

Unlike most of the players in this market, we have a direct relationship with the consumer. This gives us a large amount of market feedback each day. We try to use this feedback to pick up when trends hit a tipping point and start to go mainstream. This is the case with our Proportions product line, where we saw many of the trends affecting how people feed their families spilling into their desires for their dogs. Recognizing that kibble alone would not satisfy their desires, we created the proportions meal that consists of a stew pouch, a kibble pouch, and a pouch of dried fruits and veggies.

Our direct contact with the customer also places a premium on customer satisfaction. Standards of service have really slipped in most retail venues, and with vets under time pressure during the visit, there are few places for dog owners to get their questions answered. Our exceptional customer care representatives, most of whom have animal science degrees, are given the time to engage in detailed conversations with consumers who have above average interest and knowledge of their dog’s requirements and options.

Our expertise has led us over and over again to innovations around the quality and convenience of the food we serve to dogs, most recently Proportions whole food meals.

PI : What would you say sets your company apart from the competition? (R&D, product development, product promotion, etc.)? What do you strive to be known for?

Our total focus on animal health, starting with the ingredients we put in our food and supplements but extending to the branded products we choose to offer in our catalog and on our website and on to the communication we have with customers as they review and select the right products for their particular dog.

We have also taken advantage of our direct marketing channel, since many of our products would not work particularly well at retail because they are generally customized to the animal’s exact needs, and we offer a huge range of options which just couldn’t fit on a store shelf.

When you bring together this wide selection of products with real expertise you have the potential to provide great value and targeted solutions for consumers and dogs.

PI : Please provide sales estimates for the past year or current year to date—or a comment on sales trends.

SmartPak overall has grown at a torrid pace and we have twice been on the Inc 500 list of fastest growing companies. Our SmartPak Canine business has grown smoothly throughout the difficult economy of the last two years, thanks in part to our proprietary products. But because we are privately held we do not release sales figures.

We just launched Proportions this year, and already thousands of dogs have tried the food and many are on the program receiving regular shipments of our custom whole food meals.

PI : What is the outlook overall for the future of your company? Any projections or possible new directions?

With the growth we have experienced we like the path we are on! We continue to search for and offer health-oriented products which solve problems for dog owners. The Proportions business has real legs, and we expect to soon be introducing additional varieties of Stew (lamb, salmon) and Harvest Mix (organic, super anti-oxidant), as well as adapting the offering in response to consumer feedback.

PI : Where do you see your biggest opportunities?

There’s an indisputable trend of human health and nutrition concepts migrating into the canine world, just as the way people view pets is moving from chattel to children. This creates enormous opportunities for health focused companies like ours to bring new products and services to the passionate pet parents who treat their dog as they would a child.

PI : How has your company changed over the past several years?

Growth has given us the ability to invest in our team to make sure we are offering the best service we can to customers. And in the course of this we have noticed that the quality of the dialogue we are having with consumers continues to get more sophisticated. Instead of “What should I feed my dog?” we are getting questions about specific ingredients and processing methods. It suggests to us that there’s a giant shift happening in the way people care for their dogs.

PI : What are some of your most difficult challenges? In other words, what keeps you awake at night?

Trying to help people see the light with respect to canine nutrition. Helping them get comfortable with making changes in their dog’s diet turns out to be harder than we had imagined. It’s one thing to “get it” intellectually and yet another to make the change and stay with it.

And finding new products is always a challenge, since we want to be the source for products you can’t just pick up in the big stores. The people with the innovative products sometimes have the least resources to get their story out, so that’s why our catalog distribution and web reach can be appealing to them.

PI : Were you affected by the 2007 petfood recalls and, if so, how?

Yes. Some of the dry food we sell turned out to be contaminated. But we were uniquely well suited to deal with it because as a sophisticated direct marketer we could not only track every tainted package but we could contact everyone who received it and within mere days we had identified and replaced all of the problem product. Customers gave us extremely high marks for the way we were able to handle that and we have many customers who’ve told us that they trust us because of the way we handled that issue in comparison to other retailers who did the bare minimum by simply hanging a sign notifying of the recall.

PI : How do you think the recalls affected the industry overall, and do you believe those changes should continue?

They made consumers more aware of ingredients, which we believe is ultimately in everyone’s best interest. The recall made consumers think seriously and carefully about what they were feeding their pets, perhaps for the first time in their lives, and that certainly bolstered sales of higher quality foods.

PI : How would you evaluate the current state of the petfood industry?

It’s clear the consumer’s mindset towards food is changing towards higher quality ingredients and better processing techniques. We see innovation and growth occurring in the high end of the canine food market. It will be interesting to see how far the growing awareness regarding ingredients extends into the market for more price-sensitive consumers, and whether they decide to trade up. In the end, it’s exciting to be on the leading edge of a revolution that has such a positive impact for the pets we all care so deeply about.

PI : What predictions do you have for the petfood industry?

I think the industry has over the years met consumer needs by creating a very cost-effective product that is extrememly convenient for the dog owner. But the emphasis on cost has forced compromises in ingredients used that are not necessarily optimal for the health of dogs. As consumers demand that ingredient quality improve, so will the competition for those ingredients among companies increase. As consumers become more demanding, the quality standards for processing and the effort that’s required to service the consumer will increase. All of these mean increased expense and the need for companies to increase prices at one of the most economically challenging times we’ve ever seen.

PI : Is there anything else you’d like to tell our readers about your company?

SmartPak is a family run company with a focus on animal health that is a complete alternative to the supermarket and big box stores. We’re proud of what we’ve accomplished and the innovations we’ve brought to the petfood industry. Though challenging, this is a really exciting time.

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