When a company has been making petfood for 90 years and has an iconic name and unprecedented trust in the marketplace, you might think it has no new heights to scale. Yet Nestlé Purina PetCare is not content to rest on history or reputation. In November 2010, the company reached a new milestone by earning the prestigious Malcolm Baldrige National Quality Award.
“We didn’t set out to earn the award,” says Terry Block, president of Nestlé Purina PetCare’s North American Pet Food division. “We applied with a continuous improvement mindset of wanting to become better. And we thought for a reasonable fee and some work, we could get some excellent feedback on our practices. Our interest is in working on our business practices and trying to benchmark ourselves against what we perceive as other high-performing companies. It's been a journey of ours for the past 17 years.”
That continuous improvement—including in the all-important areas of product development, safety and quality—contributes to Nestlé Purina’s status as the most trusted petfood company, according to Block.
Perhaps the most visible improvement is the company’s business results, with sales and market share growing across the board in 2010. “We improved share in every one of our segments last year and have for the past several years,” Block says. While the company does not report sales by market, Nestlé Purina PetCare had global sales of US$12.5 billion in 2010.
Block credits two factors. “One of the keys to sustainable growth is being able to manage what I call the tyranny of the short-term and the long-term,” he explains. “You have to be able to do both successfully to have sustainable operating performance and be able to outperform the market. So yes, we will always do our best to achieve the short-term, but we’re always looking out three to five years and making the capability and infrastructure investments that are necessary to sustain our performance over the long term.
“Secondly, I’d say we have a maniacal focus on the consumer, both the dog or cat as well as the owner of that dog or cat,” Block continues. “We really want to provide that consumer with products that will allow the dog or cat to thrive over its lifetime.”
The most important strategy derived from that consumer focus, Block says, is Innovation & Renovation, Nestlé’s R&D strategy. “We spend a significant sum of money as a percentage of sales against R&D. We touch over US$1 billion a year of our revenue with product improvements or new products, and we have for the past several years,” he explains. “What we look for in innovation is scalable white space. As we see those opportunities, we’ll try to seize them and create a product to address that need.”
Block adds that these innovation and renovation efforts help keep the entire product portfolio fresh and revitalized. To ensure the products are improving in both palatability and nutritional efficacy, Nestlé Purina has its own large kennel of dogs and cats that continually test not only its products but also competitive ones. In addition, the company looks for what Block calls “bolt-on acquisitions,” such as its purchase of Waggin’ Train dog snacks in September 2010.
The most exciting launch in the past 12 months, Block says, is the brand Beyond from Purina One. “It’s about taking small steps to make a difference in the lives of consumers, their pets and the environment. As we did research, we were seeing an increasing number of consumers beginning to consider more than taste and nutrition when they choose a petfood.
“Sustainability by itself is not a primary reason to purchase, but when you have the appropriate attributes and benefits of food appeal and nutrition, sustainability can be that difference-maker,” Block adds. “Consumers are interested in knowing the things we are doing to make our products more sustainable.”
The Beyond line, for example, is packaged in bags made from at least 92% renewable material (“I believe that was a first in the industry,” he says) and printed with soy-based inks. Also, the brand is produced at a Nestlé Purina plant in Denver, Colorado, USA, that’s generating a small part of its energy from solar power. “We’ve got two facilities now, the one in Denver and one in Flagstaff, Arizona, USA, that use solar power,” Block explains. “It’s one of those small steps we’re taking to gain experience with solar power as a source of energy.”
Block emphasizes, however, that the company has been reducing the amounts of energy and water used in its plants for years. “Prior to sustainability becoming the hot buzzword, it was called cost efficiency. As you reduce energy and reduce water, you reduce costs, and we have been on that curve for over a decade,” he says.
Nestlé Purina’s other sustainability initiatives include:
- Together We Can, a three-year-old program involving retailers that encourages consumers to recycle wet petfood cans;
- The use of more sustainable fishing practices and fish, working with several non-government organizations; and
- A variety of social responsibility programs with animal welfare organizations, including Pets for People, Purina Pro Plan Rally to Rescue and the One Hope Network by Purina One.
After over 33 years in the industry, Block recently announced his retirement, effective at the end of 2011. “I’ve had a great ride,” he says. “I’ve worked with a host of super people and I’ve had a lot of fun along the way.”
Block has spent all those years with Nestlé Purina, which he describes as both passionate and pet-centric, where many employees bring their pets to the office. “I think that passion transfers into the work we do across all functions as we attempt to outpace our competitors in interacting with the consumer,” he says, adding that might be something many people don’t realize about the company. “Because they don’t really understand the culture behind that big petfood company called Nestlé Purina and the checkerboard.
“We call it out in our mission statement that we stand for trust,” he continues. “We want to enrich the lives of pets and the people who love them.”
