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Freshpet trendsetters - Cathal Walsh, John Phelps (with B.E.) and Scott Morris - are radically changing the way we think about petfood.
On March 28, 2008

A fresh idea

With the goal of revolutionizing the way dogs are fed, Freshpet sinks its teeth into a US market ready for something innovative

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["Pasteurization just gets that right balance between bioavailability and having a safe food to feed.", "If you think about very processed here, and raw here, we're kind of in the middle."]

The initial scheme for Freshpet came about when Cathal Walsh, COO and co-founder, and John Phelps, VP of R&D and co-founder, both worked for a major petfood manufacturer in Australia. "In Australia the fresh market is 22% of the petfood market," according to Walsh, "so it's large, successful and growing. The US market is one of the most advanced markets in the world and consumers were absolutely primed for it. All the trends pointed toward fresh food."

So, with the goal of revolutionizing the way dogs were being fed, a group of veterinarians, scientists and nutritionists - including Pennsylvania State University's department of food science - created a human-quality dog food made of meat, vegetables, rice and little else. Or as Walsh puts it, "What consumers wanted in human food wasn't getting paralleled in petfood, so we took that opportunity and launched it here."

Keeping it simple

Nutritionally, Freshpet products, which are currently available in slice & serve rolls and Fresh Bites, are very different from typical wet/canned and dry petfoods. "We process our food a lot less than canned or dry petfoods," says Walsh. "They are both highly processed foods, that's what gives them their two year shelf life." As for Freshpet Select and Deli Fresh, Freshpet's two brands of dog food, they obviously have a shorter shelf life:13 weeks from date of manufacture to declared packaging, to be exactsince they are preservative free and refrigerated. When consumers call up and ask how to handle the food, they are simply told to handle it the same way they would their own meat or milk. Once the product is brought home it should be kept in the refrigerator and, once opened, used within a week.

"We use the process of pasteurization and we keep our ingredient statement very simple. It is what you see," explains Walsh. "It's chicken, vegetables and rice." And he isn't kidding. In a 6 pound package of Freshpet Select slice & serve Adult Chicken, Vegetable & Rice Dinner there are:

  • 2½ pounds of chicken;
  • 12 ounces of liver;
  • 6 eggs;
  • 11 ounces of vegetables and brown rice;
  • Vitamins; and
  • Minerals.

And that's it.

"Everybody talks about the humanization of pets," says Scott Morris, VP of marketing and co-founder. "Think about your child for a minute. Would you feel good about giving them a bowl of chicken-flavored cereal and going, 'Here you go!'?" And as Walsh points out, feeding them that chicken cereal everyday, for virtually their entire lifespan.

"Petfood's been stuck in extrusion and retort," continues Morris. "It's not because manufacturers couldn't dream up a better food - it's because it's hard. What we did was hard and painful and expensive. There's been a lot of learning."

"We'd like to think that if you could start from scratch all over again, with no extruders or canneries, and develop the perfect dog food that was safe to usea combination of fresh meat, vegetables and some rice is what you'd end up with," finishes Walsh.

Not raw, not overprocessed

Walsh and Morris are quick to point out that the process of pasteurization is what really sets Freshpet apart from other petfood products in the US market. "What we do is get that balance between pasteurizing it to ensure that it is always safe and high quality, but at the same time not overprocess it so is loses its nutritional value," Walsh explains. "Pasteurization just gets that right balance between bioavailability and having a safe food to feed that doesn't rely on consumers handling raw products correctly."

After last year's recalls, consumers were hungry for alternatives that were safe and healthy for their animals. Morris puts it this way, "I think after the petfood recalls, it caused a lot of consumers and retailers to look harder at the products that were in their stores. I think people are a little bit more cautious, a little bit more concerned, and I think consumers probably spend more time looking at ingredient statements."

Freshpet has seen no cases of bacterial contamination and was unaffected by the recalls, another reason why they attest pasteurizing their products is so important. "We know that the raw food guys have had some problems," Walsh says. "Certainly, we've seen a few reports and we've seen the FDA issue two statements saying that raw food may not be safe." Essentially, according to Walsh, pasteurization removes the bacteria that has plagued the raw food category.

"If you think about very processed here and raw here, we're kind of in the middle," says Morris. "It's a good kind of medium; a safe approach to feeding that's more natural, but slightly processed to make it safe."

Riding the wave

For a period after the recalls, a significant spike in natural, organic and holistic petfoods occurred. "We believe there's an acceleration of certain types of foods," says Morris. "They were growing anyway and they'll continue to grow, but they got a little bit of hyper speed for awhile. But I don't think it's this radical, overnight change and people are going to completely abandon what they've been doing." That's why Freshpet is working hard to differentiate itself in the market, virtually creating the fresh category in the US and Canada.

"It's this massive change and it takes time because everything has to be rethought," says Morris. "People have to rethink the approach to everythingthe supply chain, manufacturing, putting fridges in aisles."

"Just the sheer operation of it," continues Walsh. "It's not like we're putting another 8 pound bag of dog food on the shelf here - we're installing a refrigerator. We figured it out, though, and we got it done. It's working very well."

Their diligent work is already paying off, with sales up over 12 times this time last year and more than 17% share of wet dog food where Freshpet is currently distributed. A little over a year ago Freshpet products were in 200 stores. This year they just passed the 2,000 mark with distribution in both independent, specialty stores and mass/grocery channels where they're expanding with eight out of the top 10 pet retailers in the US like Wal-Mart, PetSmart and Petco.

Acceleration of innovation

"Food really hasn't matched the development of the rest of the pet category," states Walsh, when asked about the state of the industry and where he sees it heading. "The gamut of services for pets has moved on and met the humanization trend. Petfood has not, until now."

"It has been a paradigm shift," Morris explains. "We're changing the buying dynamics of consumers. When they're buying fresh food they're not buying a 40 pound bag and coming back weeks and weeks later. So they change their shopping frequency. We're changing how they store it, where they keep the food, how they serve it and cut it up."

Freshpet plans on launching a new treat in the upcoming year and is developing a whole series of products that the founders hope will widen the appeal of fresh food with consumers. Increased distribution is another place Morris and Walsh see big growth opportunities.

With their recent triumphs, the founders try and stay organized, keep their priorities clear and get things done to keep Freshpet moving in the direction they originally set for it. "We are growing at an accelerated rate," Walsh says. "Sometimes when you get that level of success and things are growing fast, you have to keep a clear vision and philosophy on what it is we're trying to do as a company. You can't compromise or let up."

Business basics

Headquarters: Secaucus, New Jersey, USA

Key staff: Dick Kassar, CEO; Cathal Walsh, COO, founder; Scott Morris, VP of marketing, founder; John Phelps, VP of R&D, founder; Mike Larney, sales; Sam Noto, sales; Vir Narula, production and logistics; Steve Macchiaverna, VP, controller

Business growth: 2006 finished in 200 stores; 2007 finished in over 2,000 storesstore count expected to more than double again this year

Brands: Freshpet Select slice & serve rolls, Freshpet Select Fresh Bites; Deli Fresh slice & serve rolls, Deli Fresh Fresh Bites

Facilities: Manufacturing plant in Quakertown, Pennsylvania, USADistribution: US and Canada

Employees: 50+

Websites: www.freshpet.com, www.freshpetselect.com, www.delifreshpet.com

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