The bark of a yellow Labrador Retriever rings out as actor Dick Van Patten, chairman of Natural Balance Petfoods, reviews a sales chart on the upward swing. The company invites employees to bring their dogs to work. In fact, the company even puts them to work at times. The personal pets of company employees are the first to sample product prototypes.
Sales of US$72 million
Conceived in 1989, Natural Balance (www.naturalbalanceinc.com) is now a US$72-million operation providing products for pets and zoo animals. Dog and cat foods range from dry product to canned food, frozen cubes, microwaveable loaves and meat rolls and treats.
New products and creativity
New products are often the best measure of a company's creative powers. At Natural Balance, the creative machine is pumping on all cylinders. "We are all part of the new product team here," says CEO Joey Herrick, who joins Frank Koch, executive vice president, and chairman Dick Van Patten in creative sessions. Nutrition consultants and zoo expert Marty Dinnes, DVM, also play critical roles. The company's zoo business has put a charge into its petfood operations, inspiring crossover products like Crunch-E-Bones for dogs, a product originally designed for zoo bears.
All new products must comply with the company's high standards of nutrition and safety. Viable new product recipes undergo extensive analytical tests. Test batches are run in the plant. "For our meat rolls, it took 17 test batches to get them right," says Herrick.
Eatables for dogs and people
Dick Van Patten's Natural Balance Eatables for Dogs products contain eight ingredients ("Eight is enough!" quips Van Patten) including fresh vegetables, high-quality meats, a special blend of nutrients, vitamins and minerals and other premium ingredients. Varieties include Irish Stew, Chinese Take-out and chicken-based Hobo Chili. Van Patten asserts, "You can't tell the difference between my Eatables and a home-cooked meal." He emphasizes that the product is human food, fortified with the nutrients dogs need.
"We're the first national petfood company to have a canned dog food made in a USDA-inspected plant suitable for people food, not a petfood plant," says Koch. He believes the practice establishes a new industry benchmark, and a marketable one at that.
Underscoring the company's "human-grade" quality commitment, Herrick also hired Lloyd Parks, a ConAgra alumnus, to be his manager and director of quality assurance at the Pacoima, California, USA plant. "Our mentality is in human food," emphasizes Parks. "I want our plant run like a USDA food plant."
Avid pet owners are apt to express personal wants and needs in the care of their pets. While petfood marketing has long driven this anthropomorphic principle to profits, Natural Balance has drawn equally from its sister truth: Great taste and nutrition may be easier to sell on the petfood shelves than in the human food aisles. Humans tend to preach more about "eating well to be well" than they practice. Natural Balance gives them a chance to practice what they preach in their choice of petfoods.
"In the old days, petfood manufacturers went to 'least-cost' formulation. They bought the lowest cost ingredients in the commodities market, and that's what went into petfoods," explains Koch, whose 35-year petfood career includes a stint with Hill's Pet Nutrition. "We wanted high quality."
Natural Balance has stuck with safe, proven ingredients in its animal food. "Some companies are throwing in herbs and other ingredients they don't know anything about," says Herrick. "We stay away from that."
A badly needed infusion of capital in 1999 from Dr. Greg Kay, a top heart surgeon, roughly coincided with the roll-out of the landmark Ultra Premium Dog and Cat Food canned and dry foods. The addition of taurine to the formulation made the introduction a watershed event in the history of petfood. Studies have since linked dogs with dilated cardiomyopathy (DCM) to low plasma taurine levels. "Ultra was ahead of its time," says Koch. "It was unusual then to add taurine to a dog food formulation. Cat food? Yes. But not for dogs."
More breakthrough products have followed since. Most chisel away at the quality and even perceptual barriers between human and petfoods. Natural Balance Gourmet, for example, is a line of frozen microwaveable meat loaves for dogs. Popular as the product has been, it has suffered from the difficulties of distributing a pet product through distribution channels for frozen foods.
No doubt, pet owners overestimate pet allergies. "About 80% of owners think their dogs have allergies," says Herrick. "Veterinarians estimate that actual number at more like 15-20%." But processors like Natural Balance are hardly sneezing at the potential of allergy-aimed formulations; even 15% amounts to a formidable sum in the US$34.8 billion global dog food market.
Natural Balance Ultra Premium Allergy Formulas for dogs and puppies come in three varieties: Potato & Duck; Sweet Potato & Fish; and Venison & Brown Rice. Joining the potato and duck dry formula are a duck and potato canned food and a potato and duck treat. The line also includes a venison and green pea formula for felines.
"The basis of allergy formulas is a single-source protein coupled with a single-source carbohydrate, both of which the animal has not been previously exposed to," explains Dinnes. Copycat products add ingredients that may compromise the effectiveness of the Single-source x 2 concept. "Our duck and potato is only duck and potato," says Dinnes. "And it is one of our best selling products."
Happenings at the zoo
Five years ago, Natural Balance contracted with the San Diego Zoo to feed its key carnivores. "Dr. Mark Edwards headed the operation then. He wanted to take zoo nutrition to a new level," explains Herrick. "Zoo animals all used to be in cages. Today we place them in some semblance of a natural habitat. But zoo nutrition is still in cages."
Make that "was" in cages. At an estimated 55 zoos, Natural Balance Zoological Formulas today feed a wide array of zoo carnivores including lions, tigers, cheetahs, bears, snakes and meat-eating birds ranging from condors and eagles to crows and magpies.
The zoo business has stoked the company's creative fires and enabled it to unleash a plethora of new products. "I saw the zoo business as prestigious for us," says Herrick. "Consumers think, If zoos are going to trust Natural Balance with endangered species, we can trust them with our pets!'"
Natural Balance has parlayed its expertise from Zoological Formulas for Carnivores to Natural Balance Canine RAW Food Diet, a frozen dog food line manufactured at the headquarters plant. RAW products approximate the nutritional content of food a meat-eating animal would consume in the wild and have favorable protein-to-fat ratios.
While Dick Van Patten's familiar man-you-can-trust image has bred confidence in the American market, quality and concept have generated acceptance of Natural Balance overseas. The company has had success in Japan, Singapore and Hong Kong, and it recently launched product in the Australian market as well. Trade restrictions in the European Union have limited broad expansion on the Continent. Still, the company has managed inroads into the markets of Germany, Italy, Belgium, Switzerland and Austria.
"EU restrictions are greater every year," notes Koch. "It may be easier for us to manufacture in Europe than to export."
The hardest part
Natural Balance is adding an 11,000-sq.-ft. expansion to its 25,000-sq.-ft. Pacoima plant, where it manufactures some of the petfood industry's most innovative products including Roll-a-Rounds and the RAW line of frozen petfoods.
The bustling new 54,000-sq.-ft. distribution center nearby offers further evidence that Natural Balance is, indeed, on a roll. The seven-year-old plant will add two lines for its popular roll products next year. The company also has plans for a new plant in Georgia, USA. Moreover, it is building a new testing laboratory, expected to open this fall.
The company continues to grow at a pace that poses formidable production challenges. "Keeping up with growth is the hardest part of our business," says Koch.