Petco Health and Wellness Company, Inc. (Nasdaq: WOOF) announced an expansion of its partnership with JustFoodForDogs to extend its leadership position in the fast-growing fresh and frozen premium food category, and to better meet rising demand from pet parents.
As part of the expansion, Petco and JustFoodForDogs will co-develop a new human-grade fresh and frozen owned brand pet food for Petco's WholeHearted line, as well as pilot a custom food program at Petco's pet care centers. Currently available in approximately 700 Petco locations nationwide, the JustFoodForDogs offering is planned to expand to more than 1,000 Petco pet care centers by the end of 2022, further solidifying Petco's commitment to providing premium fresh and frozen food options to pets and increasing the availability of JustFoodForDogs nutrition nationwide. With the expanded partnership and exclusivity arrangement, Petco will continue to be the only national brick and mortar retailer to offer JustFoodForDogs products in retail stores and online through same-day delivery, buy online, pick up in store (BOPUS) and other online fulfillment options. The companies will also jointly invest in new marketing programs and the expanded pet care center presence to support the deepening relationship and fast-growing category.
Additionally, Petco will receive a warrant for JustFoodForDogs equity tied to the successful execution of the parties' 2022 plan, and will have the opportunity to acquire additional equity over time. Both companies have agreed on mutually beneficial structures should either Petco desire to add certain new fresh frozen brands to its assortment or JustFoodForDogs desire to add additional online distribution to its omnichannel offering.
"Pet parents are rapidly shifting feeding to the fresh frozen category, which is predicted to grow from $1 billion to approximately $4 billion by 2025, and 92% of it is selling through physical retail today," said Ron Coughlin, CEO of Petco. "Expanding our relationship with JustFoodForDogs ensures Petco's continued leadership in the category and reinforces our unmatched commitment to pet health and wellness. Broadly, we offer pet parents the fastest and most convenient access to fresh, human-grade food in the industry, whether purchased on petco.com and delivered same-day to their doorstep or picked up at a Petco pet care center. We look forward to further innovating with the JustFoodForDogs team to deliver new and exclusive options to our customers as we grow this long-term, mutually beneficial partnership, and are excited to become equity holders."
"Petco's commitment to health and wellness, as well as setting a higher standard for pet nutrition, are in perfect alignment with JustFoodForDogs' values and mission," said Julian Mack, CEO of JustFoodForDogs. "We want every dog to live its longest and best life possible through the transformational power of fresh food, backed by science. Pet parents value both the expert nutritional counsel they receive in store at Petco as well as the convenience of Petco's store locations and delivery options. Our partnership with Petco has been a fantastic collaboration to date, and we now look forward to deepening this partnership further to help even more dogs thrive from the health benefits of fresh food."
Petco's relationship with JustFoodForDogs began in 2018 and has contributed to Petco's leadership in the fresh and frozen pet food category. In 2018, Petco became the first – and remains – the only national retailer to remove pet food and treats with artificial ingredients from its offering, with nutrition standards that live up to its health and wellness focus. In 2019, Petco and JustFoodForDogs launched an iconic, state-of-the-art pet food kitchen in Petco's Union Square store, which marked the beginning of a national expansion program in Petco pet care centers and at petco.com. Additional in-store kitchens are planned to open in pet care centers this year, including one at Petco's Sports Arena location in San Diego. Petco's national footprint of strategically located JustFoodForDogs pantries has been honed in recent years to create an optimized infrastructure for fresh and frozen offerings that can't be replicated by online- or brick and mortar-only competitors.