Brazilian powerhouse

A relative newcomer to petfood, Total Alimentos SA has leaped to global leader status

Total's headquarters includes a large distribution center where trucks back into bays lining the back wall of the company warehouse. Once products go to the other side of that wall (to the docks), they are considered the customer's property.
Total's headquarters includes a large distribution center where trucks back into bays lining the back wall of the company warehouse. Once products go to the other side of that wall (to the docks), they are considered the customer's property.
Dr. Corbin used to say, 'Sell no food until it's okayed by the dogs and the cats.'

"Always ask the dogs and cats first; they are the real owners." That statement sums up the philosophy behind the success of Total Alimentos SA, based in Três Corações, Brazil. Uttered by president and founder Antônio Teixeira Miranda Neto (known as Miranda), this guiding principle refers not only to the company's practice of feeding all its potential new products to the animals at its own research station; it also means focusing on pets' nutritional needs to develop innovative premium petfoods for the global market.

The philosophy is definitely paying off. Though its petfoods have been available only since 1995, Total ranked as the ninth largest petfood company in the world last year, having grown more than 200% from 2000 to 2006. That growth has leveled off recently, but the company is still launching dozens of new products, expanding its global distribution and reaching new heights of quality and safety.

Get the animals' okay

Miranda began his career in petfood heading the Brazil office for Ralston Purina. In 1975, he started a feed company (then called Sul Alimentos) with two partners. Miranda split off in 1993 and changed the name of his company to Total Alimentos in 1995 when he created the petfood division.

Today, petfood comprises 70% of the company's sales. Besides being one of the largest petfood producers selling to the Brazil market, Total exports its cat and dog foods to 33 countries.

Miranda's longtime mentor was the late Dr. James E. Corbin of the University of Illinois, who worked with Miranda at Purina and became a consultant to him when Miranda started his company. Miranda credits Corbin with helping Total create its research station and establish the requirement to conduct feeding trials on all products under development. "Dr. Corbin used to say, Sell no food until it's okayed by the dogs and the cats,'" Miranda explains. Corbin emphasized the importance of not only proving the palatability of the products but also analyzing lab samples from the animals to show high digestibility and nutrient usage.

Now Total and its technical director, Anderson Duarte, are advised by Dr. George C. Fahey Jr., also of the University of Illinois.

New buildings, new brands

Duarte's and Fahey's work is evident in the explosion of new products emanating from the company's sprawling headquarters. To keep up with the growth since 2002, Total has added two new petfood factories to two existing extrusion buildings. The facility also includes a feed factory, its own electricity source and water supply, plus a cafeteria at which all Total employees-including Miranda and other executivese-at lunch every day.

Miranda estimates the Total portfolio encompasses 125 product lines or about 850 stock keeping units (SKUs). These include several new brands and line extensions launched just this year:

  • Naturalis, a line of natural dog foods with chunks of fruit visible in the kibble;
  • Natural Chicken Breast dried treats and jerkylike sticks (includes fish sticks and slices for cats);
  • Oral care products for dogs; and
  • Hairball-prevention products for cats.

Refocusing growth

All the new products reflect a restructuring of the company, Miranda says, citing two new directions:

  1. Focus on premium and superpremium products , sacrificing the volume of economy-priced petfoods for higher revenues. Earlier this decade, the Brazilian petfood market was booming, with many new entries coming in at the low end, flooding the market with what Miranda says were low-quality economy brands. Though growth in the premium/superpremium segment in Brazil has been flat in recent years, Miranda believes Total can best compete in the long run by maintaining its quality and margins. This also helps hedge against commodity prices that continue to increase.
  2. Continue to develop labor-intensive products, especially treats. Manual labor in Brazil is inexpensive compared to the US and other more developed markets. Labor perhaps costs more than in China and other parts of Asia, but Miranda believes Total can offer much higher quality than producers in those regions can. The catch, he says, is combining the manual labor with the latest technology and equipment so much larger companies can't beat him at this strategy. By creating more jobs, Total also supports the local economy.

To keep quality and service high, Total maintains a large sales force selling directly to 12,500 pet store and other retail accounts. As the company has expanded globally, it has opened sales branches in China, US and Europe.

Quality mind-set

Since 1999, Total has co-packed Hill's Science Diet dry petfoods for the South American market. Making those plus all its own products means a plant that operates at least two shifts a day-the treat packaging building operates 24/7-and a large distribution center where trucks back into multiple bays lining the back wall of the warehouse.

That wall serves as more than a physical entity; it represents a change in how products are handled. "Once products go from the warehouse to the other side of that wall, they become our customers' products; Total no longer owns them," Miranda says. Then they are treated with even more care.

That mind-set pervades every corner of the Total facility, which follows human food-processing standards and is certified in ISO 9001, GMP and HACCP. Taking quality and safety a step further, this summer Total became the first petfood company in Brazil to receive the new PIQPET seal from ANFAL-PET, the petfood manufacturers' association, for four product categories: standard, premium, superpremium and snacks.

Despite the third-party assurances, ensuring Total's continued success remains a personal mission for Miranda. When he's in town, he likes to walk through the plant at least twice a week. "Even when you have a good team, it's good to see for yourself," he says.

Business Basics

Headquarters: Três Corações, Brazil
Officers: Antônio Teixeira Miranda Neto, president; Paulo Tavares, financial director; Anderson Duarte, technical director/product development; Diana Coelho de Miranda, research station director
Annual sales: US$220 million estimated for 2008
Brands: Família Max, Big Boss, Lider, K&S, Equilíbrio, Naturalis, Natural treats
Distribution: 33 countries besides Brazil
Employees: Approximately 1,100

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