Interviews conducted by Sherri L. Collins
It was 56 years ago that Rolf C. Hagen immigrated to Canada, bringing his import/export apprenticeship experience with him. More than a half-century later, the Rolf C. Hagen company is one of the largest privately held pet product manufacturers in the world and it is Rolf’s son who now heads the concern. Pet Product News International caught up with both Hagens to discuss the company’s past, present and future.
|Founder and chairman Rolf C. Hagen with his son Rolf, who is president and CEO. Photos courtesy of Rolf C. Hagen Corp.|
: What inspired you to move to Montreal and enter the pet product business?
Rolf C. Hagen: I was born in a small resort town on the Baltic Sea north of Hamburg as one of 10 children. My parents owned a small hotel and during the three summer months of June, July and August, enough income had to be earned to support such a large family for another year. Not an easy task.
After my schooling, I entered into an apprenticeship in an import/export trading house in Hamburg. This company had a division dealing in the importation of raw materials for the fish food and pet food industry, including bird seed and animal feed.
During my apprenticeship I sold ant eggs from Finland, dried daphnia from China and mosquito larva from Mexico to Dr. Ulrich Beansch—an inventor of a revolutionary flake food for tropical fish called Tetramin—who had just started a manufacturing facility in a town south of Hamburg.
I also offered and sold millet, canary seed, sunflower seed, Niger seed, flax and other specialty seeds from all over the world to the Wührmann family of Vitakraft in Germany and the Jessen family of Hykro in Denmark.
These three major manufacturers of excellent pet products had one thing in common: They had established good markets in their home countries and some European countries, but had no sales to North America.
What’s more, the Hamburg trading house had difficulty getting ready access to some Canadian specialty seeds, such as sunflower, rape and mustard.
After successfully completing my apprenticeship, I could not make ends meet with the salary offered, and my decision was an easy one: Leave the country and try my luck elsewhere.
The USA was my first choice. The year was 1955, and I was 22. Uncle Sam had conscription going and would have sent me right back to Germany to do a stint as a GI. So I opted for Montreal, Canada, only 50 minutes away by plane from New York.
The Hamburg/Chicago line offered me a free trip on a small freighter, and it took over four weeks to arrive in Montreal on May 7, 1955.
I immediately asked my manufacturing contacts in Germany and Denmark for their export offers, and secured exclusivity agreements for Canada and USA. I had also instant success in contracting specialty seeds in the Prairie Provinces for export to Europe.
Already in Sept. 1955, I attended my first pet trade show in the old, rundown hotel, the New Yorker, in New York. It was the NAPI Pet Show (National Association of the Pet Industry) run by the outspoken Jay Winters.
There I met Sy Bergen and his partner Irv Gall of Gro-Wel Fish Ade, and took on their lines for Canada. The Willinger and Nestler brothers just started their Wil-Nes company, Ed Levey of Wardley just broke in his son Allan, who later became an icon and pillar of the pet industry. Adrian Sokoloff was building up his 8in1 product line. Henry Arak, Lou Gallo and Harold Bader were some of the kingpins; the Goldmans of Penn Plax showed their 3D backgrounds. Kurt Vogel, founder of Vo-Toys, showed a selection of dog and cat toys. Herb Axelrod had just started his colorful TFH career by offering a line of pet books, and Julius Cohen of Spartan Distributor, father of Alan Cohen of Blue Ribbon, gave me my first order in USA for a shipment of pet supplies from Hykro of Denmark.
In 1956, I had the pleasure of traveling to Europe with the eminence of the pet industry, Max Stern, the founder of the large Hartz Mountain company. His son Leonard was still in University at that time. Max Stern was a gentle, soft spoken, understanding and generous patriarch of the old school, and he impressed my contacts in Europe who did good private-label business with Hartz. In later years, after Leonard took command of Hartz, I often wondered why father and son could be so different.
Business grew at a rapid pace. By offering my younger brothers Dieter and Horst attractive positions with a piece of the action and putting in place capable managers to look after our USA interests, I ended up with one of the best teams in our pet industry in North America, and we never looked back.
PPNI: As a scion of the Hagen empire, did you ever want to do something outside the family business? How many positions have you held at Hagen? What was your favorite?
Rolf Hagen: There was never any doubt about joining the family company. All of the kids started working at Hagen at 16 and we spent all of our summers in the warehouse picking orders, keeping shelves filled or working at the plant. Later, we worked in the office and took orders or helped the receivable team with the daily deposit—a little bit of everything. I have a memory of telling my father that since we shared the same name all we have to do is change the middle initial of the company!
I started as export manager in mid 1992 and reported to our General Manager, Horst Hagen. My uncle was a terrific mentor and a dynamic individual. I was able to travel with him on his annual "buying trip”—the first one was a 43-day marathon as we visited 12 countries. I learned more in those six weeks than I did in six years of university. It was a great time as we grew our export business tremendously—it helped that we finally had someone specific looking after our partners. My markets were all of Asia, Australia and parts of Europe.
In 1999 I moved to Germany for a full year. When I came back my new title was VP International as we took over Mexico, Central and South America from Hagen USA and I had gained exposure to Eastern Europe while in Germany. But my responsibilities were evolving away from export as I was finding my voice within product development and brand development. In 2004, my father decided my ideas were best implemented as president. I was reluctant as it was too early for me—and also for the founders of the business—but he insisted. The moment of truth arrived one day when he moved out of his office and took his name plate down. There was no choice.
As much as being CEO is gratifying, I did enjoy my many years as export manager—it was an exciting time. You had to know your products and competitors as it was a sales position, but it also involved working with suppliers to localize products and with our own operations to ship product out. Best of all was the travel to new countries, and being a humble and sincere Canadian worked well, as did my German roots of getting things done right.
PPNI: The company started out as pet products importer and distributor; what led to the transition as a manufacturer? What was the first Hagen product to reach pet store shelves?
Rolf Sr.: We were in a comfortable position when we had exclusive control over major product lines with significant market share. We controlled 50 percent of the output of the Tetrawerke and enjoyed a close friendship with its founder Dr. Ulrich Baensch. Canada, USA, Mexico, Japan and part of Germany through our Hagen Deutschland subsidiary were our markets.
We introduced and sold millions of Vitakraft Seed Sticks (Kräckers) each year in North America, and the Hykro Denmark business was booming.
We successfully sold Wil-Nes (later Metaframe), Wardley and Aquarium Pharmaceuticals in Canada.
But then things changed—and they changed a lot. The boardrooms of multinationals, investment bankers and equity partners discovered the pet industry. It happened at a rapid pace.
Carnation bought Hykro of Denmark, and shortly thereafter Nestlé bought out Carnation. Warner Lambert bought Tetra, and later Pfizer bought Warner Lambert. Vitakraft decided to set up its own distribution center in the U.S.
Fair monetary settlements were reached with all parties, but the flow of their goods ended.
The sale of Metaframe to Mattel and the sales of 8in1, Aquarium Pharmaceuticals and Wardley affected our Canadian imports. Central Garden & Pets went on a buying spree, collecting distributors and manufacturers alike.
A decision was made to henceforth control our own destiny. Fortunately we had the financial strength, the expertise and the capable team to create innovative new product lines at an unparalleled pace in all segments of our industry. Modern, state-of-the-art manufacturing facilities were set up in Montreal (Hagen Industries Ltd.) and Waverly in USA (Hagen Pet Foods Inc.) Initially, we concentrated our efforts on Aquatics (Fluval, AquaClear, Nutrafin, Cycle, Glo), Reptiles (Exo Terra), Bird (Tropican, Vision) and Small Animal (Living World).
Now we are in the midst of exploring the high volume dog (Dogit, Nutrience) and cat (Catit) product lines and we find the numbers enticing.
Our first Hagen products to reach pet store shelves? In Canada, our Hagen lines of birdseed and bird treats; in the USA, our Aqua Clear line of power filters, including Aqua Clear filter media.
PPNI: As Hagen already offers a wide range of products for reptiles, fish (aquarium and pond), small animals, birds, dogs and cats, what will the company expand into next? What are the prospects of bringing the full Nutrience line to the U.S.?
Rolf Jr.: With every company, your strength can eventually become your weakness. The days of being a generalist are numbered and increasingly we see that specialization is required. Some companies get their start by being great at one thing and then go from there. Our roots are a little different and as you mentioned we offer nearly everything possible for pets. But that is our weakness as well.
|Rolf C. Hagen Inc.'s expansive headquarters are in Montreal, Quebec, Canada.|
For example, we have improved our dog and cat product mix tremendously but are not considered, at least in the U.S. market, as a dog and cat company. It will take years to change that perception. We have changed our overall product mix more in the past five years than we did in the 20 before that. But is it enough? The market moves quickly and when you compete against "everybody” it is hard to get all of it right.
Our focus over the next years will be to reconcile our ranges and focus on the nuts and bolts of our strategy. We need to make it easier to deal with us—we have made huge investments in operations and are very well managed in that area. High fill rates, perfect shipping and competitive prices are a given today. We have nearly all of this right. What we need more of is online training, in-store merchandising services, B2B platforms—even proprietary POS systems—as we feel our independent customers will need this from their key suppliers. We need to make our customers successful. I think we have enough product and now need to support it better. That will be our focus.
We will still invest in innovation. Hagen has been one of the leaders in that area. At least that is what our customers tell us. We have more great ideas and have a solid pipeline of product. We never turned it off—even when we were tempted to do so. We also invested in our suppliers as they are a key element in the plan to continue down the path of innovation, design and quality. We have made some changes in our U.S. management and believe we have upgraded key positions.
As for Nutrience, we have no plans to introduce this brand into the U.S. market at this time. Yes, our plant is located in Waverly, N.Y., and we are very proud of it. We have a tremendous team. We do expect the plant to be near capacity in 2011 without Nutrience being sold in the USA. We also have to consider our capacity to launch a brand into what is the most competitive pet food market in the world. Nutrience is doing well in key export markets and in Canada, but that is not America—not even close.
PPNI: What are you most proud of in terms of the company’s and your own accomplishments?
Rolf Sr.: In North America, we are the only privately and family-owned company with a global presence left in the pet industry. Our devotion to the independent pet trade carrying livestock is legendary and well respected by the majors. After all, where will our industry go without a steady flow of livestock?
We do not have to report to Wall Street every three months. Our bankers only see us once a year to extend our credit lines. Our investments are long term, measured in years.
My own accomplishments? First the major one: Having completed the transition process in a businesslike, harmonious atmosphere with brothers Dieter and Horst receiving their just rewards for their immense contribution toward building up the Hagen Group of Companies, and with my three sons Rolf Jr. (president and CEO), Tom Hagen (VP finance and administration) and Mark (director of research) and their capable teams of managers having already made some far reaching strategic decisions to bring the company to the next level.
Other highlights: In 1999, the American Pet Products Manufacturers Association voted me into its Hall of Fame, and in 2003, the Pet Industry Distributor Association bestowed on me its Lifetime Achievement Award. Quite unusual for a Canadian of German origin. No other entrepreneur of the pet industry in North America was ever honored with both of these awards.
I am also an honorary member of the Canadian Pet Industry Association, of which I was one of the founding fathers.
The City of Montreal gave me the honor to sign the Golden Book at City Hall, and the Federal Republic of Germany acknowledged my efforts with the "Grosse Bundesverdienstkreuz am Bande” (cross of merit), its highest civilian award.
The University of Guelph, the Alma Mater of son Mark, recognized our support by naming their research facility for aqua culture and fisheries the Hagen Aqua Lab.
Rolf Jr.: I am most proud of what my father, his partners and our employees built. We have a great family enterprise with valued employees and many customers that we consider friends. Our culture values hard work but is respectful. We take care of our people. We have been given a great opportunity to find the next stage of growth for Hagen. We hope we can achieve it.
I am proud that I could absorb the pressure of expectation, the emotion of a family company and the difficulty of the present day market. It is not always so easy but in another way it might be—it seems I have been born to do this.
My brothers Mark and Tom have been very supportive and contribute daily to key areas of the company. Each one of us has specific strengths and we need to leverage them. At the end of the day, my office needs to see our future clearly and lead the team that can achieve that strategy. If I lose that feeling of confidence in our future then it will be time to do something different. I hope that day never comes.
PPNI: As the "humanization” of pets continues, what do think will be the next "great” opportunity for the industry? What will be its biggest challenge?
Rolf Sr.: I will let our President and CEO, son Rolf Jr., comment on future opportunities, but I would like to respond to the "biggest challenge” question.
More needs to be done to make known and to promote the joys, pleasures and educational values of pet ownership. Parents must be convinced of the benefits of letting their children keep hamsters, Guinea pigs and other small animals, an aquarium with some life bearing community fish or a well-kept terrarium. The elderly and lonely folks must know about the precious companionship a budgie, canary or other cage bird, a cuddly cat or a loyal dog will provide.
Where are the Allan Leveys of today to rally the troops behind a national promotion of pet ownership?
Rolf Jr.: I am not sure that we will see the humanization trend continue to grow as it has. Firstly, it applied nearly exclusively to dogs and cats. I believe this arc has come close to its end point. How many more offers does the market need in dog clothing? In cat collars?
Yes, continued innovation will lead to product replacement but more and more of this will be simple churning. The overall accessory market will not grow if the pet population does not grow as well.
The same can be said about super premium foods. As the consumer continues to become educated, we will see the share of market for organic and all natural feeds grow but there will be a limit to that.
Humanization will only go so far when you have missed a mortgage payment on your home. The increase in pricing in pet foods in 2009 showed that demand is very much elastic. Even in 2010, some major brands have reported reduced sales in the specialty channel.
We believe a great opportunity is aquatics. Aquatics today are under a lot of pressure, but we have to also understand that there are less store fronts doing it right.
We need three things to happen. Product innovation is the most important. Selling a 10-gallon starter kit at $49.99 is not going to grow the market—neither will a new Nemo movie. We need aquariums that are easy to maintain and offer value to the consumer yet at a higher price point. That means design; that means a new green story; that means a cool-looking aquascape.
The second thing that needs to happen is the way aquatics are merchandised within the larger pet retailers. Simply put, we need to find a way to sell an aquarium to a dog owner. The industry needs it and so do our retailers. We must inspire the consumer and not confuse them.
Lastly, we need to improve the livestock offer and sell hardier fish—species that are not overbred or transshipped. This is possible; other countries have proven that. Aquatic differentiates pet specialty from the mass channel—as they focus nearly exclusively on dog and cat. The biggest challenge will be to find a way to convince our retail customers to give aquatics a proper opportunity—literally to give it the oxygen it needs. We are excited about the prospects of doing this right and seeing what happens.
PPNI: On a more personal note, do you have any pets?
Rolf Jr.: I have a Tervuren—also known as a Belgian shepherd. He is 13 years old and in great shape —he has been fed Nutrience of course! He has protected our family and on one occasion prevented a home invasion—a great dog, very smart, slightly aloof and a strikingly handsome dog. I also recently set up a large aquarium, using our Fluval Profile, as an Amazon biotope. My son has a Fluval Chi with cichlids, and we are considering a panther chameleon for one of our other boys—Exo Terra terrarium, of course.
This article originally appeared in the March 2011 issue of Pet Product News International.
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