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Breaking Through

Posted: February 26, 2014, 1:40 p.m. EDT


By Clay Jackson

Brad’s Raw 4 Paws dog treats hit the shelves of a major chain in October, iFetch shipped its first ball launcher last month, and Rosie’s Barkery is on course to turn its gluten-free treat line into a national brand.

What all three fledgling brands share is a measure of success in an industry (which mimics the trends of most other industries) that sees about half of all manufacturers pushed out of business within five years.

Successfully reaching a national audience doesn’t mean these companies can coast the rest of the way. A Case Western Reserve University professor in 2012 plotted the five-year survival rates of startups in various business sectors and found that only 48 percent of manufacturers were around after five years, compared with 41 percent of retailers and less than 48 percent in in the service industry.

So whether what’s being sold is a line of kale-based dog treats, a do-it-yourself dog toy or organic biscuits, lessons may be taken from these companies on what is needed to possibly succeed in an increasingly crowded industry.

Here are their stories:

A Kale-Do Attitude
Brad Gruno lost his construction business during the dot-com bust and then lost his way for a while, only to get into the raw food industry with a line of kale chips for people. Since then, Brad’s Raw Foods, based in Pipersville, Pa., has grown into a $20 million-a-year business.

Like many successful entrepreneurs, Gruno was forever looking to increase his margins, so the knowledge that he was using kale leaves in his snack foods but discarding the seeds and stems troubled him. In a eureka moment, Gruno was convinced that what he’d done with snacks for people he could do for pets.

Raw 4 Paws
Using his experience in the human snack food industry, Brad Gruno convinced PetSmart that he could do the same in the pet industry, giving birth to Brad’s Raw 4 Paws dog treats.

"Instead of wasting 25 percent of my product, I thought I could make the stems into a nutrient-dense pet food,” he said.

But breaking into any industry can be daunting. Enter PetSmart.

At the 2013 SuperZoo show in Las Vegas, Gruno was invited to present his kale dog treat, Brad’s Raw 4 Paws, to a panel of PetSmart executives. He was given 10 minutes to explain why the treats belonged on the shelves of the Phoenix-based chain’s 1,300-plus stores.

Gruno joined a handful of other SuperZoo exhibitors in receiving the chance to deliver a pitch under PetSmart’s Innovation Station program.

In a scene resembling the ABC show "Shark Tank,” Gruno held his audience rapt with the story of his career change and extolled the virtues of kale as a treat for dogs.

"I’m buying 40,000 pounds of kale a week, but I’m throwing out 10,000 pounds of stems a week,” he told the small group assembled in Mandalay Bay Convention Center.

"What about exclusivity?” one PetSmart executive asked.

"I’m not interested in exclusivity; I’m trying to grow this brand,” Gruno answered, adding, "But I’d love to make a deal.”

When asked if a March 2014 launch date was to his liking, Gruno responded, "March is too long to wait to get into all the PetSmart stores.”

"Well, when could you get us the product then?”

"I can start shipping you tractor-trailer loads in two weeks.”

The PetSmart decision makers liked what they heard, and Brad’s Raw 4 Pets was chosen the 2013 Innovation Station winner. The six-flavor line of kale dog treats entered PetSmart stores in late October.

PetSmart negotiated a six-month exclusivity agreement that is up at the end of April.

"After that, we intend to cultivate our pet business and potentially move into other markets and independent pet retailers,” Gruno said.

Join the Crowd
The Hamill family of Austin, Texas, would agree with the proverb "necessity is the mother of invention.”

Their dog, Prancer, is such an insatiable ball chaser that family members often play with the toy poodle in shifts.

Denny Hamill credited grandson Grant’s epiphany, "Why don’t we make something that will throw the ball for him?” as the genesis for iFetch, an interactive, automatic ball launcher.

Denny and Grant worked up a prototype and invested thousands of dollars and three years refining the original contraption into something they were excited about unveiling to pet owners.

Initially, iFetch was introduced through the crowdfunding website Kickstarter. The $88,000 raised was more than four times their goal, and the new capital equated to 1,200 preorders.

The 2013 SuperZoo show was the Hamills’ first foray into the pet industry. And good thing they exhibited iFetch, because the device was named Best in Show out of hundreds of new pet products.

Still ramping up their manufacturing operation, the Hamills didn’t accept new orders for iFetch at SuperZoo. But the show proved invaluable for other reasons. 

"We talked to hundreds of people and got a much better understanding of the pet market than we had before and a pretty good idea of the value of iFetch,” Hamill said. "Also, we got a tremendous amount of attention and follow-up contacts.”

The biggest challenge, he said, was "getting the design right for dogs and the manufacturing cost.”

iFetch is produced offshore, which Hamill stated has brought the suggested retail price down to $99.95.

The first 1,200 Kickstarter orders were scheduled to be shipped by mid-February.

Hamill, who also plans to exhibit iFetch this month at Global Pet Expo in Orlando, Fla., believes his product will be a big hit.

"We are in discussion with several different selling channels around the world,” he said.
 
Bricks and Clicks
Christine Iversen, the owner of Los Angeles-based gluten-free dog treat manufacturer Rosie’s Barkery, turned a hobby and a good cause into a business.

Iversen and her husband adopted company namesake Rosie from a pet shelter in 2010 and later discovered she suffered from allergies.

"I always baked as a hobby, so I started baking gluten-free treats for her out of our kitchen,” Iversen said. "I then thought I could use this to raise money for all the dogs we had to leave behind at the shelter.”

Today, Rosie’s Barkery donates 10 percent of its proceeds to animal welfare interests.

The charitable effort has increased brand awareness and customer loyalty, Iversen said.

"I began selling at dog parks, then local events, then regularly at farmers markets and on our website,” she noted.

In its first year, which included a booth at the 2013 SuperZoo show, Rosie’s Barkery went from no revenue to more than $13,000 and no debt.

"Now we’re in five stores, both online and brick and mortar, have three employees and are at the beginning of a growth spurt,” Iversen said. "We’re putting everything we have into making this successful.”

SuperZoo was the jumping-off point, she reported.

"There’s no way we would have had access to the decision makers of all these great companies on our own,” Iversen said.

Some friends questioned Iversen’s sanity for wanting to break into the pet industry.

"Try not getting paid a dime and working lots of 10- to 12-hour days for almost two and a half years,” she said. "We knew it was going to be tough, and I can hardly blame the naysayers, but that won’t stop me from gloating a bit once we’re on shelves nationwide.”

Lately, the company has considered working with a U.S. co-packer, but the going has been slow because the potential manufacturers make human-grade goods and have not processed pet treats.

"They have not worked with our kind of dough before, and getting a tiny test run on their giant, house-size rotary machine is a tough thing to do,” Iversen said.

Rosie’s wrapped up an Indiegogo crowdfunding campaign that didn’t meet expectations, but Iversen was not deterred.

"It’s looking like we’re going to have an investor, so ultimately it ended OK,” Iversen said. "Our plan, aside from Indiegogo, is to stop short of stealing to get our product launched,” she noted. "We know there’s a demand, and we’re on a mission to help dogs.”

Iversen chalked the frustrating delalys up to business reality.

"The good news is that we have customers, we have funding, and once our co-packer is on line, all systems will be a go,” Iversen said.  

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