Posted: Dec. 17, 2012, 4:45 p.m. EST
By Ken Niedziela
We know what happened in 2012, but what will 2013 bring to the pet industry? Here are some educated guesses about people, companies and organizations that made news in 2012 and should warrant additional attention over the coming year.
President Obama: Under the Patient Protection and Affordable Care Act, or ObamaCare, businesses with 50 or more full-time employees will have to offer some form of health insurance to the workforce or pay what amounts to a penalty starting in 2014. Will the insurance mandate be too costly for larger pet retailers? Already some businesses outside the pet trade are vowing to lay off employees or cut their hours below the federal threshold of 30 hours so they may avoid the entire issue. Companies and individuals have less than a year to get their health care insurance in order.
Charlie Sewell, PIJAC's executive vice president of external affairs.
The Pet Industry Joint Advisory Council in November 2012 filled a new position, executive vice president of external affairs, with a man who knows his way around business and politics. Having worked as a consultant on state and national political campaigns and ballot issues as well as a successful corporate lobbyist, Sewell turns his focus to defeating proposed retail pet sales bans in 2013. “It is certainly our intention to continue advocating on behalf of consumers to ensure they have the ability to obtain the pets they want from safe, reliable pet retailers,” he said.
Craig Rexford: The new publisher of Pet Age magazine—and former publisher of Pet Business—puts his stamp on the trade publication starting with the January 2013 issue. What changes does Rexford have planned now that Journal Multimedia of Somerset, N.J., has taken the reins from H.H. Backer Associates? Time will tell for the 41-year-old magazine.
H.H. Backer Associates: Having divested itself of Pet Age magazine, the Chicago-based organization can turn its full attention to its trade shows and educational conferences. The company in August 2012 postponed the annual spring trade show, held in Atlantic City, N.J., until 2014 because of what it called a flailing economy and a lack of support from key pet industry distributors and manufacturers.
For the Earth Corp.: A company whose first corporate objective is to “create, acquire and manufacture products with a purpose” has been on an acquisition roll the past two years under CEO Nelson Grist. Witness the Phoenix-based company’s takeover of Prestige Pet Products in 2012 and Miller’s Cats and Kat Box King in 2011. What’s the next piece in the buying spree?
Dog for Dog CEO Rocky Keever
The CEO of Dog for Dog in Santa Monica, Calif., acted decisively in September 2012 when Sunland Inc., the manufacturer of Dogsbutter and hundreds of other peanut products, became embroiled in food safety issues and was later shut down. Keever immediately recalled all Dogsbutter peanut butter on his own and at significant cost to Dog for Dog’s bottom line. The move spoke to the start-up company’s social consciousness, which is most evident in the buy-one, donate-one model of Keever’s Dogsbar nutrition bars. Look for a new product, DogsTreat, in early 2013.
Tom Murray: Villa La Paws launched a national franchise program in 2012 in an attempt to rapidly expand its cage-free pet spa and resort business model. CEO Murray wants to go from just two units in its Phoenix hometown to 250 over the next four years. Murray trumpeted Villa La Paw’s entry onto the Small Business Administration’s Franchise Registry in October 2012 as an achievement that could help potential franchisees obtain financing. Wild growth imperiled companies such as Boston Market and Krispy Kreme; if Murray can pull it off, he’ll be proclaimed a genius.
Hill’s Pet Nutrition: The pet food giant in December 2012 added more natural ingredients to a reformulated Science Diet line for dogs. Chicken byproducts are gone, as are artificial colors and flavors. The move undoubtedly is an attempt to grab a larger share of the natural market, but whether independent retailers who don’t carry the brand will see customers head to a Hill’s-carrying competitor remains to be seen.
Walmart's Pure Balance natural dog food.
Deep-pocketed Wal-Mart Stores Inc. jumped into the natural market place in August 2012 with its private-label premium dog food, Pure Balance
. The early word from pet food analysts was that Pure Balance’s two recipes—Chicken & Brown Rice and Lamb & Brown Rice—were genuinely nutritious. The trick for the Bentonville, Ark.-based retailer in 2013 is leveraging the offering against big-box competitors such as Petsmart and Petco, whose natural selections fill row upon row.
Salmonella: Big player like Diamond Pet Food and Sunland Inc. contended with widespread contamination of their wares by the potentially deadly bacteria in 2012. Even smaller players, such as WellPet and treat maker Kasel Associated Industries, have seen their good names tainted. While few animals have been sickened by the outbreaks, pet owners don’t take kindly to news that their favorite brand has been recalled. What can be done to reduce the salmonella scourge? Healthier manufacturing practices and meticulous quality control would be a good start in 2013.
Kevin Fick: The new CEO at San Rafael, Calif.-based Worldwise, the maker of SmartyKat, PoochPlanet and Petlinks products, was issued a challenge upon his appointment in September 2012. “We expect Kevin to drive the company to a higher level of growth,” said Jeffrey Ginsberg, managing director at owner Mistral Equity Partners. Fick will look to entice pet owners to embrace eco-friendly products in general and Worldwise’s in particular. That’s not an easy task in the ultracompetitive sector.
PetFlow.com: The New York company, under co-founders Joseph Speiser and Alex Zhardanvosky, advertises a “hassle-free way to shop for pet food.” The online business model appears to be working. The company states that it ships more than 1 million pounds of food to customers living in the continental United States each month. Shipping is free on orders of more than $49, and Petflow promises a money-back guarantee. The company’s pockets are filled with millions of dollars in venture capital, but in the cut-throat world of Internet competition, how long will that cash stash last? Petflow’s preferred shipper, FedEx, is raising its standard ground shipping rates by 4.9 percent in January 2013.
Tom Bagamane: The founder and managing director of Los Angeles-based Freehand is helping to elevate the concept of buy-one, give-one in the pet trade. (Dog for Dog’s Rocky Keever is another originator.) As Freehand slowly expands into other parts of the United States from its test markets in Dallas, Southern California, Indianapolis and Las Vegas, the company will discover whether the charity angle can thrive. Freehand’s hope lies not necessarily in its dog food but in the altruism of pet owners.
Shawna Shuh: The American Pet Products Association has the Professional Women’s Network. Shuh, a certified public speaker and business consultant, sees room for another group, the Women in the Pet Industry Network. The latter group has more than 200 members under Shuh and recently published the “Top Women in the Pet Industry Holiday Biz Book,” a guide to other leaders in the business. While the Professional Women’s Network has a networking event scheduled during Global Pet Expo in February, Shuh’s group is loosely connected through digital communication. Shuh wants to bring her members together in 2013, but how to accomplish that is the question.
Women in the Pet Industry Network President Shawna Shuh
Crowdfunding: Companies such as Atlanta-based Green Monster and Provo, Utah-based Orabrush turned to the Internet to successfully round up capital for the development and launch of their pet product ideas. In a time of tight credit and tough lending requirements, might other entrepreneurs opt for digital fundraising to get their creations off the ground in 2013?
Humane Society of the United States: The advocacy group announced in December 2012 that 2,000 pet stores had taken a pledge not to sell puppies. The Washington, D.C.-based organization states that about one-third of the nation’s estimated 9,000 independent pet stores sell dogs, so 2,000 stores committing to stay out of the trade is a statement that can’t go unnoticed. Whether the Humane Society’s campaign against alleged puppy mills can turn a significant number of dog sellers to its side in 2013 is unclear.
American Veterinary Medical Association: Along with the American Animal Hospital Association, the Schaumburg, Ill.-based AVMA released a policy statement in August 2012 that discourages feeding raw or undercooked foods to cats or dogs. The position appeared to have little effect on food sales, but as the words spreads, will more pet owners migrate to commercially prepared and home-cooked meals?
Outstanding Pet Care University: Having claimed the assets of the bankrupt Pet Care Services Association, businesswomen Kelly Vanasse and Joanne Morris see a need for certification programs catering to pet lodges, grooming salons and training centers. Their Wilton, Conn.-based online school aims to raise professional standards. The women plan to unveil advanced certification programs for managers in early 2013.
MilkOpet: Lactose-free milk for dogs? The Australian company Milko Nutritional Products thinks U.S. and Canadian canines are ready for specially formulated milk that may be poured over dry food or served as a beverage. The company had a coming-out party in October 2012 as an exhibitor at the H.H. Backer Christmas Trade Show. The question isn’t whether dogs will go for MilkOpet; it’s whether their owners will bite.IEH Laboratories: Diamond Pet Foods hired the Lake Forest Park, Wash., company in 2012 to take over product testing after a salmonella outbreak forced the shutdown of Diamond’s Gaston, S.C., plant. Whether third-party testing will become more common in 2013 is unknown, but Diamond’s trust in an independent authority speaks volumes to cautious pet owners.
MilkOpet lactose-free milk for dogs.
Radio Systems Corp.: The Knoxville, Tenn.-based conglomerate behind brands such as Petsafe, Invisible Fence, Drinkwell, Premier and the recently acquired Brilliant Pet set up shop in Ireland in October 2012 to begin a march on Europe. David Verdon, whose background is in consumer electronics, was hired as European operations manager. Verdon appears to be a great pick for a company trying to peddle a stable full of containment, training, safety and food and water devices to pet owners on the other side of the Atlantic.
Dog Vacay: Leaving a dog at home or at a kennel when an owner heads off on vacation or a business trip is a nonstarter for some people. Dog Vacay vets pet sitters who register on its website, and owners get to pick from a list of approved providers. The Santa Monica, Calif.-based company, invigorated with $1 million in seed money in 2012, is rolling out its web-based alternative boarding service throughout the country in 2013.
The Honest Kitchen: The San Diego-based pet food company was selected one of Outside Magazine’s “Best Places to Work” in 2012. Founder Lucy Postins must be doing something right, because the company is looking to expand in its 11th year of operation. With a new website and additional sales staff, The Honest Kitchen sees nothing but good news ahead. Postins helped spread the word about her company and gourmet dog food when she made an appearance in November 2012 on CBS-TV’s “Sunday Morning.”
Philanthropy: The pet industry stepped up in a big way when Hurricane Sandy ravaged the East Coast in October 2012. Companies ranging from Milwaukee-based Stella & Chewy’s to Halo, Purely for Pets of Tampa, Fla., to World’s Best Cat Litter of Muscatine, Iowa, worked quickly to bring product, cash or services to pet owners and animal welfare groups in need. The bar has been set. Will manufacturers, distributors and retailers react in a similar way the next time disaster strikes? Most definitely.
Animal Supply Co.: The Western U.S. pet products distributor ended 2012 by gobbling up two competitors: Lone Star Pet Supply and Zeus & Co.’s California division. Is the shakeup over, or are more acquisitions in the Seattle company’s future? And what will the consolidation mean for wholesale prices and the distributor network west of the Mississippi?
Click here to see Pet Product News International's 25 to Watch in 2012.
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