Driving Fresh Pet Food Forward
Freshpet manufactures, markets and distributes natural, fresh food and treats for dogs and cats through the grocery (including online), mass, club, pet specialty and natural channels. All products are made according to their nutritional philosophy of fresh, meat-based nutrition with minimal processing - Freshpet focuses on creating food that is good for pets, people and the environment.
The Baird team sat down with Scott Morris, President & Co-Founder of Freshpet, to talk about the growth of the fresh pet food category and where it could be headed next.
We were watching the relationship the consumer had with their pets, the nutrition that they were thinking about and said, ‘Wow, there's an opportunity to really change the way we're feeding our pets in the industry.
Scott Morris, President & Co-Founder
Key Takeaways
Changing How We Feed Pets
The humanization of pets has transformed how consumers feed the animals in their lives. It was one of the trends that shaped Freshpet early on. “What was happening was the relationship with pets in our lives was changing. That extreme owner that had their dog sleeping in their bed or was buying a bed for their dog – [that] really was becoming more and more mainstream,” Morris said.
Changes in the ideology around human nutrition also influenced the evolution of pet food. Morris shared, “I think there were a lot of skeptics in the early days. And I think tenacity…us really kind of believing in what it was, doing a lot of really good consumer work and really looking at those underlying changes, was what gave us confidence and the belief that there was a lot of potential here.”
How Retailers & Online Players Came to Embrace Fresh Pet Food
While Freshpet encountered some resistance from retailers and consumers in its early days, both groups have embraced fresh pet food. Morris said retailers have come to see great opportunity in selling fresh pet food where consumers buy fresh food for themselves and their families. “It's a real point of difference versus many of the other pet products that are on the shelf…retailers are now incredibly excited. It's becoming a bigger and bigger piece of their category, and it's a leading growth engine for their category. And they really want to be a big piece of the future of pet food.”
Investing in People
Like many organizations, Freshpet and the broader pet industry has felt the impacts of a tight labor market. To address these trends, Freshpet initiated a skills-based compensation step-up program called Freshpet Academy. The program has opened doors for employees across the company, including its kitchen team. “The goal was to empower people to be able to develop skills – and as they developed more and more skills, they were able to graduate to different pay levels,” Morris said. The initiative has also had a strong cultural impact. “You have a lot of passion - you have people that are really empowered in order to raise their salary and their compensation over time that were really part of something.”
Expanding the Platform
As a first mover in the fresh pet food category, Freshpet continues to see significant opportunity in leveraging its scaled platform.
“We've basically cut the swath through the jungle and paved the road,” Morris said, speaking about Freshpet’s growth and future goals. It’s grown beyond a “first mover” in the category and sees a scale advantage next. “Not only manufacturing scale, but [its] advertising scale, its supply chain scale, its know-how scale… we see a really, really bright future,” he shared.
Connect With the Baird Research Team
Peter S. Benedict
Justin E. Kleber, CFA