Pets are people too. At least that’s a concept many consumers lean toward as pet-owners pay more and more attention to how they care for their animals, including what goes into their bellies.
For Freshpet, that means the fresh pet food manufacturing business will continue to grow, as evidenced by the company’s recent plans to invest $100 million to expand its Hanover Township, Northampton County site and create a campus linking several buildings. With the project set to begin next year, $190 million in revenue projected for 2018, and plans to reach $300 million in revenue by 2020; the company is relying on continued growth.
“We are well on our way to delivering on our 2020 goals,” said Billy Cyr, CEO of Freshpet, headquartered in Secaucus, N.J.
The company’s success stems from the changing way humans feel about their pets. No longer is the dog sleeping in the doghouse. Now it is cuddling up in the owner’s bed. That changing relationship between humans and their pets translates to what goes into their food dishes.
“We live at the intersection of the humanization of pets and fresh, wholesome, all-natural foods,” Cyr said, adding: “People are always looking for higher quality and they appreciate the product we make.”
Freshpet manufactures all its pet food and treats at Freshpet Kitchens in Hanover Township, where it established a significant presence after moving from the Quakertown area in 2013.
The company began in 2006 and continued growing as interest in fresh pet food took hold among consumers. By 2016, Freshpet hit $130 million in annual revenue. In March 2017, the company established its 2020 goals and increased its spending on advertising that same year, Cyr said.
“There’s a very strong correlation between media investment and people buying product,” Cyr said.
Awareness of the Freshpet brand was low at the time it established its 2020 goals, he added. While the rate of growth slowed in 2016, the company has steadily increased the number of people buying its products, he said.
“At the end of 2017, that was a good year, but we thought there was opportunity to go beyond that,” Cyr said.
By 2020, the company wants to have its products in 23,000 stores. It’s possible the company could surpass $500 million revenue by 2023, he added.
The company distributes its products to customers throughout the United States, Canada, United Kingdom and the Netherlands. Another country could be added this year, he said.
Freshpet also focuses on being environmentally and socially conscious. Its Hanover Township facility is wind-powered and the company provides pet food to organizations that breed, train and support dogs for families in need, along with providing food for animals in shelters, Cyr said.
Though canines represent Freshpet’s biggest market, the company also makes cat food. Dog food represents 94 percent of its products and cat food 6 percent, Cyr said.
Employee engagement is also a focus for Freshpet, particularly since workers inside the plant have to work in colder indoor temperatures. Freshpet offers employees free snacks in its cafeteria and the opportunity to take home a package of free pet food each day, along with incentives to encourage high productivity.
“The whole idea is that they know that we value and appreciate them,” Cyr said.
The company has 221 employees in its Hanover Township plant and plans to add 100 over the next three years, Cyr said.
“Access to talent is always a challenge,” Cyr said. “Our goal is to make the jobs here incredibly attractive. We’re looking for people who have the technical skills. It’s very difficult to do what we do. Quality is job one.”
He acknowledged that Freshpet is a difficult business to replicate, from its technology to its manufacturing process, which helps account for the company’s strong growth.
The company’s products are in 18,662 fridges throughout the United States at retailers that include Wegmans, Target, Walmart and Petco. All the fridges are company-owned and branded. They cost $3,500 per store installation, Cyr said.
Freshpet produces the products at its Hanover Township site and then ships them to Lineage Logistics in Upper Macungie Township, a refrigerated supply chain company that ships the products to customers.
E-commerce customers can also get Freshpet delivered from online retail sources, including via home delivery and curbside pickup, he added.
So far, the company has spent about $75 million on its Hanover Township facility and will spend another $100 million on its third expansion, he said.
“We have a lot of manual operations,” Cyr said. “Our new expansion we called Kitchens 2.0. It will further perfect our process.”
The 140,000 square-foot facility will have two high-speed production lines designed to make the company more efficient, he added. Work on the new expansion should start in spring 2019 and wrap up in 2020, he said.
The company recently started a seven-day, 24-hour operation on one production line at its Hanover Township site. Previously it was a five-day, 24-hour operation.
The company could build a second location with high-capacity lines, Cyr said. But the company has yet to determine a location for the plant, which would not be operational until about 2023, he added. Freshpet gets fresh chicken from Quakertown and gets its beef from both local and Midwest sources.
CHANGING A BUSINESS
One of the reasons Cyr wanted to step in as CEO for Freshpet in 2016 was because he saw it as a business that a leader could help change.
Earlier in his career, he worked in the orange juice business when dehydrated juice in frozen containers was the norm for retailers. Now, that model has completely changed, with consumers overwhelmingly choosing fresh bottled juice.
“I think the same phenomenon can happen here in the pet food business,” Cyr said.
He looks forward to that challenge.
Don Cunningham, president and CEO of Lehigh Valley Economic Development Corp., said Freshpet’s evolution as a company has been extraordinary.
“In that short period of time, they’ve gone public and now they’ve come to dominate that high-quality pet food market, they’ve entered international markets,” Cunningham said. “That’s exactly the type of manufacturing success story that the Lehigh Valley wants to pride itself on.”
The food and beverage manufacturing market is one of the top sectors of the region, he added.