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A Dog's Life
Forbes Magazine
Kiri Blakeley
June 07, 2004
After years a small pet products company finally makes it to the big time--and finds its problems are just beginning.
Most entrepreneurs would love to have Andi L. Brown's problems. After 13 years her small (2003 revenues: $4 million) all-natural pet food and treatment company is finally poised to rocket. Until recently you could find Halo, Purely for Pets--her line of vittles and pet-care products--only at health food or small pet stores. Now her stuff is being tested by giant retailer Petco in 8 of its 673 stores. "A lot of companies experience major bursts of growth overnight," frets Brown, 48. "They put themselves out of business because they can't handle it."
Her specific concern is that Petco demands order fulfillment within seven to ten working days. A big pickup by the chain would put unprecedented strain on Halo, which is its own manufacturer and distributor. Brown figures she'd need to raise $1 million to $2 million from private investors to cover the costs of raw materials, ramped-up production and a larger refrigerated warehouse, not to mention doubling her current staff to 40. Brown is also worried about keeping happy all those little shops that stocked her wares when nobody else would take her seriously. "We're the ones who educate the public and make these brands what they are," says Randy Klein, the owner of Whiskers Holistic Petcare in Manhattan and an early Brown supporter, sounding miffed about Halo's migration to Petco.
When does the license for gratitude expire? Brown started off modestly, investing $3,000 of her savings--she owned a small printing business in Tampa Bay, Fla.--in making chicken-and-vegetable meals for cats and dogs. The idea grew from caring for a sick cat, Spot, whose chronic vomiting and excessive shedding didn't respond to conventional medications and prescription diets. Could have been a coincidence, but the animal bounced right back after a little home cooking.
Alas, Spot's Stew--made from USDA-inspected chicken and turkey, as well as zucchini, squash, celery, peas, carrots and pasta--didn't go over well outside Brown's circle of friends. "The pet stores said, 'Natural? What kind of scam are you trying to pull?'" she recalls. Vets, she claims, "threw me bodily out of their offices." So she started off with three simpler products: a blend of oils, added to commercial food, for shiny pelts; an herbal ear wash; and a natural flea dip.
Those did well in small venues, and in 1998 Brown worked up the courage to go bigtime with Spot's Stew. She got herself booked on The Montel Williams Show and Good Morning America and ate the stuff on camera--"It's a little bland," she admits--to underscore its distinction from everyday brands that use "4-D meat" ("dead, dying, diseased or disabled"). Since then Halo has had a bit of competition. While meals made from "human-grade" ingredients barely put a dent in the $12.5 billion U.S. market for pet foods, larger "human-grade" rivals like Old Mother Hubbard's Wellness and Newman's Own Organics have hit the shelves.
Which is what drove Brown to Petco. Halo will be rolled out slowly in high-income neighborhoods where customers won't scratch their heads over the word "holistic" or balk at Brown's prices. (A 7.5-ounce can of Halo's cat food runs about $2.20, compared with 45 cents for a can of Friskies. Pounce treats are $1.50; Halo's cost $10.) Petco already stocks a few similar brands, like Wysong and Natural Balance (founded by Dick Van Patten, onetime star of the sappy and pet-friendly Eight Is Enough). More, undoubtedly, are coming. Given the growing rivalry, and Brown's almost inevitable need to scramble for equity capital, Halo could soon find itself fighting for its life all over again.
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