When J.M. Smucker announced in December 2020 that it was selling its Natural Balance pet food business to investment firm Nexus Capital Management, I (among many others in the industry, I’m sure) surmised that it was because this superpremium, traditionally pet specialty brand was not quite a fit with Smucker’s other pet food brands, which appear in many channels.
In a recent interview with my colleague Tim Wall, Brian Connolly, now CEO of Natural Balance, affirmed this impression. “We’re realigning the business to the pet specialty channel,” Connolly said. “That kind of lost its way a little bit being owned by a big consumer packaged goods company that was used to having widely distributed brands. Natural Balance in the Smucker portfolio was a bit of an orphan in that sense.”
Perhaps one of the most interesting parts of Connolly’s comments was this: “We have absolutely no intention of going mass with this brand. This is a pet specialty brand and that’s where we’re going to continue to put our investment and energies.”
Considering how pet food distribution channels have morphed and blurred over the past five to 10 years, it’s noteworthy for an established brand to plant its flag and commit mainly to one channel, especially one that traditionally has been the core, even sole, home to superpremium pet food brands. Does it provide clues for an eventual resurgence of that channel, along with other directions the pet food market may take?
Brick-and-mortar pet specialty still has strong potential
Like most consumer goods companies, Natural Balance responded to the pandemic-driven flocking of many consumers to e-commerce, experiencing success in that channel, too. In another interview, with Dean Best of just-food.com, Connolly estimated e-commerce now accounted for 25% to 30% of the company’s sales.
Still, the company also sees a robust future in brick-and-mortar pet specialty. To that end, Connolly’s new executive team includes industry veterans with significant experience working for retailers like Petco, PetSmart and Chewy, he said.
Connolly is himself a seasoned industry veteran, having founded Castor & Pollux, one of the first organic pet food lines worldwide, then subsequently serving as a board member for Merrick Pet Care after it acquired Castor & Pollux. He also previously held executive/investor roles with Darford and Iams. Thus, he knows the evolution of the industry and its brands and retail channels, which likely helps provide insights into how the market will continue to develop.
Connolly told Best that he believes pet food e-commerce will “continue on a structurally higher plane than it otherwise would have done without COVID-19” but doesn’t foresee the same level of online sales surges post-pandemic, believing that in-store shopping will come back in force as life returns to normal (whatever that will be). “People that like to get out and shop and see different products and talk to the experts at pet specialty stores, they’ll go back to doing that,” Connolly said.
Hot pet food trends: plant-based products
The new team at Natural Balance wasted no time in introducing new products, debuting a new Targeted Nutrition line of dog and cat foods in early April 2021. Comprised of four formulations, the line hits on many current pet food and functional ingredient trends and issues, including prebiotics, joint and bone health and pet overweight/obesity. Connolly told Best that the company still operates from an “ownership position” in limited ingredient diets, calling Natural Balance a pioneer in the category.
And, in possibly a move to stake another leading position, Connolly said the company is “eyeing the growing interest among dog and cat owners in plant-based food.” Actually, Natural Balance has long had a vegetarian formulation for dogs, and Connolly told Best that when he and Nexus were considering acquiring the business, they were surprised to find that sales for the three sizes of that product were among the company’s highest.
Based on that and the increasing consumer focus, he said Natural Balance is looking to expand in the segment—joining other pet food brands trying to get out front in a potential up-and-coming segment.