UNITED STATES-TYSON ENTER BILLION DOLLAR PET FOOD MARKET.
With the economy going to the dogs, meatpacking giant Tyson Foods Inc. is forming an alliance to make a product its executives think is recession-proof: deli-like food for pets.
Tyson, Springdale , Ark. , is expected to announce Tuesday that it bought a minority stake for millions of dollars in closely held Freshpet Co., a Secaucus, N.J., company that is rolling out refrigerated dog food to thousands of stores such as Kroger, Supervalu and PetSmart.
The Freshpet brand is unusual because the company’s executives, a collection of former Meow Mix managers, are trying to make dog food look, smell and taste as much like human food as possible. The line, the first national brand of refrigerated pet food, is aimed at consumers who give their pets everything from clothes and car seats to cemetery graves.
"Everyone talks about the humanization of pets," said Scott Morris, Freshpet marketing vice president. "But pet food looks the same as it did 30 years ago."
Tyson, which is being battered by gyrating feed costs and slowing consumer demand for pricey steaks and chops, is betting that some consumers won’t cut corners when it comes to their pets. It is a phenomenon that is coming under increasing scrutiny during the recession.
Paul Bulcke, chief executive of Swiss foods giant Nestlé SA, which owns several pet-food brands, said earlier this month that consumers who have "humanized" their pets refuse to trade down despite the economic climate.
Jeff Webster, a Tyson group vice president, said he expects refrigerated pet food to grow into a $500 million sales category within five years. "We want to make Freshpet huge," he said. Freshpet, which started operations in 2006, generated less than $100 million in 2008 revenue.
As part of its alliance, Tyson will begin to make Freshpet products this year and will use the Tyson truck fleet to haul Freshpet products to stores alongside Tyson’s microwavable dinners, chicken breasts and hamburger. Tyson, which also is opening its research kitchens to Freshpet, is stopping short of using the Tyson brand on dog food, however.
Until now, the meatpacking industry has been content to sell scraps such as chicken fat and byproducts to makers of canned and dry pet food, which generate roughly $17 billion in annual sales. Nestlé owns Purina Puppy Chow and Dog Chow, among others, while Mars Inc. owns Whiskas, Pedigree and Sheba . Del Monte Foods Co. owns Kibbles ’n Bits, Meow Mix and 9 Lives.
But Tyson is looking for business beyond the U.S. meat market. In addition to producing meat overseas, Mr. Webster’s renewable-products group is trying to make a business out of turning animal fat into fuel.
