Better Choice Co. made big moves in 2021 as it looks to shake up a crowded marketplace.
Better Choice Co., a maker of high-end pet food, will surely look back on 2021 as a transformational year.
Highlighted by a listing on the New York Stock Exchange (ticker: BTTR), a $40 million capital raise and the hiring of an additional 20 employees, the Tampa-based company took huge strides, to say the least, and now is super-pumped for 2022.
“We have more than 1,500 retail stores that we’ll be adding in 2022. Next year will be our ‘hockey stick,’” says CEO Scott Lerner, referring to a graphical representation of sudden growth commonly used by economists and statisticians.
‘We’re going after a younger demographic, like millennials and folks who are delaying having kids. They see their pets as their children and they’re willing to pay a lot for the food and products they give to their pets.’ Scott Lerner, CEO of Better Choice Co.
The firm also plans to release Halo Elevate, a new line of pet food that will complement its existing brands, Halo Holistic and TruDog. Those brands were marketed and sold by separate companies until a couple of years ago, when they merged under the umbrella of Better Choice Co.
“In a perfect world, it would have been nice to have the company called Halo, but Halo is the brand that we're rallying around,” Lerner says. “If you think about it like Procter & Gamble selling Tide or whatever, that's kind of how we do it. On the flip side, it does give us some flexibility if we look at something from an M&A perspective that we can just slot in into the company and don't necessarily have to worry about transitioning into the Halo brand, if we so choose.”
At this point, you could call the company whatever you want and it will still be a moneymaker. And that’s despite some unconventional marketing and distribution moves, such as avoiding grocery store chains altogether and making its pitch directly to specialty retailers such as Petco. That’s because it views feedback from staff members and customers of such stores as critical to success in an increasingly crowded market.
“We shut down expansion in the grocery channel and focused on pet specialty, because that’s where we see the opportunity for our business,” Lerner says. “It’s the fastest-growing segment of the market. Pet specialty is where recommendation happens. There are a few places where people get recommended to food: One might be their veterinarian; another might be their local pet food store. That’s why it’s super-important for us to be strong there.”
Better Choice’s brands don’t come cheap — a 21-pound bag of Halo Holistic dry dog food retails for around $70 — but that’s by design. The company wants to “play in the higher end of the market,” Lerner says. “We’re going after a younger demographic, like millennials and folks who are delaying having kids. They see their pets as their children and they’re willing to pay a lot for the food and products they give to their pets.”
Even though Better Choice’s net sales, says Lerner, are up 19% compared to 2020, obstacles to growth this year have come from — you guessed it — supply-chain issues. Procuring ingredients has been a challenge, as has the cost of shipping to Asia, particularly China, where the company does a brisk business.
“Our demand is up,” Lerner says. “Supply has been our biggest pressure, to date, but we are moving to a new manufacturing facility next year, and that will be amazing for us in terms of opening up more capacity.”
Better Choice Co. is not yet profitable, Lerner says, but he expects profits to come in the fourth quarter of 2022. For now, the company is laser-focused on top-line revenue and expanding its retail sales network. In addition to brick-and-mortar pet specialty stores, the Halo and Top Dog brands are available via prominent e-commerce retailers such as Chewy and Amazon.
“What we want to do is provide options when and where it’s convenient to shop,” Lerner says. "That’s the way people are shopping now. You can't force them into one channel versus the other.”
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