K9 Natural: The simple idea that carnivores should eat meat

Kia ora, welcome back to Flying the Fern, powered by New Zealand Stories, Fernmark License program and produced by Raw Collective. This series is all about telling the real-life stories of well-known New Zealand businesses that carry the official Fernmark logo. We dig into how they came about, the challenges they've overcome, and their contribution to the reputation New Zealand businesses have around the world. K9 Natural is one of New Zealand's fastest growing companies for a while, with annual export growth of nearly 19,000 percent, yes, you heard that right. The company has been a pioneer in the movement towards natural quality pet food. Its recipe was inspired by one of its co-founders spending three months in Alaska observing the feeding habits of wolves, and the success that the company has had speaks to the commitment to premium ingredients and accepting nothing less than the best. ACEO Neil Hinton talks through how the company has grown to exporting around the world, including how it coped with such a massive growth period, and how their New Zealandness reinforces their positioning as a high quality producer. Well Kia ora, Neil, welcome, thanks for joining us on the podcast. Yeah, Kia ora, David, it's great to be here, thank you, thanks for the opportunity. Nice, now first question I always have for everybody is if you were head of visitor to New Zealand, someone who's never been here before, what's the quintessential kind of experience or thing or place they should go? So I've left all over New Zealand, grew up in the North Island, now live in the South, the thing that everybody should do is that free thing of just get outdoors. So yeah, where I grew up, lakes and forests, and then the South Island, for me, the Port Hills, or anywhere in the mountains, central Otago, just get outdoors, it's all free as well. Nice, you came on board at K9 in 2015, but it had a bit of a prehistory before you. One of the little fun facts that I discovered was that one of the founders I think spent three months in Alaska studying the grey wolf, jeepers, that sounds like a really fun work story. Yeah, I've heard that story too, look it's well before my time, and as I think I've said to a number of people, there will be a hell of a book written by some of the early founders of this business, colorful characters and colorful stories. I've just got this image of you coming on board in 2015 and sort of walking into this place, where there's bits of wolves and all this kind of amazing Alaskan lineage, and you're going, right now, I've got this business, I've got to tune it into something really huge. What was it like when you landed first in K9? It was a fantastic opportunity, I mean, I think that was the really interesting thing for me, I was coming back from overseas and didn't expect to get that kind of an opportunity presented to me across, so we'd made a choice to come back to the South Island, which is where we wanted our kids to grow up. I just didn't think there'd be this sort of an opportunity that would present itself, but you know, a credible vision from the early guys setting it up, and what I didn't know, I walked in, there was a business that had tremendous bones and a huge opportunity. Literally and figuratively, probably. Exactly, a lot of bones. Yeah, there's a lot of chews at that stage, I was a big part of that business. Nice, now what were you doing before then? What sort of prehistory, your career history before that? I spent a lot of time with the line group of companies, so a lot of time in alcohol, I was in China for three years early on in my career, which sort of opened me up to that market, and then most recently I've been in Australia, I was running the Vitasoi joint venture, so I'm holding up milk, plant milk, I'd been based in Melbourne for about four years at that stage. Brilliant, so now you're back into a whole different product category, pet food, but can I, you know, special, isn't it? What makes your pet food different than the others do you think? You know, firstly, you've got to start at nutrition, and so you know, that was where we really prided ourselves, was we thought we had the best food in the world, and a massive part of that is growing here, so New Zealand meat has a great story, and particularly our grass-fed pastoral model, but there's so many other layers to the story as well, you know, that are more than just that, so fundamentally we felt like we had a product that could take on anyone in the world, and that's a pretty powerful position to be in, you know, if you can back your product to that extent, because then you just go out there and say, this is just a trial challenge, we've just got to get people trialing this, it'll talk to itself after that, and that has been the experience, you know, it's one bowl at a time, you know, one dog at a time, and if you can stick out it long enough, you get enough dogs in the pack that it's a, you know, great sustainable business, so it's sort of that very simple goal at the beginning. Our pet owners typically pretty consistent with their purchasing, with their pet food purchase. Yeah, they're, there is, our product in particular is very sticky. No, we're not doggy literally, I mean, you know, from a marketing point of view, from a marketing perspective. So, you know, we all know particularly cats, and that's become a really big part of our growth has been a move from being just a dog business to being a cat business as well, and we all know, you know, the reputation that cats have for being fussy, so if you've got a product that they just are instinctively driven to eat, then that makes a massive difference, and we've, you know, we've all, as pet owners, pet parents, we've all been on the end of that lock of disdain when you put the wrong thing in the bowl, and we've got, we've got an emotional connection to all of the mammals in our household, whether they're too legular forlegged, and, you know, it's the same sort of response when you carry your dog, turns her nose up at the food, so that helps us from a customer perspective, but all, you know, that the consumer loves it, so palatability, as well as nutrition is just critical. Nice. Yeah, because you don't want to as an owner by pet food just to have the pet, you know, scoff at it and go outside and do something else, you know, it's an important part of your caring for your animals. Yeah, absolutely. The rise of pet parenting has been, you know, there's been a big driver of that, quite a difference, yeah, yeah, we know, they're really uh, members of the household now, members of the family. You've probably done all your consumer research, you know, your market inside out, is there difference between cat owners and dog owners? What do they like as people? There's great generalizations, as you always are in marketing, and sometimes you, you know, you try and pick the, you pick the teeth out of it, but, you know, generally if you've got a product that's very palatable and very nutritious, then that's a great starting point for you. Actually, there are a lot of cat and dog owners, you know, so often in the same house, so in some respects, you can appeal to the same purchase decision maker, yeah, but yeah, there are, there are definitely differences. You're far too politically correct. Dogs are social. Yes. Yeah. By and for instance, cats are not social creatures. Oh my gosh. One of the opportunities with dogs, obviously, is that dog owners bump into each other. Yeah. They're out walking the dogs, and so there's an, you know, an exchange of information there, and you don't get that same dynamic with cat owners, you know, cats typically, they're territorial, they're around the house. They're different ways of addressing those customers. I initially thought of that because yes, we've a dog, we go down the dog park, you sort of get to know all the other. In fact, you don't know the humans name, you just know, you say, oh, that's Barney's exactly there. Yeah. You know, that's Scruffy's Mum or whatever. So it's interesting because you do end up still talking about all sorts of things, don't you, over in the parks. I wanted to ask this question because I've read here that your food is apparently fit for human consumption. This is, you know, something that someone told me. Is that the truth? Definitely not going to harm you. So we purchase all of our product out of the human supply chain. So that gives us a real quality assurance confidence. Think about how our human supply chain is regulated. If we know we're buying from there, then we know we're getting it at a certain level. And that's really reassuring for us, but also for all of our global customers as well. New Zealand has an incredible regulatory environment for human food processing. So, you know, again, it's a part of what we can assure people with when we use things like the New Zealand Fernmark. Yeah, but it sounds expensive though, to buy food from a human supply chain. You know, the other pet feed manufacturers potentially overseas, etc. don't go to that level of rig. And they obviously can probably allocate your pricing. Yeah, that's right, but you know, what we choose to be. That's the proposition that we've got. And, you know, we've certainly hasn't hindered our growth. So the purpose of the pudding in that respect. Nice. Now, you've been on this shift towards natural as well. That's another sort of trend, you know, owners being more aware of the provenance of the food and this type of food they give there. So it's not all kibble, for example. You know, do you think that that's something that you've helped to champion and pioneer? Yeah, I think so. We were at the first, but we were early. We were certainly early. And, you know, there are some things that we did do before others, but what we did is, you know, we recognised that. And it's a pretty simple idea that carnivals in our households would be much better off if they were fed meat. And you learn that, you know, there's a seven-year-old and science class that a carnival should eat meat. And yet, actually, in the pet food market, we were feeding these high-carbohydrate kibble products, which were, you know, mostly made from what we'll buy products from, you know, the human supply chain of grains and corn and all of those sorts of things. So once you kind of unpick that for people, it's a really simple idea. And they go, well, actually, this isn't stinctive, you know, that's the game we've got to remember that these cats and dogs that are our household are 99.9% the same as the wild cats and dogs that, you know, we know of as well. We don't have some lions, etc. And so their digestive system isn't different, you know, they instinctively, this is the right diet for them. And so once you start to cognitively link those things and you go, well, what would that mean if I fed them that, I'll go, well, that digestive system would fall back into a really good sink and they'd be much healthier. It's as simple as that, you know, so it isn't natural, it isn't stinctive, but it's also so much better for them. Oh, that's great. And being a dog, I know, I know that I want to look after my pet, you know, he's part of the family, as you say, all of that, mammals in our household. I might refer to the rest of the family as other mammals in the household now, actually, I think it's quite nice. Two legged and four legged mammals. But the business is obviously grown because of this approach. You know, you're taking this premium, this natural, this beautiful product, and you've grown a fantastic business with it as well. So congratulations. How many markets are you in these days? We actually pulled back from a number, and I think we've had this conversation in the past. We made the hard call to come out of something. But we're in about 13 or 14 now. But again, I think you have to make some hard decisions about where you think you can win, and we did that very early on in my time with the board. You know, we talked to it said, "Look, we've got a finite level of resources, so where should we focus them?" And we picked out what we thought were the key markets that we felt we had a right to win, and we went deeper into those markets rather than spreading ourselves thinly. That doesn't mean we won't go back to those other markets, but I think it's been the right approach for us. It seems like a really mature approach. I mean, I talked a lot to exporters and people who, for some, it feels like it's almost a notch on the belt, you know, trying to get as many markets as possible. For somebody to go, actually, no, we chose to consolidate the end and focus on a few where we could really win. That feels like a very mature market approach. I think it is. It's choices with resources, isn't it? You know, we had pretty scarce resources, and you don't want to dissipate them and be ineffective, so it's like, actually, let's be critical about where we think we can, and where we can't succeed, and push hard in the areas that we think we can. Nice. On your website, you've got this phrase. I just want to read it to you. "K-9 natural pet food is made from the best, most wholesome ingredients found in New Zealand." I wanted to check that last little bit. They're in New Zealand, but how much does that feature in, you know, your go-to-market, your thinking, your marketing strategy? It's actually a massive part of it. And, you know, the great thing for us is that New Zealand underpins some of our critical brand components. So our nutrition and our pastoral fed grass fed model has some really clear nutritional link. So if you've got product that you've got meat that has been grass fed, then you will end up with significantly better omega-3-6 ratios than you will from any meat that's been fed grains or finished with grains. And so, you know, New Zealand is quite unique in that we can claim that. And that omega-3-6 ratio is a huge difference in inflammatory effects on carnels. So, cats and dogs, you know, they typically get a few issues. They get fat, they get joint problems, they get skin and coat problems. And all of those are made worse by the fact that they've got higher levels of omega-6 relative to omega-3. And if you feed them grass fed New Zealand meat, then they will get a better ratio of omega-3 to omega-6, which will drive down all of those inflammatory effects. And so, you know, that's a massive opportunity for us. And what it also does is it kind of underpins the fact that we'll always be grass fed. And so, that'll always mean, you know, that the product coming here from New Zealand. So, that helps us in that respect. But, you know, it also feels really good that we've got a unique proposition from here. And it helps us tell a great story for the rest of the meat industry too. So, you know, the same applies for human consumption as well. Yeah. Well, let's say, in fact, one of the other guests on this podcast was talking about exactly this. Our conditions for growing our light, for example, the way that the light interacts with the land and the animals and plants is unique. It does create different levels of chemicals inside the animal or the plant. And it's not something that's widely known, I think, in New Zealand. We take it for granted, because we live in this incredible country. We've got amazing food. It's not until you travel, you realise that the rest of the world doesn't have those advantages. Yeah, that's right. Exactly right. Now, your New Zealandness, then, how much do you work on that or play on that? I suppose, in your marketing. Is it a front center on the packs? Is it in your marketing materials and protocols? I'd say it's a strong support. I think we've got to be really careful that we offer more than just that. And so, I think that is important. So, we talked about why is New Zealand good? And so there, I've already talked about our growing conditions and you've built on that as well. But there's a number of other endorsements that come from here. There is our way of life and that is appealing to some people. But interesting, our most recent owners are a very large American private equity company. And they've got a huge focus on ESG. One of the challenges for us is that they want us to report in a certain way against certain initiatives. And then you look at that and you go, actually, these things aren't issues for us. Because this is all codified in New Zealand. This is just the way we do business here. We have regulations to support animal welfare. We have very strong labour regulations. And so a lot of our paradigms are completely different. And that, again, is relatively unique. I'm not going to say it's completely unique to New Zealand. But it's pretty strong endorsement of the way we do business. And I think that New Zealand is, again, something that we're able to trade on. And particularly as the rest of the world becomes increasingly aware of these issues, we will be able to continue to differentiate ourselves on that. And we're going to have to, because we're going to have to extract more value from our exports to pay for the cost of all of these externalities that inevitably we will have to wear. And it is critical that we continue to defend these positions. But also we do a really good job of marketing these positions as well. Yeah. And you mentioned earlier the Fernmark. You are one of the companies that proudly displays the Fernmark on the pick of the pack or in your marketing. Tell us about what that means and how has it impacted you. It's something that we wanted to support when it was first pushed out again by New Zealand Trade and Enterprise. What's really important is that we make it more meaningful. And I think we all do that collectively. So the work that the entity does. But also the work that we all do around telling that story. Because it can stand for all of these things. And as I said before, if we want to be able to extract value from our New Zealanders, then that can be a shortcut for people to go actually. Well, that means it has got a very high level of labor regulation. It has got a very high level of regulation around food processing. I can trust a product that wears that badge or carries that badge. So I think there's much more we can do with it. But if we want to genuinely create value from it and differentiate ourselves on it, we all have to do some work on it as well. Oh, that's good. Well, watch the space actually. We're thinking about exactly how we can do that. And now you mentioned also your acquisition. And it was really inspiring actually to see a private equity company coming in a couple of years ago. And obviously see the potential when the value of the business. Tell us about that process. What happened for you there? I mean, it was a fantastic process to go through. You know, it was a real testament to everybody who's contributed to this business from the very early founders through the Pioneer Capital who took a risk and punted the business and really supported it through the scale up phase. Also, for all of our suppliers, everybody who's contributed that we've been able to create a business that was able to attract one of the world's largest and most successful private equity groups. You know, who said, "We think this is a great idea and we think we can do a lot more with it." There's a lot of interest globally on it. It was a hell of a process to go through. It was pretty full on. It was busy. But, you know, in the end, we got a fantastic result for everybody. You know, and that's, and I sort of went into it with a view around who you stay cold as set as. And obviously you've got to stay cold as set as just your existing shareholders were looking to exit. But equally, you know, very important that we were doing the right thing for our people and all our suppliers. And then also making sure that you're doing the right job for your incoming investors as well. So, you know, trying to get that balance right was really important. And we, from the start of the process, with my board and the outgoing shareholders. You know, we had that conversation that said, "Look, you know, this is the stakeholder set. We're trying to do right by all of these people." So let's make sure that that's the filter that we make this decision on. It's a really good process to go through and really satisfy our conclusion. And how's it played out now, you're a couple of years in or you're in a bit in, has worked out the way you thought it would? Largely. Yeah, I mean, apart from the volatility of the market and, you know, there's an awful lot going on that you're just not expecting. So, day to days, fairly challenging, but in terms of, you know, the ownership and the investment from KKR and their commitment and, you know, everything they bring to the table. You know, that it's been exactly as we would have hoped. They're very well-run, they're a very good bunch of people. They believe in the right stuff. They've bought great networks to the table, the board. They've been really good. I'll call it sort of corporate think. Yeah. But, you know, we haven't got a, you know, a small business, a small scale up, and we try to avoid a lot of that, but they're very good at helping on that stuff. So, they support us on things like cyber security, you know, stuff we just want to be able to do. But they go, "Actually, we've got it. We'll push it on that." And, you know, ESG, and at the same time, you know, clearly they're committed to the business and they're happy to continue to double down on investment, you know, which will open up some fantastic opportunities for us as a business going forward. Fantastic. So, the future sounds pretty bright for K9 Natural. You've got a lot of opportunity to grow. But nothing to complain about, that's for sure. It's just the challenges of, you know, choosing which opportunity to take next. That's often the hardest part of a business like this. It sounds like a good problem to have. Now, I tried to get you before, but you're far too politically correct to answer. So, I'm going to give you a direct question. Are you a cat person or a dog person? I'm a cat person, and that's, but that's nature of my family circumstances. In terms of, we've got, well, we've got a very old cat that has been part of the family for a long, long time. And so, there's been an awful lot of pressure to add a puppy to the household. But we've resisted based on the fact that we just don't think that would be fair. On a cat who's been, you know, grown up with our kids. So, we've said, well, when the kids are gone, and the cat's gone, then maybe. Yeah, but I don't miss out. We've got 10 dogs running around here at work in the office, so. Oh, I can imagine you're a very dog-friendly and cat-friendly workplace. Yeah. Yeah, we get my dog fix here at work, that's for sure. Oh good stuff. Well, Neil, thank you so much for sharing your story and thank you for flying the food. Awesome, thanks for all the support. We really appreciate it and it's great to chat, David. Thank you so much for listening. This podcast series is all about highlighting the amazing work New Zealand companies are doing in a variety of sectors and spaces. If you like this episode, there's clearly more great stories from flying the food podcast that you could listen to. 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