A Growing Appetite for Healthy Pet Food

As pet owners react with alarm to the nationwide pet-food scare, small producers of premium brands are rushing to meet new demand

by Stacy Perman

When the news broke last month that 16 cats and dogs across the country had died and many more had become seriously ill after eating pet food found to be contaminated with rat poison and a chemical found in plastics and pesticides, pet owners nationwide reacted with alarm. The hunt was on for safe and healthy alternatives to the usual name-brand food they had relied on to feed their animals for years.

Indeed, in the weeks since the scare began, the large companies that manufacture the affected products launched a full-scale recall. Canada's Menu Foods, a large manufacturer that produces pet food for such labels as Iams and Hills Pet Nutrition, pulled 60 million containers off store shelves. Nestle Purina PetCare said it was recalling all sizes and varieties of specifically dated Alpo Prime Cuts in Gravy wet dog food. And Del Monte Food (DLM) announced it would also recall a selection of its products.

Some pet owners, long accustomed to being able to buy a wide variety of food products and treats, began cooking up their own bowls of kibble. However a number of small specialty firms that make everything from organic to vegetarian to low-carb pet food reported a spike in inquiries and orders following the scare. "We've seen a huge surge in the last couple of weeks," says Lucy Postins, the founder of The Honest Kitchen, a San Diego (Calif.)-based company that makes dry, chemicals- and preservative-free cat and dog food. "Since the scare, we've received four times the number of orders online, and a 100% doubling of actual dollar amounts."

Giant, and Growing, Market

The recent pet-food debacle has drawn new attention to the kind of specialized pet menu that in the past many would have thought suitable only for pampered critters. But in reality, in the past few years, specialty pet food has been on the rise. This increase follows the overall trend in increased consumer spending on pets.

According to the American Pet Product Manufacturers Assn., when it comes to pets in the U.S. all numbers are up. For starters, 69.1 million homes, or 63% of all U.S. households, have a pet, up from 56% in 1988 when the organization first surveyed pet ownership. Moreover, spending on domesticated creatures has soared to $40.8 billion, up from $38.5 billion last year. When it comes to feeding pets, Americans are expected to spend $16.1 billion this year, up from $15.4 billion last year. And that includes an increasingly expansive menu of niche meals.

KosherPets, based in Ft. Lauderdale, Fla., was founded six years ago, after Martine Lacombe and her husband Marc Michels searched in vain for something to treat their Dalmatian Lola's serious skin allergies. Drugs and other vet-recommended products did little to help Lola, so the couple decided to change her diet with home-cooked meals. Since they kept kosher, they began preparing their dog's meals following the same Talmudic requirements. "She instantly got better," recalls Lacombe.

Pet Food for Passover

Soon neighbors remarked how well Lola looked and asked where they could purchase kosher food for their own pets. But there was nothing on the market. Lacombe, who had a background in marketing, and her husband, who was in sales, took the numerous inquiries as a sign that they had a business on their hands.

From the outset, KosherPets has been a growth business. Sold online and in retail locations across the country, it earned $10,000 its first year, according to Lacombe. The following year, sales increased tenfold, to $100,000. By the end of 2007, the couple expects to pull in $500,000 in sales. And Lacombe says their specialty line of Passover pet food completely sold out this year. While they have received many requests to expand into other areas, such as rabbit and bird food, she says they plan to focus on what they do best—making high quality food for dogs and cats. In fact, business is so brisk that they're now starting to bring in investors in order to expand capacity.