Ep. 7: The Honest Pet Food Jackpot

How San Diego entrepreneur Lucy Postins turned “human-grade” pet food into a multimillion dollar business.

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Lucy Postins, The Honest Kitchen

Lucy Postins, a San Diego entrepreneur, turned “human-grade” pet food — healthy, artisinal canine feasts you could eat, too — into a multimillion dollar business: The Honest Kitchen.

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Lucy Postins: Everything we produce is made in a human-food facility from 100% human-food-grade ingredients - it’s basically people food that’s been formulated to meet the needs of pets.

Colleen DeBaise: Welcome to The Story Exchange, featuring the stories and strategies of entrepreneurial women around the world. I’m Colleen DeBaise and we’ll be joined later by Sue Williams, co-founder of The Story Exchange.

Colleen DeBaise: Listen closely. That is the sound of two very happy dogs. They’re eating a gourmet meal of meats and vegetables -- definitely not your typical kibble. The chef behind this artisanal canine feast is their owner, the British-born Lucy Postins. She runs a company in San Diego called The Honest Kitchen, which makes a range of delicious-sounding dishes for dogs and cats -- some might say, over-the-top dishes for dogs and cats. You can choose from things like “Midwestern Beef with Papaya and Dandelion Greens” or “Line-caught Whitefish with Sweet Potatoes and Parsley,”all made with organic, non-genetically-modified, gluten-free ingredients. In fact, the exact same stuff that can be found in human meals. And when I say “exact same stuff,” I mean literally -- it’s called “human-grade” pet food. The only thing different is that the meals come in dehydrated form, sort of like astronaut food. All you do is add water and stir. Here’s what Lucy says about it:

Lucy Postins: We’ve had a few customers over the years threatening to feed the food to their husbands. I don’t know if anybody has, but, certainly, there’s nothing in there that you can’t eat.

Colleen DeBaise: Now, Lucy -- like a lot of us -- is crazy about her pets. And one dog in particular, a rhodesian ridgeback named Mosi, inspired her to create The Honest Kitchen back in 2002. This is probably where we should tell you: She now makes 21 million dollars in annual revenue selling this pet food. That’s right. 21 million dollars.

And she’s not alone, either: More entrepreneurs than ever are serving the billion-dollar pet industry. There’s a lot of competition out there, big names like Purina and Pedigree, but there’s also a lot of opportunity. Americans own more pets than ever -- if you look at the census, there’s actually more households with dogs than children -- and a lot of people treats those pets like children. It’s not like the old days anymore, when dogs were lucky to get table scraps. So, if you’ve got an idea for a kitty product or a puppy play toy, this is a podcast for you. In this episode of The Story Exchange, we’ll look at how Lucy Postins turned her passion for pets into a multimillion-dollar business. If you go to our website, The Story Exchange.org, you can see a video we produced on Lucy telling her complete story. Today we are going to share snippets from that conversation, so you can get a sense of how she did it.

Colleen DeBaise: Our tale begins in Lucy’s kitchen, some 13 years ago.

Lucy Postins: I had a Rhodesian Ridgeback dog who I’d had for about a year, and he was suffering with a number of different health problems with his skin and some recurring ear infections and things like that. So I really began trying to think of a way to address that through nutrition. And I ended up settling on a homemade raw food diet... and began concocting my own meals for my dog, Mosi. And loved the results. It was really amazing how much his ear infections and things improved, but I ended up with a terribly messy kitchen. I had broccoli and blood, and all sorts of things all over the place.

Colleen DeBaise: Now, broccoli and blood are not the first things I think of when I think of dog food, or any kind of food, for that manner, but keep in mind, Lucy was experimenting with fresh, wholesome ingredients. She wanted something that Mosi would eat, that would clear up his skin, and that was much healthier than traditional dry kibble, which really was the only thing on the market at the time.

Lucy Postins: There are a lot of horror stories around what goes into conventional pet foods. I’ve been to a pet food rendering plant and that horrific stench where you literally have to breathe through your mouth, it’s just too awful to even breathe through your nose, the rendering and the heating of ingredients to make these pellets. Dry food in general, the pellets that so many unfortunate pets eat every day, have been linked with kidney problems and urinary tract issues because they cause a state of chronic dehydration in the pet, which takes a toll on the kidneys after many years.

Colleen DeBaise: All this explains why Lucy was looking for a better option for her pet. But of course, as she chopped up and pureed fresh ingredients -- she found the whole thing to be a bit of a mess, plus not exactly convenient.

Lucy Postins: So, I just began thinking of a way to continue feeding, sort of a fresh, whole food diet that was made with real ingredients, but in a format that was a little bit less messy to prepare. And that’s really where the idea for dehydration came from, so removing the moisture from the fresh ingredients leaving everything else behind.

Colleen DeBaise: So, now Lucy has a whole bunch of this healthy, astronaut food for her dog. That’s when the proverbial lightbulb went off.

Lucy Postins: So I began feeding Mosi a concoction of my own dehydrated blends, and he did really well on that and sort of got the idea that we could make a little business from it. So I had some friends help me build a website, and I placed a test order and logged into PayPal to make sure it had gone through. Couldn’t believe my eyes that somebody from Virginia had actually beaten me to it and somehow had tracked down our web site and placed an order. And I was just absolutely flabbergasted with this and ended up losing money on that order.

Colleen DeBaise: Lucy set up a FedEx account so she could get her shipping costs in order, and before she knew it, mostly through word of mouth, she had regular customers.

Lucy Postins: It just took off and snowballed and I often think of the business as being an animal in many regards. It’s sort of got a mind of its own and it just does its own thing and very often we just feel like we’re here for the ride.

Colleen DeBaise: One thing that is remarkable to me about Lucy’s story is the relatively high price she charges. Pet food that you could theoretically feed your dog and your husband is not cheap. For instance, a 10-pound box of The Honest Kitchen food can run as high as $110 or so. Keep in mind, that 10-pounds yields about 40 pounds when water is added. But by comparison, a 40-pound bag of Purina or Pedigree, that is much, much cheaper, about $20. So persuading customers that they need to buy organic food for their pets, and then getting them to pay five times as much as they’re used to -- you’d think that would be a challenge. But, people are buying this, which Lucy attributes in part to the artisanal food movement, trickling down to pets. She now sells about four million pounds of food a year, through more than 4,000 speciality shops in the U.S. and Canada, plus some Whole Foods locations and of course, The Honest Kitchen’s website. Lucy says it’s the ingredients that set her apart from the competition…

Lucy Postins: We use a lot of organic ingredients, so things like our oats, barley and flaxseed are all 100% organic. Then we use all non-genetically modified produce, everything from cranberries and apples through green beans, and celery, pumpkin, sweet potatoes and lots of other delicious things.

Colleen DeBaise: By the way, if you’re wondering if dogs are supposed to eat things like cranberries and pumpkins, the answer is yes. Lucy says it’s important.

Lucy Postins: Yeah, There are lots of different people foods that are really very beneficial for cat and dog health, just as they are for humans. Things like cranberries have compounds in them that help to prevent bacteria from adhering to the bladder wall, so they can be really helpful in addressing urinary tract problems and infections, things like that.

Colleen DeBaise: Now, we’re making this all sound easy, but starting up wasn’t without its challenges. Later in this podcast, we’ll look at some of the problems Lucy ran into, including one with the government, when she marketed her product as “human-grade.” But first, let’s take a step back and look at Lucy’s background. At The Story Exchange, we like to show how women from all different walks of life can become entrepreneurs. And if you’ve never checked out our site, please do so. It’s The Story Exchange.org, we’re a nonprofit media company and we produce articles and videos about women business owners. I’m being joined now by Sue Williams, co-founder of The Story Exchange, who spent a day with Lucy in San Diego and produced a video profile of her for our site. Welcome, Sue.

Sue Williams: Hello!

Colleen DeBaise: So, first tell me about The Honest Kitchen’s office. It sounds like a fun place to work.

Sue Williams: It really is. Her office is a loft in an old Wonder Bread factory, and it has this really warm feel to it. Lucy has nearly 40 employees now, and it seems like every one of them brings their dog to work. There are dogs everywhere. There are mutts and mongrels and big old things sleeping next to almost every desk. When I walked in I actually wondered if having a dog was a requirement for the job. And you think it would be chaotic with all these animals around but they all seem to get on and while we were filming we had no barking interruptions at all.

Colleen DeBaise: That’s great. Tell me about Lucy’s background -- she has a degree in animal studies, right?

Sue Williams: Yeah, she does. Lucy grew up in a very small village in the south of England, and like so many English school girls, she had a passion for horses and spent a lot of her free time riding and taking care of them, grooming them and mucking out stables. And at school she loved biology, she loved learning about human AND animal bodies and how they worked. And she was pretty funny when she was talking to me ‘cause she said she didn’t know you could actually get a college degree in equine studies. But when she learned she could spend 4 years studying just horses, she was thrilled. And so that’s what she did, at Warwickshire College. She studied horse anatomy and physiology and they also had these really good ancillary courses -- business and finance studies related to animals. They were really training students to be able to get careers with animals.

Colleen DeBaise: Wow, that’s great. It sounds like she was probably in heaven.

Sue Williams: Oh, she was.

Colleen DeBaise: How did she end up coming to the US?

Sue Williams: She was just finishing her studies in 1996 when her boyfriend, now husband, got a job in San Diego. So she moved here with him and she got her first job in the US. Was at a pet-food company called Solid Gold, and she did marketing and product development for them. This all means Lucy had a great deal of scientific know-how and marketing experience before she began formulating her pet food for her dog. I mean, she wasn’t thinking about just leftover people food. Let’s listen to what she said:

Lucy Postins: I think I was doing an element of what’s done in Europe in terms of feeding leftovers to my dog, Mosi. But I, in my mind and I think from my degree there’s a little bit more of a science to it. It’s not quite the same as trying to feed a human all the time, and it’s very difficult to scientifically formulate a recipe just using leftover scraps. I wanted something that was sort of a properly nutritionally balanced and complete finished product that met my dog’s complete daily requirements for all of his vitamins and minerals and amino acids. So that’s where I sort of began formulating a recipe that would be just perfect for him.

Sue Williams: About 8 months later, Lucy turned this into a business. And of course, as you said earlier, she’s now making $21 million a year doing this. I have to say, it’s pretty impressive what she’s achieved, already, because Honest Kitchen’s still a young company.

Colleen DeBaise: Anything else strike you about Lucy, or how she runs her business?

Sue Williams: Yes. When you walk into her offices, there’s a sign on the door saying she won’t use any ingredients from China. That struck me as pretty strong. Let’s listen to a bit of the tape where we talk about that:

Lucy Postins: China was the country that was implicated in some huge pet food recalls a number of years ago and I think a lot of people are pretty shocked and horrified about the magnitude of those recalls and how far reaching they really were. And it turned out that the culprit was melamine-tainted ingredients from China. As a result of that we completely phased out any Chinese origin ingredients from our product line-up.

Sue Williams: Actually, that must’ve helped your company quite a lot.

Lucy Postins: It was a horrible way to have gained new business, but we did end up with a lot of new customers. At that time, people were just absolutely devastated about what had been going on within the industry and they literally switched foods several times and finally landed on us through their research and wanted something that was a little bit more trustworthy. And because all of our ingredients are 100% human-grade and we literally don’t make anything that we can’t taste ourselves, so there’s really a line in the sand in terms of what people can expect and trust us for.

Colleen DeBaise: Sue, can you remind me what melamine is?

Sue Williams: It’s basically a compound that was being put into a number of protein products in China at the time. It makes foods look like they have more protein, it kind of bulks them out. But melamine is more commonly used in plastics.

Colleen DeBaise: Yuck. Sounds awful! Good to know she doesn’t use it. Thanks for sharing a bit more about Lucy’s background.

Lucy Postins: I think some of the biggest challenges over the years have actually been my ingrained desire to always try and be different from everybody else.

Colleen DeBaise: We’ve been looking at Lucy Postins, a Brit who came to this country, came up with a new-and-improved idea for pet food, and captured a piece of the market. But of course, the journey wasn’t always so easy. From time to time, she hit a few speed bumps, starting with her very first production run. Let’s listen.

Lucy Postins: I set out to find a manufacturer that would be willing to actually blend basically a pet food in their human food facility alongside things like breakfast cereals and trail mix and bakery blends and things like that. And it was actually hard in the early days. There was sort of a stigma associated with being pet food. So one of the initial challenges was really trying to explain to the blending companies, the co-packers, this is actually people food, it’s just simply being formulated to meet the nutritional needs of cats and dogs.

Colleen DeBaise: Eventually, Lucy found a manufacturer willing to work with her.

Lucy Postins: So the very first manufacturer that blended the food for us, they were based outside of Los Angeles and I’d worked very closely with them to get my formulation transferred over, and I’d purchased all of our own raw ingredients. And I’d had everything sent to the plant for them to blend, a little test run, which was gonna be 20 pounds of finished product just to make sure they could do it. And I was very excited that the rep was going to come to my house with my very first bag of food! And he came to the front door and we tore open this brown paper sack of food and I literally was just devastated because it was, it had basically turned into a bag of flour. They had blended it for so long on their ribbon blender and just pulverized it.

I said, “This isn’t quite what I was looking for and it’s supposed to look like muesli. And the whole point is that people can see what they’re feeding their dog. They want to actually know what it is. It’s not gonna be these pulverized brown chunks that people are used to feeding. And I closed the door, and sent him away to try again, and I ended up sitting there crying with my dog that afternoon.

Colleen DeBaise: So this does have a happy ending. The manufacturer did eventually get it right, and Lucy started selling her “muesli” for pets. She stayed with that manufacturer for many years -- until she outgrew them.

Lucy Postins: And then we’re actually on our fourth manufacturing facility now, as we’ve grown and outgrown different places, and we always like to have a couple of places making the food so there’s a back up. So we’re now in a facility just outside of Chicago. We now have an employee, an Honest Kitchen employee who’s based in Chicago and he’s overseeing all of our production. And then still to this day The Honest Kitchen’s foods are made on the exact same equipment as mac and cheese, and bakery mixes, and everything else that people eat.

Colleen DeBaise: “Everything else that people eat…” Now we get to one other huge challenge that Lucy faced as she was growing her company. It turned out, the government didn’t like that she was calling her pet food “human-grade.”

Lucy Postins: I think it was in 2004. It’s a pretty bittersweet time for me. I had a newborn baby. Talia had been born in January right around the time one of the Departments of Agriculture had questioned the fact that I was saying “human grade” on my labels.

And they said, “You can’t say this. It’s pet food. It’s not legal to say it’s human grade.” And I said, “Well, but it is.” And they said, “Well, you’re gonna have to go to the FDA and work with them. And if you want to say ‘human-grade’ FDA’s gonna have to approve it before you can say it on your labels.” So I reached out to FDA and I worked with a doctor there at the center of veterinary medicine as well as somebody from the USDA and I had to provide affidavits from every single one of our suppliers promising that the ingredients that they were selling to The Honest Kitchen was, in fact, the exact same ingredient that they were selling to multiple other companies for use in human food products. So things like the celery were coming being used in soup mixes, and our cranberries were used in trail mix and breakfast cereals. All that documentation as well as the FDA inspections from the plant itself, the place that was making the food and packaging it for us, showing all the other ingredients they made, and testifying that they were making our Honest Kitchen food on the same equipment that was being used to make breakfast cereals.

And finally after all those regulatory hoops, FDA gave me a statement of no objection to use the term “human-grade” on our labels.

Colleen DeBaise: And we did check with the FDA…. the agency confirmed that it did indeed work with Lucy on this. Now, she says to her knowledge, The Honest Kitchen is the only pet food company that is approved to say “human- grade” on its label. That we couldn’t get confirmed, as the FDA doesn’t maintain a public list of pet-food manufacturers who want to market their food as such. But regardless….what a battle! And it’s certainly Lucy’s competitive advantage over most other companies. Her customers -- and she has a lot of loyal ones now -- often tell her that Honest Kitchen products have cured their pets’ chronic health problems or allowed them to stop taking steroids or antibiotics.

These days, the Honest Kitchen’s success has attracted a lot of attention. Lucy has taken on investors, including the owners of Clif Bar, Gary Erickson and Kit Crawford, and also the private equity firm Alliance Consumer Growth. She and her husband Charlie, who wound up joining the company in 2007, are still majority owners.

Before concluding this podcast, I did want to circle back to Lucy’s original inspiration -- her dog Mosi. Now, Mosi has since gone to that great dog park in the sky, but Lucy has two more Rhodesian Ridgebacks, Taro and Willow, who are definitely the dominant dogs in the office, and they currently taste all her recipes and give the paws up or paws down on new flavors. Mosi’s influence, however, is still present.

Lucy Postins: There are a couple of ingredients that from the very early days Mosi didn’t approve of, one of which that sticks out in my mind is tomatoes. And, to this day, tomatoes have never made it into one of my finished recipes.

Colleen DeBaise: Join us next time to hear more stories about innovative and inspirational women doing the things you’ve never dream of. Or, maybe you would. This has been The Story Exchange. If you like what you’ve heard, visit our website as TheStoryExchange.org, where you’ll find news, videos and tips for women entrepreneurs. I’m Colleen DeBaise. Editing help provided by Nusha Balyan. Interview recorded by Sam Shinn. Executive producers are Sue Williams and Victoria Wong.

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The Story ExchangeEp. 7: The Honest Pet Food Jackpot