A recent report
out from one of the leading market research firms today, Packaged Facts – which
has been at the forefront of consumer packaged goods, food and beverage, as
well as demographic sector analysis now for over five decades – clearly
indicates the strength of the U.S. pet products and services market, which did
sales last year of around $73 billion. This is a huge pie for any company to
carve a slice off of. The report’s trend lines show increased pet ownership
rates, as well as increased ecommerce spending on pets, and a population of
pets that are living longer, just like their owners. These trends appear intact
for the foreseeable future and it seems like everywhere you go on this planet,
people just love their pets.
While some
consider the pet industry to be essentially proofed against recession, it is
better to simply think of the industry today as being driven by family-oriented
household spending, and therefore core to spending habits. Most pet owners
consider their pets to be a regular member of the family and they will
subsequently go well out of their way to care for a pet, spending a great deal
of money for the well-being, as well as overall happiness of that family
member.
Little wonder
then that, even by the American Pet Products Association’s (APPA) more
conservative estimates, based on their own compilation of various market
research, the supplies segment of what they tallied as a $58 billion market
last year was around $13.75 billion. With 45 million U.S. households currently
owning dogs and 30 million households owning cats, any way you slice up the
data, the numbers look good. The Packaged Facts report was keen to emphasize a
38 percent jump last year in the number of pet owners shopping online too, with
heavy ecommerce hitters like Amazon.com (NASDAQ: AMZN) making it easier than
ever to streamline product flow to end markets.
In an industry
largely dominated on the services side by players like big box retail outfit PetSmart
(NASDAQ: PETM) – which provides services like grooming and pet training, in
addition to miles of aisles of pet products – the pet supply market is
saturated with cookie-cutter tropes. Only a handful of companies are dedicated
to creating defining brands and are capable of successfully cultivating what is
essential to connecting with consumers in the pet products space: constant
innovation and a tight feedback loop with the end users. A strong brand in this
game is essential to success, but a company has to really make that connection
with consumers through the products, winning them over to the superior style,
design, continuity, and affordability of the brand.
One look at the
latest product from rapidly developing proprietary pet supply company, OurPet’s
Co. (OTCQX: OPCO), and it is plain to see that this operation really lives up
to the vision of its founder, Dr. Steve Tsengas. Intelligent applications to
toy design and product engineering, driven by deep insights into cat and dog
biology, as well as psychology, have continually defined OPCO as a rising star
within the industry.
Launched in May
this year, the company’s new Catty Whack® electronic toy for cats was
scientifically developed to stimulate the natural hunting instincts of our
feline friends, using an erratic feather wand that darts in and out of five
different holes and an enticing audio queue. Feeding the animal’s instinctual
desires, as well asproviding therapeutic mental diversion that is also good
exercise, directly addresses the needs of the animal to make them calmer and
well-adjusted to domestic life. Only three months after the product’s debut,
the Catty Whack managed to take home the New Product Showcase Award at the pet
supply industry’s major conference, SuperZoo 2015. The Catty Whack, featuring
the company’s electronic RealMouse® sound and erratic movement technology, was
voted “Best New Cat Product” in the New Product Showcase by pet industry
retailers themselves, illustrating how captivating the design, quality, and
overall execution truly is. The company wheeled out a bevy of new products at
SuperZoo 2015 in Las Vegas this year, with toys and feeding solutions at the
heart of the OPCO booth.
The Catty Whack
stole the show though, and this one product is a perfect example of the wide
array of trend-setting and highly unique ideas available via OPCO’s OurPets®
and Pet Zone® portfolios. This dual-brand portfolio is respectively set up in
order to provide a tailored experience for the company’s pet specialty trade
customers on the one hand, and those in the mass-market, as well as food and
drug channels on the other. The company creates an entire range of products
designed to promote the comfort and enjoyment, as well as the health and safety
of pets. From accessories and toys to well-designed feeders and bowls, OPCO
even makes a constantly evolving selection of pet waste management solutions.
Many of the company’s highly unique products are one-of-a-kind market entrants
and nearly every offering from OPCO is protected by the company’s growing IP
library of over 160 issued and pending patents.
Record Q2
revenues reported by OPCO in early August were no surprise to investors who
have been following the company closely. And while quarterly net revenues were
up only four percent compared to last year, net income shot through the roof,
pulling in a 77 percent gain on strong receptivity in pet specialty end
markets, primarily due to the company’s recently introduced bowl designs, as
well as new cat toys and accessories. The PetZone brand is also doing quite
well in the mass market, food and drug channels, and a significant uptick in
overall profit margins for the quarter was further enhanced by noticeably lower
SG&A expenses. These guys run a tight ship it seems and the company even touted
an upcoming rollout for a series of three new and proprietary feline waste
management products early in 2016, which shows just how aggressively the
company is delivering on consumer response to its brands of pet products.
Dr. Tsengas
pointed out in the company‘s August 3 earnings conference call that ecommerce
was picking up incredible amounts of steam for OPCO, and the segment currently
represents about as much as 10 percent of the company’s footprint, which spans
direct-mail catalog and internet, as well as leading pet specialty retailers
and food, drug, and mass merchandisers. A strong relationship with ecommerce
juggernaut Amazon.com doesn’t hurt of course and the company’s imminent
expansion from Amazon Canada and Amazon co-existing, with the upcoming Amazon
UK closing, will set OPCO up very nicely for maximum product throughput
capability. Already tapped for Amazon Japan and India, the sky is the limit for
the company’s international brands of pet products, and because the language of
design is universal, consumer resonance barriers to entry will be at a minimum.
OurPet’s Co.
has honed its design process down to creating holistic products that unify the
behavioral, lifestyle, and health needs of both pets and their owners. The
result is truly astounding, with products so clever that consumers can’t say
no. An example of this is the WonderBowl™ selective feeder, which uses a small
infrared tag on the pet’s collar in combination with a properly positioned and
unit-based sensor to open the transparent lid for feeding. This brilliant
design helps keeps food fresh, ensures that only the correct pet eats from the
correct dish, and also keeps anything from getting into the food. The product
directly addresses an unmet need that can often be a big problem in multi-pet
households and demonstrates how OPCO beautifully addresses that underserved
demographic with an elegant solution.
Whether it is
coming up with new toys to help stimulate a pet’s mind and therefore contribute
to preventing unwanted behaviors, or creating gorgeous designer dog bowls in
durable stainless steel, OurPet’s Company is constantly rifling great products
out to a loyal user base. It is this kind of forward thinking in product design
that is capturing the most sought after consumer dollar demographics in the pet
supply space and OPCO is proving itself to be quite the dynamo, churning out
creative solutions to underserved or unmet needs in the market.
Take a closer
look at the company by visiting www.ourpets.com, or www.petzonebrand.com
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MissionIR is committed to connecting the investment community with companies that have great potential and a strong dedication to building shareholder value. We know our reputation is based on the integrity of our clients and go to great lengths to ensure the companies represented adhere to sound business practices.
Sign up for “The Mission Report” at www.MissionIR.com
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