Champion CEO Discusses Petco Partnership
Last week, Champion Petfoods made headlines when it announced that its ORIJEN and/or ACANA foods will soon be made available through Petco. And given that these brands were once exclusive to independent pet specialty retailers, many independents were understandably concerned about this development. With that in mind, I approached Champion president and CEO Frank Burdzy with some of the questions that are on the minds of most pet retailers...
Why is this the right time for Champion to enter the big-box segment of the pet specialty channel?
Frank Burdzy: First of all, I don’t think we would define this as the big-box segment; we really do look at this as the pet specialty segment because of the specific actions that Petco has committed to and is already taking. So, from our perspective, we see it as a continuation down a path we have adhered to for a long time.
Really, what our motivation is founded on is our goal to make sure we are providing the best food available in the marketplace. So, our focus is on the pets themselves and pet lovers, and we believe that we want to provide them with as much access to our foods as possible.
We know that there is continued premiumization of pet food all around us, and we really appreciate the influence that pet specialty retailers have had in helping our brands get the awareness and recognition that we believe they deserve. They’ve always challenged us to continue to work on our offering and the quality of what we provide to the market. So for us, it is just a continuation of making sure our foods are clearly available to pet lovers where they are.
We also think this move is very important to us in terms of focusing on pet nutrition. As you’ve read in Petco’s announcement, they have been very clear about their commitment to refine their view of what is animal nutrition, both from a food perspective and an advice perspective. So, we believe this is a real good opportunity and very consistent with our philosophy on how we provide biologically appropriate pet foods to the market.
While I understand your point of view about Petco, I’m sure you understand that many independents see things differently. With that in mind, are you concerned about the potential backlash from independent retailers?
Burdzy: We’re certainly aware that there is a potential for that, and I think the key is in knowing that our business has always been built on our relationship with and the importance of pet specialty retailers. That’s because it takes a little something extra to support a brand like ours to consumers and the pet specialty marketplace is very committed to their customer base.
Although this might provide more access to our foods than the current stores, we also think that the awareness levels are going to go up substantially. Right now, we’re doing awareness research that tells us we’re still one of the best-kept secrets in the industry, even with the approach of word-of-mouth that we’ve relied upon, and we think that having our foods offered in more locations, everybody is going to win. All boats will rise with the tide, because as more consumers become aware of us, we expect that they will go back to the retailers to which they have become quite loyal. And they will stay with them because those retailers have worked hard to build customer relationships over time. As true independent retailers, I think they can rely on those relationships and will even have an opportunity to build new relationships with more customers as they come into the store looking for ORIJEN and ACANA.
What would you say to independents that are concerned about losing their exclusive access to Champion's brands?
Burdzy: What I’d like to say—and I’ve said this to several who have contacted me—is that we understand their concerns. I’m not being naïve about this. I get it; there could be a perceived threat here. But at the same time, I think you have to listen to and think about the whole story.
Beginning in late 2018 and going into 2019, Champion has, for the first time, really started investing in telling our story directly to consumers. With that increased commitment to marketing efforts, as well as the expectations we have made clear to Petco about how they present our foods to the marketplace, you can expect to see a higher level of awareness and more information out there about our products. And I hope that independent retailers will see that they have an opportunity to actually gain and retain more customers with our increased promotion and awareness support. We’re trying to provide more resources in more places to attract pet lovers and serve more cats and dogs with ORIJEN and ACANA.
What types of pricing protections will Champion put in place to ensure independents can stay competitive?
Burdzy: We can say with confidence to independents that they will see our pricing remain fair to all parties. Remember, what’s at the heart of this is our fundamental belief that we add value for consumers in every bag. We do not believe in any process that would lead to discounting or representing price differentials across the market. It’s really about upholding the brand value that we believe Champion offers, and allowing retailers to benefit from that equally. So, our whole philosophy with Petco is that there will be no preferential pricing or giving them opportunities to present our products in the marketplace differently than an independent retailer, from a price perspective.
So, we can expect to see aggressive MAP policies and aggressive enforcement of those policies from Champion?
Burdzy: That is correct.
Could broader distribution change the way Champion brands its products? In effect, could you see a scenario where Champion develops separate brands for independents and Petco?
Burdzy: No, Champion has been and will remain a pet industry leader. We’ve provided foods to the marketplace based on one philosophy, and that’s being biologically appropriate. We focus on saying that those foods, in their present form or as we continue to add value to them, are really the key to all pet lovers. So, making all of those foods available to all pet lovers in all the ways they want to interact with the brands will continue to be the driver.
We don’t believe in the philosophy of offering a sub-brand or a separate brand in one market or another. There is only one ORIJEN and there is only one ACANA.
Is there any other aspect of this move that you think is important to convey to retailers—any nuance that isn’t simple enough to put in a press release?
Burdzy: The only thing I would add is that Champion has and will continue to invest heavily in our foods. There have been some comments along the way on social media that this is the beginning of the end for the quality of the foods or our BAFRINO [biologically appropriate, fresh regional ingredients, and never outsourced] mission, but it’s just the opposite. We will continue to add food development, as well as advance our BAFRINO mission. Biologically appropriate foods will continue to be our focus.
I want to assure everyone that we are 100 percent committed to making sure we are the leaders in delivering the best quality food and our biologically appropriate philosophy to the market.
And can you say with confidence that Champion will remain committed to the pet specialty channel? We’ve seen other pet specialty-focused food companies move into the FDM channel, would it be inappropriate to look at this as a step in that direction?
Burdzy: We remain 100 percent committed to pet specialty. We believe that the pet specialty channel is the only way to successfully bring ORIJEN and ACANA to pet lovers around the world.