Freshpet Stock

Freshpet, Inc. (Freshpet) manufactures and markets natural fresh meals and treats for dogs and cats. The company's products are distributed throughout the United States, Canada and other international markets, into major retail classes including Grocery, Mass and Club, Pet Specialty, Natural, and Digital retail.

The company is driving consumers to reassess conventional dog and cat food offerings that have remained essentially unchanged for decades. The company positions its brand to benefit from mainstream trends of growing pet humanization and consumer focus on health and wellness. The company prices its products to be accessible to the average consumer, providing it with broad demographic appeal and allowing it to penetrate multiple classes of retail, including grocery, mass, club, pet specialty, natural and digital. The company has successfully expanded its network of Freshpet Fridges within leading blue-chip retail chains. As of December 31, 2023, the company's household penetration within the U.S. was approximately 11.5 million, with a target of 20 million households by 2027.

Products

Freshpet's business operates in a single segment: the manufacturing, marketing and distribution of pet food and pet treats for dogs and cats. The company's portfolio of products consists of dog food, cat food, and dog treats. All Freshpet products are made according to the company's nutritional philosophy of fresh, nutritional ingredients and minimal processing. The company's proprietary recipes include real, fresh meat and varying combinations of vitamin-rich vegetables, leafy greens and antioxidant rich fruits, without the use of preservatives or additives. The company's unique product attributes appeal to diverse consumer needs across multiple classes of retail where Freshpet is sold. Consequently, the company's brand resonates across a broad cross-section of pet parent demographics.

The company's products are sold under the Freshpet brand name, with ingredients, packaging, and labeling customized by different classes of trade and are available in multiple forms.

The company also offers fresh treats across all classes of retail under the Dognation and Dog Joy labels.

Product Innovation

As the first manufacturer of fresh, refrigerated pet food distributed across North America, product innovation is core to its strategy. The company takes a fresh approach to pet food and are not constrained by conventional pet food products, attributes, and production capabilities. The company employs a tightly-knit, creative team of marketing and research and development professionals, and it consults with outside experts through its Nutrition Council, which consist of PhDs in nutrition and veterinary nutritionists. The company's team often identifies pet parents' needs by evaluating emerging demand trends in both pet food and human food. New products are refined iteratively with the help of consumer panel data to arrive at products that can be commercially successful.

The success of the company's approach is evidenced by its broad product portfolio today. The company began Freshpet by producing fresh, refrigerated slice and serve rolls, and over time have steadily expanded into successful new product forms including bags and treats. The company also introduced new fresh recipes and ingredients, such as proteins and grain-free options never before seen in pet food that cater to the specific dietary requirements of pets.

The company's Innovation Center, which is part of its Freshpet Kitchens (collectively, its Freshpet Kitchens Bethlehem, Freshpet Kitchens South and Freshpet Kitchens Ennis), helps it ensure that it remains capable of strong innovation, including creating new product platforms to expand the breadth of its fresh pet food offerings. The company expects that new product innovation and the introduction of new cooking techniques will continue to delight its consumers and drive growth going forward.

Customers and Distributors

The company sells its products throughout the United States, Canada, and Europe, and generate the vast majority of its sales in the United States. The strength of the company's business model makes it an attractive partner for leading blue-chip retailers, who find that Freshpet grows the sales of their pet category, drives higher traffic, increases shopper frequency, and delivers category-leading margins. The company's Freshpet Fridge locations have been consistently increasing as it adds new retail accounts and add stores in existing accounts. The company sells its products through the following classes of retail: grocery, mass, club, pet specialty, natural, and digital.

The company's customers determine whether they wish to purchase its products directly from it or through a third-party distributor. In 2023, the company's largest distributor by net sales, Animal Supply Co., accounted for 9.0% of its net sales and its largest customer, Walmart, accounted for 23.4% of the company's net sales.

The Freshpet Fridge

The company sells its products through a growing network of company-owned branded refrigerators, the Freshpet Fridges. The company's Freshpet Fridges are typically four feet wide by seven feet high and replace standard shelving in the pet aisle or an end-cap of a retail store. The company's Freshpet Fridge designs are constantly evolving with all new models featuring prominent edge-lit LED headers, LED interior lighting, crisp black interiors and frameless glass swing doors for aesthetics and easy access. The company uses state-of-the-art refrigeration technology and environmentally friendly refrigerants to minimize energy consumption and environmental impact.

The company designs and produces the Freshpet Fridge through a combination of in-house resources and world-class partners. The company sources its Freshpet Fridges from leading global commercial refrigerator manufacturers with whom it has a collaborative approach to refrigerator design and innovation. Once ordered by it, Freshpet Fridges are shipped to distribution centers for delivery and installation in retail stores.

Installation into retail locations and ongoing maintenance of the Freshpet Fridge is coordinated by Freshpet and executed through leading third-party service providers. All of the company's Freshpet Fridges are protected by a manufacturer warranty of three years. The company's refrigerators are designed to be highly reliable, and at any given time, less than 0.5% of the network is out of service for maintenance. Moreover, to ensure quality, cleanliness and appropriate in-stock levels, the company employs brokerage partners to conduct a physical audit of the Freshpet Fridge network on an ongoing basis, with photographic results of the company's Freshpet Fridges transmitted back to Freshpet for review by members of its sales team.

The company's total chiller fleet at retailers covers over 1.7 million cubic feet of space.

Marketing and Advertising

The company's marketing strategy is designed to educate consumers about the benefits of fresh refrigerated pet food and build awareness of the Freshpet brand. The company deploys a broad set of marketing tools across television, digital and public relations to reach consumers through multiple touch points and increase product trials.

The company has effectively used national TV advertising to drive incremental consumers to try Freshpet products. The company has also expanded its online presence to better target consumers seeking information on healthy pet food. The company reaches consumers across multiple digital and social media platforms including websites, blogs and online reviews, as well as with tailored messaging on popular digital hubs including Instagram, Facebook, X, TikTok and YouTube.

The company's marketing strategy has allowed it to drive new consumers to its brand and develop a highly engaged community of users who actively advocate for Freshpet.

Competition

The company competes with some of the largest pet food manufacturers, such as Nestle Purina Pet Care, the J.M. Smucker Company, Hill's Pet Nutrition, Mars Pet Care, General Mills Pet, and Post Consumer Brands.

Trademarks and Other Intellectual Property

The company owns a number of trademarks and service marks that have been registered, or for which applications are pending, with the United States Patent and Trademark Office including among others, Freshpet, Vital, Nature's Fresh, Roasted Meals, Fresh From The Kitchen, Freshpet Dog Joy, Dognation, Homestyle Creations, and Pets People Planet. The company is continually developing new technology and enhancing proprietary technology related to its pet food, Freshpet Fridges and manufacturing operations.

Government Regulation

Along with its brokers, distributors, and ingredients and packaging suppliers, the company is subject to extensive laws and regulations in the United States by federal, state and local government authorities. In the United States, the federal agencies governing the manufacture, distribution and advertising of its products include, among others, the Federal Trade Commission, the U.S. Food and Drug Administration (FDA), the U.S. Department of Agriculture, the United States Environmental Protection Agency, and the Occupational Safety and Health Administration. Under various statutes, these agencies, among other things, prescribe the requirements and establish the standards for quality and safety and regulate its marketing and advertising to consumers. The company is required to comply with state feed control requirements in the United States. The company is subject to the laws of Canada, including the Canadian Food Inspection Agency, and the United Kingdom, including the Food Standards Agency, as well as provincial and local regulations.

History

Freshpet, Inc. was incorporated in Delaware in 2004.