Not just any pet project - Westfair Communications

There”™s probably a moral or something in this tale about Bill Bishop, who studied journalism in college and wound up selling dog food. Not just any dog food, though. This is premium, high-priced stuff that”™s made with human-grade ingredients aimed at pet owners who have changed their own diets to eat more healthy foods and want the same for their pets.

“You”™re seeing a tremendous humanization in the world of pet food,” said Bishop who, with his two sons, created The Blue Buffalo Co. in Wilton six years ago. The company was the latest adventure for Bishop since he graduated from Ohio Wesleyan University in 1961, where he studied journalism. Along the way he joined the Marines, worked a series of two-year stints at major advertising agencies in Manhattan, got married and raised a family, was part of a trio that started South Beach Beverages, and retired after they sold the business to Pepsi. Retirement didn”™t last long, though; the family decided to start selling premium pet food.

“Pets are surrogate children, and as people eat healthier, they feed their pet healthier,” Bishop said. “It”™s amazing how the pet market is swinging toward superpremium products.” And Blue Buffalo pet food “is at the top end” of the premium price range, he said. Blue Buffalo dog chow, for example, sells for about $40 for a 30-pound bag. “You can buy other brands for under $10, if you want” at the local supermarket. “We were the highest-priced guys at PetSmart just to start out.”

A growing number of pet owners, however, don”™t blanch at the premium prices. Blue Buffalo is part of the premium segment of the pet food industry, which is growing at 25 percent a year compared with the traditional pet food segment, growing at 2 percent. And Blue Buffalo has carved out a strong national market in the premium segment. “We were the first brand that PetSmart introduced nationally” in its 750-store chain, for example. Chains usually like to test-market new product, but “we went to them when we were just a concept,” Bishop said.

No barriers

That concept began seven years ago when the Bishops had a family meeting to decide what to do with themselves after the elder Bishop and two partners sold their Norwalk-based South Beach Beverages to Pepsi for $400 million. “That”™s nothing like today”™s multiples, but back then, it was a good deal,” he said.

Back in the mid-1990s, a friend of Bishop”™s had come to him with the idea to add nutrients and antioxidants to soft drinks and teas, and SoBe soft drinks were introduced in 1997. “We took it up to $200 million in sales and sold it to Pepsi in January 2001,” he said.

Bishop took a little time off, then had that family meeting. “We sat down with the boys and gave them some options,” he said. Billy, now 37, had been SoBe”™s vice president of marketing and Chris, now 35, ran the company”™s mountain bike racing team. “We said we could supplement their income if they wanted to coach or teach or go into business, and the vote was, ”˜Let”™s do another business.”™”

And, just like that, the decision was made to go into the pet food business. “Truly, it was that simple,” Bishop said. “We”™ve always been big dog lovers and always had Airedales. One was named Blue and had three bouts with cancer, but was able to recover from each of them. That got us into looking at diet as part of healthy living for pets, and we looked at the pet food business and started doing some analyzing.” They discovered the double-digit growth rate of the premium food market, and began homing in on that.

“We liked the fact that there were some structural similarities in the pet food and beverage markets,” Bishop said. “There are three or four big guys at the top that control the business” ”“ Coke and Pepsi in the soft-drink market; Purina, Nestle and Iams in the pet food industry. “Underneath are a huge bunch of what I call ”˜all the others,”™ so there were no real barriers to our entrance into the business.”

White paper

Once the Bishops decided to go into pet food, they had the advantage of ready cash to invest in the venture ”“ “Most of the small guys in this business are undercapitalized,” he said ”“ and “we could start with a white paper in terms of developing our product. A lot of people in the business are in the canned tuna or grain business and are vertically integrated” but Blue Buffalo could start from a different perspective ”“ to be “the healthiest pet food in the market,” Bishop said.

“We worked with potential manufacturers, analyzed the current leaders in the holistic market, and looked at their key characteristics, such as human-grade ingredients, fresh mean, whole grains, vegetables and fruit.” The Bishops decided to take those ingredients a step further, creating a two-part product. Other pet food companies spray vitamins and nutrients on the dry kibble while the kibble is being cooked at temperatures of up to 400 degrees. But at those temperatures, vitamins can lose 75 percent of their potency, Bishop said.

“We have what we call a nutrition kibble with whole grains, veggies and fruits. It”™s totally unique in the business. We decided to cold-form our antioxidants and nutrients so they wouldn”™t lose any potency, which is very expensive to do.” The nutrition kibbles are then mixed into the dry food, 10 percent nutrition kibbles, 90 percent regular kibble. “You want a difference in the product that people can see, and you can actually see our little nutrition bits,” he said. “They”™re a darker color and different shape than the kibble.”

Effective selling

Blue Buffalo pet food quickly spread across the nation, generating “north of $30 million” in annual revenues for the privately held company, Bishop said. “We”™ll be well north of $100 million in the next five years.” All its products are made in the U.S., the dry food in upstate New York and Kansas, canned food in Arkansas and dog biscuits in Ohio. “Manufacturers are not hard to find,” he said.

The company has 17 employees in its Wilton office, another 30 or so in other parts of the country who supervise 400 part-time people who demonstrate Blue Buffalo products at pet stores on weekends. “They set up tables in any store big enough to have enough of our product to justify a demonstration and tell people about our products as they enter the store. It”™s an incredibly effective way to sell. People don”™t buy pet food on impulse. Once a pet likes it, people tend to stay with it.”

As for the name itself, Blue Buffalo is a combination of the name of the family Airedale, Blue, and a dreamed-up icon. “What we had done at SoBe,” Bishop said, “was create an icon, a lizard, and that became very well known very quickly. Nobody has any visual icons in the beverage industry ”“ except SoBe, and the pet food business is the same thing. We came up with a buffalo ”“ out there on the plains, nice and clean and not contaminated. And people like buffalos; they”™re an American icon.”