Going to the Dogs: Why JustKitchen Created a Delivery-Only Fresh Pet Food Brand
Like many other developed countries, an increasing number of young people in Taiwan are choosing to own pets rather than have children. In 2020, Taiwan’s Council of Agriculture and the Minister of the Interior reportedthat there are now more pets in Taiwan than children under the age of 14, marking the first time the country’s pet population has surpassed its child population.
The reasons for this shift in animal vs human population are plenty: declining birth rates coupled with rising real estate prices mean people are living in smaller spaces, and the rising cost of child care also pushes many young people to delay having children, or to opt not to have them at all.
Pets as a Status Symbol
Pets, and dogs in particular, have become a sign of affluence in Taiwan, so it’s not surprising that pet owners in Taiwan are willing to pay top dollar to keep their furry friends happy.
According to market research firm Mordor Intelligence, the pet food market in Taiwan is expected to grow at a CAGR of 4% in the years from 2020 – 2026, and is “characterized by high-quality awareness and preference, and the willingness of the consumers to pay for such products.”
Filling the Gap
At JustKitchen we have a process for developing new delivery-only food concepts, which starts with us identifying a gap in the market.
While there are several Taiwan-based manufacturers of dry pet foods, currently many Taiwanese buy pet food exported from the US, as these brands are considered to be of higher quality. In fact, Taiwanese spent an estimated USD $184m on imported pet food in 2019, up from USD $141 m in 2016.
Pet Food SalesWhile researching what new and exciting delivery-only concepts we could introduce to our customers, we identified a clear gap in the market for premium dog and cat foods made locally, from fresh ingredients such as meats and vegetables.
It dawned on us – why not take a similar approach to other successful pet food brands, like FreshPet, and create our own brand of fresh pet food made from natural ingredients, that can be ordered online and delivered directly to our customers’ doorsteps?
That was the beginning of Wow Chow. Wow Chow is JustKitchen’s line of premium-quality dog and cat foods, made from fresh proteins including beef, pork, chicken, and fish, and blended with vegetables including broccoli, carrots, corn, and grains. We make several blends of dog and cat foods fresh in-house, using top quality ingredients – and when we say this pet food is fresh, we mean fresh. Wow Chow is prepared daily and delivered to customers daily.
Pets as Family Members: a Global Trend
The implications of all the pet statistics mentioned above are clear: pet populations are one the fastest-growing cohorts – not just in Taiwan, but in many other developed countries, too. You only need to look at the rising M&A activity in the pet food space to see the evidence of how much we humans value the health and longevity of our pets.
In 2020 and 2021, the pet industry was flush with mergers and acquisitions from a variety of buyers, from pet product manufacturers to private equity. The frenzy of activity is a testament to industry tailwinds supported by the increasing number of pet owners, and disposable income, in developed economies.
According to Rakuten Insight, 3 in 5 people in Asia own a pet, and 39% feed their dogs with home-made food. In Hong Kong, where we just opened our first ghost kitchen location, imports of dog and cat food reached nearly US $80 million for the first six months of 2020, an increase of almost 23% over the same period in 2019. Pet ownership in Hong Kong increased a staggering 72% in the decade between 2006 – 2016. And just like in Taiwan, pet owners in Hong Kong are willing to pay top dollar to keep them healthy and happy. According toRetail News Asia, “pet parents” in Hong Kong treat their animal companions as though they are human housemates, a trend that is reflected in the consistent rise of registered pet surgeons and veterinarians in Hong Kong over the past 15 years.
In the U.S., 67% of households, or about 85 million families, own a pet, according to the 2019-2020 National Pet Owners Survey. Approximately US $42 billion of pet food was sold in 2020, and this figure is estimated to increase to around $44.1 billion in 2021.
Mergers & Acquisitions in the Pet Industry are Heating Up
It’s clear in looking at these trends of increased pet ownership and pet industry spending over the past few decades that there is significant demand for premium-quality pet foods, and this is reflected in the sector’s M&A activity of late.
While 2020 was a busy year for M&A activity in the pet food space, with over 25 pet food deals, 2021 has been off to a strong start too. Some notable acquisitions were J.M Smucker (SJM:NYSE) selling its Natural Balance brand for USD $50M; MiracleCorp being acquired by BrightPet Nutrition; Mid America Pet Food being acquired by TA Associates; and Pet Nutrition being acquired by Cap Vest.
Furthermore, a number of private pet food brands operating in the space of pet foods made from natural ingredients have gone public recently. Let’s take a look at some of the examples:
- Freshpet (NASDAQ:FRPT)
- Went public 2015 at $20 per share reached a high of $186
- PetIQ (NASDAQ:PETQ)
- Went public 2018 at $20 per share reached a high of $46.
- The average analyst rating is a strong buy and the average price target is $41.60.
- Chewy (NYSE:CHWY)
- Went public in June 2019 at $22 per share and reached a high of $120 per share.
All these transactions demonstrate the growing interest from both industry competitors and new businesses and investors looking for exposure to this dynamic market.
Given these industry tailwinds, it’s clear that the timing is right to enter this space. There seems to be a perfect trifecta of rising global consumer demand, industry demand and investor interest in all-natural and premium-quality pet foods.
Keeping our Eyes on the Prize
At JustKitchen we are all about building long-term value into our business – from the design of the kitchens we operate and our proprietary technology, to the signature recipes and in-house brands we have developed under our own ‘JK’ umbrella. Including Wow Chow in our roster of signature in-house brands gives our shareholders a chance to own a piece of both the rapid-growth ghost kitchen industry, as well as the booming premium pet food market segment.
Wow Chow fulfills a new niche in a rapid-growth market, but perhaps more importantly, it is part of a concept we came up with while determining what our customers truly want. In choosing JustKitchen to order a meal or JustMarket to order groceries, our customers are able to order meals for the whole family at the same time – including their children and their “fur babies”.
To this end, we’ve also recently launched kids’ menus for several of our delivery-only concepts – because even though you’re craving a bowl of spicy noodle soup, your kids might be more in the mood for a hot dog – and with JustKitchen you can get both in one order.
Ultimately, we are in the business of giving customers what they want, when they want it. Giving them new and unique menu items and products that they can’t get elsewhere – and offering them the added convenience of faster at-home delivery – is what drives us forward.