- Unsure of what to feed his Maine Coon cat, Nacho, chef Bobby Flay launched his own cat food brand earlier this year called Made by Nacho.
- The pet food and treat market has grown to more than $42 billion in the U.S. as pet ownership and spending has exploded amid the pandemic.
- Pet retailers like Chewy and Petco have also seen growth as pet owners are buying more products both online and in stores.
Chef Bobby Flay has spent his career focused on delivering high-quality ingredients and flavors to customers at his various restaurants and through his appearances on Food Network. Flay is now looking to succeed with a new audience: cats.
The pet food market has exploded in recent years as U.S. ownership of pets now sits at an all-time high of 70% of American households, or roughly 90.5 million homes, according to the American Pet Products Association.
Naturally, spending on pet products has also surged, growing to $103.6 billion in 2020, up 6.5% year-over-year, according to the APPA. The largest category is pet food and treats, which makes up $42 billion of that total and is up 9.7% year-over-year as more people not only adopted pets but spent more on them.
But even Flay, a self-proclaimed "cat guy," said wasn't sure what meals to put in front of his two Maine Coon cats, Nacho and Stella.
"I had a hard time myself trying to figure out what to feed my cats, so I sort of took it upon myself," Flay said on CNBC's "The Exchange." Flay said he took inspiration from the "premiumization of human food and transferred it to the cat business."
While the idea started as a passion project, Flay said the goal for the Made by Nacho is "making this a real business, so that it's not just a hobby —it's definitely a passion, but it's for real."
Flay reached out to Elly Trusedell, who was previously the global director of local brands product innovation at Amazon subsidiary Whole Foods and was the CEO of food production studio Canopy Foods, to join as his co-founder.
In August 2020, they hired former Petco executive Julie Nelson to serve as the company's president, helping to develop the brand's omnichannel distribution. When the brand launched in April, Made by Nacho was available on its website and exclusively at PetSmart. Flay said the company has seen a 64% average customer return rate thus far, and also now has a subscription service for its products.
"We had the human food business, and the cat food and pet food business, sort of covered," Flay said.
After several more months — during which Flay said the brand saw "immediate growth and basically week-to-week, we're growing every week" — the company hired a CEO, Tessa Gould, a former SoulCycle and Buzzfeed executive who also served as the group CMO of Kinship, the innovation and ventures division of Mars Petcare.
They've also leaned into the brand's namesake — the seven-year-old Nacho Flay has more than 240,000 followers on Instagram.
While Flay said the flavors of the food are geared towards the likes of cats, there are more chef-inspired ingredients and recipes such as treats made with duck liver and wild Alaskan salmon, and dried food made from grass-fed beef, rabbit, and pumpkin.
The boom in online shopping and pet ownership amid the pandemic has benefitted companies in the pet food space.
Chewy reported a 27% increase in year-over-year revenue to $2.16 billion in its second quarter, thanks in part to customers spending even more. The company's net sales per active customer were $404, up 13.5% compared to last year, while Chewy reported it had 20.1 million active customers, a 21.1% increase compared to last year.
Petco saw its revenue grow 19% to $1.4 billion in the second quarter, with the company also citing increased spending as pet owners spent more time and care with their pets. "I have this theory that pets helped Americans psychologically get through his pandemic, and they bonded, and they took better care of their pets," Petco CEO Ron Coughlin said on the company's second quarter earnings call.
Flay previously said on CNBC's "Closing Bell" that he believes that "what we feed our pets is an important component for their happiness, but also for the pet parents as well to make sure that they're eating well."
"Because of the pandemic, we've all become a lot closer to our pets," he said. "They were an important part of my life before that, and I think over the last year we all realized how incredibly important they are to us."