Bengaluru-based Drools Pet Foods is hungry for growth and has set sights on becoming a unicorn in the next two years. The ambition may not be far-fetched as the company raised $60 million earlier this year from L Catterton, a private equity firm backed by French luxury brand LVMH Moet Hennessy Louis Vuitton, at a valuation of $600 million.
The journey has been satisfactory so far as Drools has a market share of 38% in terms of volume and 17% in terms of value in the Indian pet food and accessories market, which is growing rapidly and is estimated to reach $1.9 billion by 2030, growing at a CAGR of 16.5% according to Decipher Market Research Agency. The pet population in India is estimated to be around 32 million, growing at 11% per annum.
It currently operates three manufacturing facilities in India, producing around 7,200 tonne of pet food a month, and plans to add another manufacturing unit by the end of this calendar year. Monthly sale is close to 5,200 tonne through its 34,000 points of sale – both online as well as offline.
“We are witnessing significant growth in tier-II and tier-III cities such as Bhubaneswar, Patna, Guwahati and Surat, where pet ownership is on the rise,” Shashank Sinha, CEO, Drools, said.
While the dog food segment accounts for a larger portion of the company’s sales, the cat foods segment is growing rapidly in recent years – from 15% of total industry revenue pre-Covid to 35% today – due to the expanding cat population and the growing trend of cat ownership in urban areas.
“Urban pet owners are increasingly turning towards cats as they are comparatively hassle-free and easier to take care of than dogs,” said Sinha. In Mumbai, for example, 65% of revenue from pet-related products comes from cat products.
The company is doubling down on the premium segment to bridge the gap between volume and value, while being backed by a global player who has considerable experience in the global premium pet food industry. “The trend towards grain-free and garden-inspired pet food is on the rise,” Sinha said, adding the mass economy segment will continue to be a focus area.
Drools’ revenue has surged at a CAGR of around 70% between FY20 and FY22. In the current financial year, the company expects to hit the Rs 700-750-crore mark.
According to Icra, the company’s average utilisation of the working capital limit stood at 41% from October 2021 to August 2022, leaving the company with a sizeable buffer to meet contingencies. The company’s liquidity is expected to remain adequate in the near term, in view of adequate cash flows from operations and undrawn lines of credit, it added.
Drools, which already exports to over 22 countries, plans to expand the footprint to 45 in the next two years. Plans to export to Russia and the US are already in place, and will commence this year and next year, respectively. Southeast Asian expansion plans will immediately focus on the Philippines, Laos and Cambodia.
Despite its success, Drools faces challenges in growing its business that include limited knowledge around the importance of high-quality pet food. “We have been actively educating pet owners about the importance of proper nutrition through various marketing campaigns and partnerships with veterinarians,” Sinha said.
The brand is also facing increasing competition from internet-first brands that offer offbeat options like vegan nutrition, and cater to a wider range of pet needs apart from nutrition, apart from the larger- and long-established retail players like Mars and Nestle.
For instance, Dogsee Chew, a Bengaluru-based internet first pet food startup that offers vegetarian dog treats that are prepared from yak milk, sourced from villagers residing in Nepal, Sikkim, and Darjeeling, and Delhi-based Sequoia-backed D2C pet care brand, Heads Up For Tails, that offers preservative-free pet treats, organic supplements and orthopaedic beds.
Drools says it is addressing these challenges by investing in high-reaching marketing campaigns and brand partnerships. Celebrity endorsers of the brand include the likes of Hrithik Roshan, Kareena Kapoor Khan and Karthik Aryan.
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