Hard costs to design/market/sell a new dog food?

[Ed_Flecko]

I've spoken to a very well known and experienced veterinarian about commercial dog food. He's been a veterinarian for over 40 years. He tells me that the food ingredients themselves do not comprise more than 10% of the retail price of a commercial bag of dog food. I'm guessing that he knows what he's talking about since he's often consulted in the development of foods and holistic nutritional supplements. That got me thinking...

My college degree is not in Marketing, so I'm hoping someone can help me out. If my friend is correct, the average $50 bag of dog food has only $5 worth of food ingredients. My question(s) is/are...what are the other $45 dollars in costs attributed to?

I know there's...

1.) Research and development
2.) Marketing
3.) Shipping
4.) Packaging

What else???

Thank you,
Ed

 

[JMJNet]

Lawyer?
Factory?
Employee?
Knowledge?
Working Capital? always forgotten.

 

[larryinnewyork]

5.) Profit - Wholesale
6.) Insurance from Lawsuits

 

[skyactiv]

You forgot retailer profit.

 

[PandaBear]

Retailer's cut of the selling price of merchandises average 23%, with a retailer profit of 3%. Restaurant needs to sell their food for at least 2x ingredient cost to stay afloat, and likely way higher to be profitable. So yeah, 10% for the raw ingredient to be successful seems about right. Remember, raw ingredient is the cheap part of running a packaged food business.

Some retailer has a policy of discarding all food returned by customer for liability reason, it is much cheaper to throw things away than selling contaminated stuff.

 

[krismoriah72]

There are forums like this one that all people talk about is dog food, how their dogs poop, the coats, energy levels etc... Grain free is where its at for my dogs, I pay about $1/lb.

There are going to be so many people that feed ol'roy and so many people that are like me that look at forums and try to figure out the best for the money.

The only thing that i can think of hindering someone starting a new brand is the one batch that would be bad...it would probably bankrupt a small startup with recalls, lawsuits and the ilk..

Take a look at Taste of the Wild.. great packaging...great reviews...yet not in walmart.

 

[Lyman]

You are forgetting one of the BIG ones... TAXES

 

[aquariuscsm]

I feed my cat Rachael Ray Nutrish grain free.

 

[Andrew1972]

My guess $25 to distribution, middlemen and store profit.

Pet food is very large and and takes a lot of valuable shelf space.

 

[dave123]

Alot of stupid people buy into the 50 dollar a bag is better for fido than the 22 buck a bag same size dog chow but yet when they are recalled for whatever reason they both are involved Hmmm makes you think.

 

[Noey]

The one thing everyone is forgetting is: Competition.

Everyone has a pet, and they're willing to spend on them, stats show more than a spouse! And for good reason... Competing for those customers is very expensive. That you and your "Friend" have a good idea doesn't really add much to the super saturated pet food market.

It costs money to design and make anything and then stock it and take it to market..watch "Shark Tank".. the ultimate cost to the consumer is based on not only that, but also a fair return on investment. Lotsa luck bringing a product to market based on your own high self opinion.

 

[Nick1994]

I feed my dog Nutro, it's $50 a bag and well worth it IMO. I would never feed him that Purina or Iams cheapo junk.

Why do people buy good food for themselves and then skimp when it comes to their pets just to save a couple bucks? My dog is family, and I plan on him living a long healthy life. Gotta do what I can to try to do that.

He also gets absolutely no people food. I have some family members who will give their dog a cheeseburger from McDonalds. I just shake my head and turn the other way, oh well, not my dog.

 

[Pop_Rivit]

Originally Posted By: dave123
Alot of stupid people buy into the 50 dollar a bag is better for fido than the 22 buck a bag same size dog chow but yet when they are recalled for whatever reason they both are involved Hmmm makes you think.


Actually, there is a lot of solid evidence that a higher quality diet for dogs in which there is little or no filler and grain is much healthier. And since dogs have their nutritional needs satisfied with less of the food, they often eat less of the more expensive high quality food, thereby making the cost increase minimal. And since a higher quality diet means a healthier dog, vet bills are reduced, making the higher quality food an even better investment.

The only "stupid" people are the ones who are so myopic that they really think the $22/bag food is a better investment than the $50/bag food.

 

[spasm3]

Originally Posted By: Pop_Rivit
Originally Posted By: dave123
Alot of stupid people buy into the 50 dollar a bag is better for fido than the 22 buck a bag same size dog chow but yet when they are recalled for whatever reason they both are involved Hmmm makes you think.


Actually, there is a lot of solid evidence that a higher quality diet for dogs in which there is little or no filler and grain is much healthier. And since dogs have their nutritional needs satisfied with less of the food, they often eat less of the more expensive high quality food, thereby making the cost increase minimal. And since a higher quality diet means a healthier dog, vet bills are reduced, making the higher quality food an even better investment.

The only "stupid" people are the ones who are so myopic that they really think the $22/bag food is a better investment than the $50/bag food.


Well said. Learn to read ingredients, Some high protein dog foods are corn based. The dogs just poop more, not and effective protein for dogs. You can get some good dog foods in the $33-$35 per 40lb bag range.

 

[Nick1994]

Originally Posted By: Pop_Rivit
Originally Posted By: dave123
Alot of stupid people buy into the 50 dollar a bag is better for fido than the 22 buck a bag same size dog chow but yet when they are recalled for whatever reason they both are involved Hmmm makes you think.


Actually, there is a lot of solid evidence that a higher quality diet for dogs in which there is little or no filler and grain is much healthier. And since dogs have their nutritional needs satisfied with less of the food, they often eat less of the more expensive high quality food, thereby making the cost increase minimal. And since a higher quality diet means a healthier dog, vet bills are reduced, making the higher quality food an even better investment.

The only "stupid" people are the ones who are so myopic that they really think the $22/bag food is a better investment than the $50/bag food.

+10000
A much better investment in the long run. Sure people can live on nothing but junk food for 60 years and barely be able to walk or climb stairs, I'd rather eat better and be 80 and walk just fine.

My aunt's Jack Russel mix is 16 years old and she gets around great for an old dog. She developed thyroid problems when young, but medication keeps that under control (not expensive medication). The dog has eaten nothing but Nutro since she was a puppy. I doubt she'd be in this good of shape if she was eating cheap dog food. My aunt also has an almost 11 year old Jack Russel, he's as healthy as a horse. Like a brand new dog. The dog's brother from the same litter, my dad owns. Has eaten Iams, Purina, and Costco dog food and table food his entire life, his teeth are falling out, have tartar, and he doesn't look right. Moves around like an old man.

 

[hatt]

Originally Posted By: dave123
Alot of stupid people buy into the 50 dollar a bag is better for fido than the 22 buck a bag same size dog chow but yet when they are recalled for whatever reason they both are involved Hmmm makes you think.
I guess you've never read a dog food label.

Dog Chow:
Quote:
Whole grain corn, meat and bone meal, corn gluten meal, animal fat preserved with mixed-tocopherols, soybean meal, poultry by-product meal, egg and chicken flavor, whole grain wheat, animal digest, salt, calcium carbonate, potassium chloride, mono and dicalcium phosphate, choline chloride, L-Lysine monohydrochloride, zinc sulfate, Yellow 6, Vitamin E supplement, ferrous sulfate, Yellow 5, Red 40, manganese sulfate, niacin, Blue 2, Vitamin A supplement, copper sulfate, calcium pantothenate, garlic oil, pyridoxine hydrochloride, Vitamin B-12 supplement, thiamine mononitrate, Vitamin D-3 supplement, riboflavin supplement, calcium iodate, menadione sodium bisulfite complex (source of Vitamin K activity), folic acid, biotin, sodium selenite. C-4101


Which part is the part that sounds good for a dog?

 

[itguy08]

Lots of opinions on dog food and probably will go on for as long as people buy into marketing.

Our dogs (and numerous cats) are family - I'd do anything for them. While not a "dog expert", I don't think the cheap foods are as bad as people are led to believe they are.

1st dog, shelter dog, possibly Lab mix, was about 1 when we got her and had a varied diet - Dog Chow, Baneful, Fresh Pet, Nutro, whatever. Nice varied diet. Yearly checkups at the vet and few times whenever she needed it. She was very healthy - and lived to 14 before kidney failure got her. No real health issues along the way.

2nd Dog - Coonhound - Got her as a rescue @ about 5. Who know what she has eaten. She gets a similar diet - varied and mid-range foods. She's now about 8 and 0 health issues. I expect her to live a long and healthy life as well.

Best thing for them is diet and exercise. I run ~ 3 miles 4x a week with both dogs and they go for morning walks.

Like us, I think a varied diet is important for animals. Imagine if you ate all the same thing. It would suck. Even in the wild, Dogs and Cats get varied food in nature. Why not the same in captivity?

 

[Ed_Flecko]

FDA’s Compliance Policy “CPG Sec. 675.100 Diversion of Contaminated Food for Animal Use” states “FDA does not object to the diversion to animal feed of human food adulterated with rodent, roach, or bird excreta.” "Diversion of rodent, roach, or bird contaminated food for animal feed use, whether pursuant to a court order or a voluntary action, requires heat treatment to destroy pathogenic organisms." - Source: http://www.fda.gov/ICECI/ComplianceManuals/CompliancePolicyGuidanceManual/ucm074693.htm

CPG Sec. 675.200 Diversion of Adulterated Food to Acceptable Animal Feed Use - http://www.fda.gov/iceci/compliancemanuals/compliancepolicyguidancemanual/ucm074694.htm

"The pet food canning industry utilizes undecomposed animal and marine tissues from various sources. These include products of the rendering industry such as various meat, poultry, and bone meals; meat scraps and offal from packing house waste, freshly boned-out animals; and occasionally meat from animals that may have died otherwise than by slaughter." - Source: http://www.fda.gov/iceci/compliancemanuals/compliancepolicyguidancemanual/ucm074710.htm

"Many manufacturing companies rely on Midwest Ingredients, Inc. to find a place in the market for their waste stream." - Source: http://www.midwestingredients.com/services.htm

What's that?...you're wondering about heavy metals in pet foods?

January 2011 -
http://digital.findanalytichem.com/nxtbooks/advanstar/spectroscopy0111/#/48
http://digital.findanalytichem.com/nxtbooks/advanstar/spectroscopy0111/#/2

February 2011 -
http://digital.findanalytichem.com/nxtbooks/advanstar/spectroscopy0211/#/48
http://digital.findanalytichem.com/nxtbooks/advanstar/spectroscopy0211/#/2

I could go on, but you get the idea.

Ed

 

[Alfred_B]

Originally Posted By: Ed_Flecko
I've spoken to a very well known and experienced veterinarian about commercial dog food. He's been a veterinarian for over 40 years. He tells me that the food ingredients themselves do not comprise more than 10% of the retail price of a commercial bag of dog food. I'm guessing that he knows what he's talking about since he's often consulted in the development of foods and holistic nutritional supplements. That got me thinking...

My college degree is not in Marketing, so I'm hoping someone can help me out. If my friend is correct, the average $50 bag of dog food has only $5 worth of food ingredients. My question(s) is/are...what are the other $45 dollars in costs attributed to?

I know there's...

1.) Research and development
2.) Marketing
3.) Shipping
4.) Packaging

What else???

Thank you,
Ed



You will have direct costs in addition to the ingredients such as labor, amortization on plant and equipment, utilities. Then you have the overhead of administrative functions of the manufacturer, distributor, retailer. Then you have transportation and their overhead.

Marketing is big as well. You have a couple of manufacturers that compete fiercely.

Then you have the profit margins of the different entities that touch the product.

There is very little R&D in this, the formulas have been perfected a long time ago.

 

[Ed_Flecko]

Originally Posted By: Alfred_B

There is very little R&D in this, the formulas have been perfected a long time ago.


Thank you for the feedback.

I've got to tell you, and I mean no disrespect, that I almost spit out my coffee laughing when you say the "formulas have been perfected"...

Do you mean, the formula that manufacturers use to create food that barely better than toxic waste, will sustain the test group of animals just long enough to pass the AAFCO feeding trials...and then produce the maximum profit? Is that the formula you're referring to?

Believe me when I tell you that the more you learn about the manufacture of pet food, the more you'll quickly realize that the health of the animal is NOT what motivates manufacturers. Companion animals are simply a way to make money from an otherwise unusable by-product, i.e., foods and food waste that are not approved for human consumption.

The figures for 2015 are not yet complete, but for 2014, the sales of cat and dog food alone (not even counting other animals) in the United States was $21.4 billion dollars! Source: http://www.petfoodinstitute.org/?page=PetFoodSales

Ed