Q How has Jones Naturals changed since you joined the Jones Naturals team in February 2017?
A [There have been] quite a few changes in our product offering and go-to-market strategy. On the innovation side, we have significantly increased our sausage and jerky business with new innovation and distribution gains. Our value pack re-sealable bags have added incremental business to our revenue while helping our customer partners increase their purchase ring per transaction. Another new segment we entered mid-2018 is the fast growing super premium segment. Our Jones Select line offers a variety of limited ingredient exotic proteins, super-mix jerkies, organic options and training treats. We are launching 100 percent single ingredient treats to the line prior to the start of 2019.
As for our go-to-market strategy, we are now using a three-brand approach to sell to all channels where consumers buy treats and chews while protecting Jones Natural Chews for the independent pet channel. The Country Butcher and Grass Valley Farm brands play important roles outside of the independent pet channel.
Q What impact has Azalea Capital’s investment in Jones Naturals had on the company?
A We really feel good about our working relationship with Azalea Capital and the help they have provided to our Jones Naturals business. When companies grow at a rapid clip, cash flow becomes an issue quickly. We have to pay our meat and ingredient suppliers in 10 days and most of our customers pay in 30 days after the product ships and is invoiced. If you do the math, this cash out/cash in timing factor eats up your cash flow in a hurry, not to mention purchasing new, expensive equipment for added capacity to keep up with growth. Azalea Capital, along with our banking institution that provides our line of credit, has stepped up to insure we have the working capital we need to continue our significant pace of growth. In addition, the people that make up our Board of Directors have a lot of experience in and outside of the pet industry. Their insights have been quite helpful as the board gives us credible feedback on our go-to-market strategy, investment priorities, etc. At our current growth rate, we will double our business in less than four years. The cash flow needs combined with the capital expense required to purchase new equipment to stay ahead of demand really does require some outside funding help. Azalea Capital adds a lot of value to our business and I really enjoy working with this type of P.E. firm.
Q What have been the results of the multi-channel brand strategy that Jones Naturals launched in 2017?
We have gained a lot of new distribution in both the independent pet channel as well as many others. As mentioned earlier, I believe the three-brand approach to the market is a winner as it allows us to aggressively grow while protecting the independent pet channel with the Jones Natural Chews brand.
Q What do you consider the biggest obstacle facing Jones Naturals?
A I would have to say people and cash. Our go-to-market strategy is working and I know we will keep up the aggressive growth pace. However, we need good people and more cash to fund the growth. I am confident that we will be able to secure the people and additional cash to achieve our aggressive goals.
Q How would you describe your relationship with independent pet retailers?
A I really feel like we have an excellent relationship with independent pet retailers. Jones Naturals is focused on pet specialty retailers by protecting the JNC brand for their channel. We know the importance of protecting margins for our retail partners in pet specialty, which is why we choose not to pursue distribution of the Jones Natural Chews brand in more aggressively-priced channels such as grocery, mass and dollar. We also have elected not to sell to dot-coms to support our pet specialty channel partners. Most of our key competitors sell the same brand name product to all channels and dot-coms, which is certainly not in the best interest of pet specialty retailers. In addition to our store locater, our new website has a “buy it now” button which links consumers directly to our brick-and-mortar retail partners who have B2C capabilities for those shoppers who insist on purchasing online.