Chewy Private label company enters the fresh pet food market
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Chewy Private label company enters the fresh pet food market

pet food

The online pet food and merchandise retailer Chewy is set to provide freshly prepared pet food items with its top, proprietary name, Tylee’s. Chewy will also sell new freshly prepared pet food products made by the the Fresh pet brand. Chewy executives introduced their new offerings in the first quarter 2021 letter to shareholders.

For Tylee’s brand-new pet food, Chewy designers have developed and patented their packaging technique that they claim is eco-friendly and maintains the quality of the food in the process of delivery.

“We are currently in Beta mode and will soon launch initial distribution in three geographies covering approximately 60% of Chewy’s customer base, and we intend to grow both our fresh catalog and expand geographic distribution as we scale this business,” Chewy executives addressed in a letter sent to shareholders. “We are enthusiastic about the fresh and prepared foods category and the opportunity to serve new customers and expand assortment choices for our existing ones.”

In the market for fresh pet food market, Chewy’s addressable market total as they stated.

Pet food stores that are fresh are cooked without extrusion, then refrigerated or frozen to sell.

Chewy Introduces Private Label Fresh Pet Food Brand

Chewy is making its debut in the fresh and ready pet food sector by launching its own premium brand Tylee’s. Company officials revealed in an open letter for shareholders. Chewy will also provide Freshpet products.

Chewy created a sustainable packaging method that lets the company preserve the quality of its products during the delivery process, the company’s officials said.

“Our highly trained and best-in-class customer service team, coupled with our personalized search and discovery features, make Chewy the right platform to drive customer adoption in this category, given the increased level of education and awareness pet parents need when deciding among the many pet food options that are available today,” CEO Sumit Singh and CFO Mario Marte have written in their letter.

The retailer is expected to begin distribution across three “geographies covering approximately 60 percent” of its customers officials stated in a statement, adding that “we intend to grow both our fresh catalog and expand geographic distribution as we scale this business.”

“We are enthusiastic about the fresh and prepared foods category and the opportunity to serve new customers and expand assortment choices for our existing ones,” the letter reads. “With this launch, Fresh joins Connect with a Vet and our Compounding Pharmacy on the growing list of recently launched offerings that expand our total addressable market.”

Chewy sales are up 31.7 percent in Q1 2021; Chewy users increase by 75% from 2019

The number of pet food business and customer acquisitions remain steady for the online retail store Chewy until 2021 despite the pandemic-related travel restrictions ease within the United States. Chewy’s sales net of pet food as well as treats and other products grew 31.7 percent year-over-year during its first quarter 2021 which the end of May 2nd, and reached US$2.14 billion. The online pet product retailer reported net earnings at US$38.7 million. Sales per customer who is active (NSPAC) rose by 31 cents (or 8.7 percent, year over year to $388. Problems with out-of-stocks remained constant throughout the period and resulted in a reduction of the sales in the first quarter of Chewy in the range of $40 million.

Wet pet food sells more than the pre-pandemic

In February 2020 pet food experts from Nielsen Global Connect noted that mass market food and wet pet food consumption was increasing by 6% year-over-year for the traditional shelf-stable variety and 32.9 percent for refrigerated pet food. In the same way the high-end pet food sales for wet pet food market sales pet specialty food sales grew at 18.6 percent for the shelf-stable variety frozen, frozen at 44.3 percent as well as refrigerated pet food increasing 22 percent. The ongoing COVID-19 pandemic drastically altered the traditional pet food customers’ purchasing patterns. In the four weeks that ended on August 8 the refrigerated wet food had seen a greater percentage of sales than it did prior to the pandemic hit in pet stores and also in food as well as the mass market.

“We can see prior to COVID…both of these segments performing very well, with refrigerated growing quite a bit faster than shelf stable wet food,” Sean Simpson, director of client services for Nielsen spoke about in his talk during Pet food Forum CONNECT. “The COVID spike saw a quite significant rise for both segments. However, post COVID, we could observe that shelf stable dropped to negative and flat after which it quickly returned to positive however refrigerated food was stable.”

Wet pet food sales during pandemic

“Within the traditional pet specialty retail side, we again can see premium wet food growing much faster than traditional shelf stable wet, prior to the COVID spike, during the COVID spike and then post COVID spike as well,” Simpson said. “Refrigerated food remained positive throughout the COVID lockdown period. Food frozen food retained its positive attitude during this time period in pet retail. The decline was between 40% and 40% to a mere 4 percent growth, but it was positive and continued to grow, before growing to 13% year-over-year. Refrigerated wet food was on the same level as what we saw across the entire market. There was a negative trend however, it was able to improve to positive and refrigerated or fresh food performing far better in comparison to food with shelf stability. This month, in August we’re seeing the largest increase year-over-year for the wet food category of conventional pet retail market, with 25% increase year-over-year. 

Chewy introduces its own brand in new category

The Tylee’s brand’s food products will transform customers of the internet pet retailer to fresh, fresh-prepared food items that are packaged in sustainable, sustainable packaging to ensure that food is fresh to be delivered.

On-line pet retailer Chewy is expanding its private brand selection as it makes its debut in the fresh and freshly prepared pet food market.

The retailer has introduced Tylee’s collection of freshly prepared, human-grade meals that are frozen before being delivered to customers. The company says they are grain-free and are rotated with different flavors to eat for meals and lunch. In addition, there are Jerky snacks that go under the name Tylee.

Each package of food is made in a human-grade food processing facility within the U.S., following strict safety guidelines. The food can be consumed on its own or added to kibble for topping. The retailer also has a video about the exclusive product on its website dedicated to the brand. Chewy has announced its new launch in its shareholder letter, stating that Chewy’s highly-trained and best-in-class customer support team, along with its customized search and discovery capabilities makes Chewy the perfect platform to help customers adopt in the category of fresh food.In the category of fresh, Chewy said it developed (and patents) new packaging that is sustainable that allows the company to maintain product quality throughout the entire delivery process. “We remain operating in Beta mode and are scheduled to start distribution in three countries that will cover around 60 percent of the Chewy client base. We plan to increase the size of our fresh product catalog and expand the geographic distribution of the business. We are thrilled about the fresh and prepared food category and the possibility to meet the needs of new customers as well as broaden our selection of existing customers,” Chewy wrote in the shareholder letter to shareholders.

The company had a good first quarter too with its exclusive brands which allowed the company to attain an 27.6 percent increase in gross margin as stated in its shareholder letters.

Chewy stated in its quarter-end report, that their exclusive brands such as hardgoods, pharmacy and other services together grew sales by almost 52 percent. Net sales came in at $2.14 billion, which is an annual growth of 31.7 percent. Adjusted EBITDA rose to $77.4 million in the quarter. Net earnings were $38.7 million, with the cost of share-based compensation in the amount of $24.8 million.

“2021 is already shaping up to be an exciting and hectic calendar year Chewy. We continue to implement our growth plan, increase our customers’ base, increase our the share of wallets and increase our market-expanding addressable verticals,” said Sumit Singh CEO, Chewy. “I am incredibly proud of the determination and focus of our teams and their ability to accelerate our pace of innovation on behalf of our customers, while consistently delivering strong top-line and bottom-line results for our shareholders.”

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