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How once-tiny pet-food maker took a bite of the global market

Champion Petfoods employed just 12 people when it embarked on its exporting strategy, says Peter Muhlenfeld, chief brand officer. Today it has about 500 employees.

Amber Bracken/The Globe and Mail

Canada's small businesses often face challenges in exporting their products – they need to appeal to different cultures or adapt to suit far-away tastes.

It's a different beast altogether, however, when success hinges on pulling the heartstrings of dedicated pet owners worldwide.

When then-tiny Edmonton-based Champion Petfoods LP launched an ambitious export initiative in the mid-1990s, it was a direct appeal to dog and cat lovers that would help the company become a Canadian export powerhouse.

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"Pet lovers are everywhere," says Peter Muhlenfeld, chief brand officer. "They have deep feelings and a sense of responsibility for the well-being of their dogs and cats."

Today the company, founded in 1985 by Mr. Muhlenfeld's father, Reinhard, and now operated as a partnership between the Muhlenfeld family and the Toronto-based investment firm Bedford Capital, sells in more than 80 countries around the world. Exports account for two-thirds of its sales. Double-digit annual revenue and export growth has helped Champion expand to 500 employees working in Alberta, Ontario and Kentucky, and it has a global team of sales representatives. (The company wouldn't disclose sales figures.)

But consider this: Champion's cat and dog foods are approximately double the price of their closest competitors. The company does almost no marketing, and it manufactures only its own foods (many larger rivals produce multiple brands and private-label foods for other companies.)

"Our core family beliefs are still entrenched in the company, and that is to make the very best food," Mr. Muhlenfeld says.

There is big money to be made keeping Fido's belly full.

According to the market research firm Euromonitor International in London, the global pet care market was poised to top approximately $110-billion in sales by the end of last year. Canadians spend about $2-billion a year on dog and cat food alone.

Deep-pocketed multinationals such as Nestlé Purina PetCare Co., Hill's Pet Nutrition Inc. and Mars Petcare Inc., maker of the Royal Canin line of foods, dominate the market, making it hard for Canadian companies to gain traction, despite a strong international reputation.

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"Canadian pet food generally is very sought after," says Martha Wilder, executive director of the Pet Food Association of Canada. "It's viewed as a very good-quality food," and the ingredient sourcing here is first rate.

But even international reputation goes only so far in breaking into new territory. To sell in foreign countries, Canadian producers must obtain certification from agriculture agencies in those markets, Ms. Wilder says. Quality control standards and certification processes differ, and approvals can take years and sometimes be derailed by events outside a manufacturer's control.

"Something like avian influenza can hit in Canada and shut down the trade completely," she says. "You're at the whim of the market you want to sell to."

How did Champion Petfoods, which at the start of its export journey employed just 12 people, manage to carve a niche in the global industry?

Management figured out early on that by making biologically "appropriate" pet food – as close to what animals would eat in nature as possible – and producing it using fresh, natural ingredients, they could differentiate their Orijen and Acana product lines from competitors that mass produce higher-carbohydrate, shelf-stable foods that last longer but deliver lower nutritional value.

From the outset, the company also manufactured to European pet food standards, which are among the strictest in the world. Rather than avoiding difficult regulatory regimes, Champion embraced them. "We built our export markets around these challenging regulatory environments," Mr. Muhlenfeld recalls.

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Instead of competing head-on with the likes of Purina and its staggering marketing budget, Champion's strategy was to build relationships with distributors in each of its export markets, then put sales representatives on the ground to educate key influencers, such as retailers and eventually pet bloggers, about their products.

From there, word of mouth spread among pet owners that Champion's foods were worth the extra money. Putting their products in specialty stores and eschewing grocery chains proved an important tactic to help differentiate and elevate their products.

"There are groups of people who … are highly involved in nutrition, and they found our foods and became advocates, influencing other people through blogs or social media," Mr. Muhlenfeld says.

The company also leveraged help from the Alberta and federal governments to access difficult markets, a strategy that Mr. Muhlenfeld recommends to other businesses seeking to expand abroad.

To export to China and India, for example, trade representatives from the Alberta government connected Champion to Canadian embassy staff overseas who arranged meetings with government officials responsible for providing the certification to sell in each of those markets. Canadian officials also helped Champion navigate often-onerous documentation and application processes.

"We wouldn't be anywhere near where we are today [without their help]. We've had tremendous support from all levels of the Canadian government."

Ultimately, Mr. Muhlenfeld says that it was research into overseas markets and the proper positioning of Champion's products that helped the company succeed.

"Some people look at an export market and want to sell there, but what's unique and valuable about your product that can provide a unique point of difference?" he asks. "If you don't have a clear idea of what that is, you're going to have challenges."

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