Red Collar transforming coast-to-coast co-manufacturing business

July 13, 2021

Red Collar Pet Foods is not yet three years old and in that time has separated five processing facilities from Mars Petcare to form the company, expanded food safety and processing capabilities across its coast-to-coast network, and acquired a new treat manufacturing company. The break-neck speed at which the young company has operated shows no signs of slowing.

Red Collar was created in December 2018 when private equity firm Arbor Investments acquired Mars Petcare’s Exclusive Brands business, which produced dry dog and cat food and extruded soft meaty treats. Very shortly after successfully separating from Mars, the newly rebranded company acquired Joplin, Mo. Based Hampshire Pet Products in February 2019. Hampshire is a leading co-manufacturer of baked and cold-formed pet treats.

Nationwide, Red Collar currently has almost 800 employees at its Franklin, Tenn., headquarters and across its six manufacturing sites located in Orangeburg, S.C.; Washington Court House, Ohio; Miami, Okla; Clinton, Okla; San Bernardino, Calif.; and Joplin.

In just 12 weeks, the Red Collar team separated the co-manufacturing and private label business from Mars Petcare, established a new company including all the business oversight and supplier relationships that entails, maintained production for the customers transitioning to the new company, and quickly established an aggressive growth plan. An impressive schedule in normal times, but add in a global pandemic, and it’s pretty remarkable.

In a 24-month time period from 2019 to 2021, Red Collar has either renovated or upgraded almost all of its production capabilities and is now one of the top pet food and treat manufacturing companies in North America.

“When we first started down the journey of creating Red Collar, what we had to do from a technical standpoint was map out our capabilities with the network we acquired from Mars and match that against what was required from our customer base,” explained Chris Hamilton, president and chief executive officer. “We looked at not only the business we had from Mars but we came out with room to grow and we had to fill that.”

Red Collar had to quickly determine what capabilities were needed to serve the customers the company wanted to attract in the future.

“All our sites saw capital investment to expand the micro mitigation systems and continually improve to be at the forefront of the market,” said Greg Wolking, chief operating officer. “In addition to our substantial focus on quality and food safety, Red Collar has invested heavily in our growth initiatives, which include coast-to-coast meat first systems and expanding our packaging capabilities.”

All of this change in a very short time for a large company spanning North America was possible with financial support and encouragement from Arbor Investments, as well as understanding and flexibility from existing customers. But also because the company’s associates embraced the challenge and the emerging culture, Hamilton said.

Center of the wheel

Coming out of a large, successful, global leader such as Mars, the new company had to be deliberate about what existing aspects of the culture should be kept and what new values would need to be fostered to set Red Collar apart.

“The open office, collaborative nature, speed and agility, flat organization and customer focus are all things that are legacy Mars and are now legacy Red Collar,” Hamilton said. “We are very proud of those. Things that are unique to Red Collar are having a very broad and large customer base and the agility and responsiveness needed to partner with our customers to grow. Having responsibility at the center of the wheel for our values, that has been critical for our success.

“Red Collar starts with our associates and associate safety together with product quality and product safety as the foundations of our business,” Hamilton said. “Those are the non-negotiables that Greg and I have for the business, and those have served us really well.”

The pandemic offered an opportunity for Red Collar’s management team to live these values.

“One of the things that Greg and I take very seriously as part of our roles is the transparency, openness and collaboration as part of our leadership,” Hamilton shared. “We have everything from monthly townhalls to annual plan days to virtual happy hours with our associates to keep everybody informed. It’s evolved, of course, over time with the challenges we’ve had under COVID, however, we set those touchstones and those cultural meaningful points in our values right from day one. When we say for our associates, efficiency, agility, customer-focused, associate safety, food safety, collaboration are our values, we tried to make our decisions visibly with our associates at all levels through the lens of those values.”

When you have a network as large as Red Collar’s that runs 24/7, doing townhall calls for every shift is a big undertaking, but it’s a commitment the company made during the pandemic to maintain the transparency to which associates were accustomed.

So, on a rotating basis, Hamilton, Wolking and other operational staff would lead live, townhall-style shift calls for every shift and every factory in real time so the associates — regardless of where they were located or what their role is in the organization — could hear from the management team personally on what was going on, why and what the company was doing about it.

“In a townhall, any of our associates can ask us any question that they want, and we’ll do our best to answer them as openly and transparently as we can,” Hamilton said. “I think that trust we have built across the organization will be a legacy that we are very proud of many years from now. And it really is the foundation of how we do business. I think our associates appreciate that.”

Critical capabilities

Two important processing capabilities Red Collar addressed immediately were expanding the treat formats that could be produced in the company’s network and the ability to manufacture dry pet food with higher levels of fresh meat.

The treat needs were addressed by acquiring Hampshire, which added crunchy-baked, soft-baked and formed treats to Red Collar’s repertoire. With the Miami plant’s meaty, semi-moist and co-extruded treats at its 68,000-square-foot facility and the addition of Hampshire’s 291,000 square feet of treat making prowess, Red Collar is now one of the largest treat co-manufacturers in North America, according to Hamilton.

The second processing capability addition found Red Collar “trying to thread the needle” to meet all its customers’ current and future needs.

“When we did the assessment of our assets relative to the needs of our customers, the big capability that we upgraded coast-to-coast was meat-first capability,” said Brad Ball, senior vice president of sales and product development.

What Red Collar determined was needed was a national network that could make every type of dry kibble its customers would demand, ideally at scale because, according to Hamilton, scale likes scale.

“We wanted to make sure our network stayed in scale so the capabilities end-to-end on a national footprint could make grain-first, grain-free, meat-first or fresh-meat formulas, and get them efficiently and cost-effectively to our customer. We didn’t want to upgrade one factory and not the others so, right out of the gate, we upgraded our Clinton facility, then Orangeburg and we finished with San Bernardino. That has given us a national, coast-to-coast network with the capability to make everything from a mainstream value all the way to a super-premium, meat-first dry pet food.”

For Red Collar, meat-first meant adding fresh meat slurry capabilities to those three sites.

“We found that the supply chain of slurries and the handling of slurries inside the plant is a lot more cost effective and efficient for us than to use [frozen] blocks,” Wolking explained. “It requires a little more responsive inbound supply chain, but it gives us better capability at each of the sites.”

Handling fresh-meat slurries required infrastructure additions for the separate meat rooms that provided temperature-controlled unloading, dosing as well as handling capabilities.

“The fresh meat systems that we added gave us the capability across the network to do things that we couldn’t do before and was driven by our customers,” Wolking said. “We needed this capability, so we did it very quickly.”

Adding higher meat capabilities to three locations was an important improvement.

“In the old days, we might have had one site that could do that, now we have that capability coast to coast,” Ball said. “Being able to replicate and duplicate that capability nationally has not only opened new avenues of production for us for something we couldn’t do before, but it’s made it a point of difference and competitive advantage for us.”

Embracing complexity

Adapting to a changing customer-base required another culture shift for Red Collar.

“One thing that we had to adjust our associates to has been the customer requirements,” Wolking said. “And that it’s not if we can do it, it’s how and how fast. We have learned to be very agile and responsive to [the customers’] needs. It’s been fun to see the culture develop in that way.”

Hamilton pointed out that the pet food industry is no longer a business of dry pet food primarily packaged in large 50-lb bags.

“There are a lot more cat households than 10 to 15 years ago, a lot more smaller breeds on the dog side, a lot more business being done on e-commerce,” Hamilton said. “Our production capabilities have to match that, and our business solutions have to match that. We’ve had to be much more flexible and agile and we’re always looking at what is the next solution we can get to, whether that is micro-dosing and adding to our bin farms or whether that’s bringing in the next wave of packaging technology.”

Whether the new packaging capabilities include bag-in-box, a specific packaging size or new sealing technology, Red Collar has had great success partnering with its suppliers to bring the solutions customers require throughout its network to meet the need where the customer needs it.

In 2019, the company expanded its headquarters in Franklin with an investment of $3.65 million, adding an innovation center as part of the company’s commitment to being a “full-service provider” to its customers. Red Collar hosts product formulation cook-offs in its demonstration kitchen and pools its in-house resources to support customers’ development processes, whether those involve product formulation, ideation, research, food safety, manufacturing, packaging or distribution expertise.

Modeling human plants

In addition to Red Collar’s national network of processing capabilities, the company’s approach to ensuring consistent product quality and food safety sets them apart as well.

“We are the only private label manufacturer and contract manufacturer in America that uses Food Safety System Certification (FSSC) 22000 and that has been a point of difference that, quite frankly, I am happy to report is resonating with our customers,” Hamilton said.

FSSC 22000 is an internationally accepted, human-grade, quality, and safety certification program available through the Foundation for Food Safety Certification, headquartered in The Netherlands. All of Red Collar’s processing facilities are FSSC 22000 certified except for the recently acquired Hampshire plant, which is in the process of receiving this certification. One of the areas of particular focus for the company is mycotoxin and micro risk mitigation.

“[FSSC 22000] is based on ISO principles, so food customers understand ISO. It’s not just pet food auditing, it’s human food as well,” Wolking explained. “It’s focused not only on the audit and checklist-based certification but on the capability and the processes that you have behind those kind of quality results. We feel it really does make us better because these audits are tough and require us to have the infrastructure and the processes in place that are going to support these kinds of solid quality results for the long term.

“FSSC dives into our HACCP plans and what our continuous improvement cycle looks like for the results,” he continued. “We learn something new every time we do one of these audits and new auditors bring in different perspectives. [FSSC 22000] isn’t as well-known as some of the other auditing bodies but we feel that it does add the benefit from a quality standpoint and fits well with our culture, which is about people, capability and process.”

Many of Red Collar’s customers serve both the pet food and treat industry and the human food industry on a national and international level. FSSC 22000 offers a program these customers are accustomed to across all the brands they sell.

“Being able to use a human food standard in our pet food application has been a real point of difference,” Hamilton said. “Multi-national, multi-category companies really appreciate that we can speak that language. I also appreciate that this quality scheme and audit scheme doesn’t let the management team off the hook. We are as involved in the audit process as any one of our factories, so it’s not this set-it-and-forget-it process where you get certified and you’re done. It is a very integrated, very technical conversation that the management team is involved in, and we go through a management review on a regular basis to make sure that we are staying at and ahead of what the food safety standards are to keep the quality and food safety for our products at the top of the game. So, when things like FSMA come along or audit cycles come through, we want to make sure we’ve given our associates and our factories the best quality scheme possible to make them as prepared for today’s challenges, as well as tomorrow’s.”

Next on deck

Red Collar’s capital project plans slated for 2021 and beyond are focused on logistics, warehouse expansions and additional production capacity.

Clinton will be the first to break ground on an expanded warehouse. The Red Collar facilities in South Carolina and Ohio will be following close behind. In Clinton, an additional 85,000 square feet will be added to the existing footprint starting later this year. The $5.7 million expansion will be built onto an existing side of the building to help meet the high demand for products. This investment follows the recent expansion of the facility’s packaging capabilities.

“Warehousing is a function of not only growth but of the additional complexity and the additional customers that we are bringing on,” Wolking said. “It’s no longer two or three brands in the warehouse, it’s seven or eight or 12 brands and every customer needs a holding spot.

“The Clinton plant continues to be one of our fastest growing plants in Red Collar Pet Foods’ coast-to-coast network,” Wolking said. “When completed, the warehouse expansion enables capacity for future growth and additional hiring.”

The current workforce at the Clinton facility is 111 people. A fourth shift added at the end of 2020 resulted in 20 new hires.

“The growth we have driven since opening our doors in 2018 has been fantastic,” Hamilton said. “To keep up with this growth, we will be spending significant capital over the coming years to expand our capacity.”

Keeping pace

Part of Red Collar’s growth strategy and the reason behind many investments is to have redundant factories and the ability to run the same formulas from coast to coast. It’s a risk mitigation strategy, but it’s also a business development strategy.

“Having a national network allows us to serve at-scale customers that also have national brands and national retail footprints,” Ball said. “Our scale matches their scale, and it also allows us to mitigate the risk in our business because we’re not tied to only one site.”

The company’s overall production split between pet food manufacturing and treat manufacturing is approximately 80% dry food production and 20% treats. When pressed for what volumes that equates to, Red Collar declined to share that information.

“We don’t like to share that too broadly, however we are open for business, so if anyone wants to come talk to us or partner with us we are happy to entertain that because we still have very large growth ambitions. We want to not only be the premier co-manufacturer within America in treats and main meal; we want to exceed $1 billion in revenue and we’re well on our way toward that,” said Hamilton.

Broadening its customer base and striving to be a top solution partner for its customers has doubled Red Collar’s capacity and tripled its treats revenue in barely more than 24 months. Hamilton credits the culture the company is building and the support of Arbor Investments for much of its success.

“We don’t have anything without our associates, so having a values-based lens through which we make our decisions helps us continue to build that culture with our associates and reinforce what a great company we have, to attract top talent who want to join, stay and grow with us not only now but for the duration of their careers. That is the foundation we are working on at Red Collar.

“Our partners at Arbor Investments have also been absolutely fantastic. They are willing to spend and invest to grow the business and they bring a lot of capabilities to the table. We have a very active and capable board and Arbor provides us with very seasoned advisors. We would never be here at this rate and speed without them.”

Arbor has been willing to invest not just in growth initiatives but also in food safety, personnel safety and compliance, which Wolking said is key to maintaining trust with customers.

“At the end of the day, brand equity is really important for our co-man and private label customers because it’s their brand that’s at stake,” Ball said. “That’s another cultural point that sets us apart. We brought a lot of people over from Mars who had that culture instilled in them and we’ve taken it and reapplied it to the co-man and private label space and I think that’s pretty unique.”

Although Red Collar has realized capacity gains from its initial rush of investments, the company expects the pace of investment to continue.

“At the rate we are growing and with the plans we have to continue growing, we will have to match that with investment,” Hamilton concluded. “This year’s investment focus will, of course, be warehousing and then we’ll come back again full circle to how do we increase capacity in production.

“It’s that endless loop of build a better business, win more business, grow the business, increase the capacity and increase the warehousing, and start all over again,” he said. “That continuous improvement requires continuous investments, so what we’ve done with Arbor is laid out our five-year capital plan that will keep us growing and our investment will continue to match that.”

At its current pace and in addition to all that Red Collar has tackled in a short time, the company’s grand goal of reaching an annual revenue of $1 billion may soon be within reach.