Kal Kan Foods, Inc. History

Address:

3250 East 44th Street
Vernon, California 90058
U.S.A.

Telephone: (213) 587-2727
Fax: (213) 586-8347

Wholly Owned Subsidiary of Mars, Inc.
Incorporated:1936 as Stirling Packing Company
Employees:1,200 (1993)
Sales: $220 million (1993)
SICs: 2047 Dog & Cat Food

Company Perspectives:

Manufacturing quality pet food since 1936.

Company History:

Kal Kan Foods, Inc. is a noted manufacturer, exporter, and importer of pet foods in the United States. A market leader, the company produces a variety of pet food products, as well as sponsors animal-related charitable events.

At First a Horse-Kill Operation

Headquartered near Los Angeles, California, Kal Kan began manufacturing pet food in 1936. First known as the Stirling Packing Company, Kal Kan operated as a horse-kill enterprise owned by a Californian who bred thoroughbreds and promoted race horses.

In 1952, the company's Vernon, California, plant unionized as Butchers Local 563, which merged with Local 770 in 1986. Kal Kan eventually operated facilities throughout the United States; however, the Vernon plant remained the company's only unionized facility throughout 1997. Plant employees processed and packed Kal Kan, Pedigree, and Waltham brand pet foods.

The Early Pet Food Industry

In the 1960s, the pet food industry in the United States was but an outgrowth of the grain-based livestock feed business. Dry pet foods utilized vegetable and soy proteins in place of meat, and other pet foods were made of meat byproducts, which were high in fat and smelled badly. Yet, Kal Kan carved a niche for itself as an industry leader in the United States.

At this time, the Mars Candy Company, a large, multinational firm run by Forrest Mars, Sr., eagerly purchased Kal Kan. In addition to candy, the Mars Company excelled in the manufacture of pet food overseas. According to Bill Saporito, a writer for Fortune, Forrest Mars "started a pet food industry long before people in those countries [Europe] would even consider feeding Fifi out of a can. His kind of pioneering required an organization that could take an expansion strategy and execute it without much help." Mars's Pedigree Petfoods, an English company, launched Whiskas cat food in Europe in 1959. A healthy, meat-based cat food, Whiskas was the first brand to offer varieties of pet food. It became the major cat food brand in Europe, as well as in Australia and Japan.

After Mars purchased Kal Kan, he renamed the company's brand dog foods as Pedigree, and the company's Mealtime brand became Pedigree Mealtime. "The Pedigree change was brilliantly executed," noted Saporito. Kal Kan solidified its position as a leader in the U.S. dog food market.

Whiskas Comes to America

The popularity of cats as pets surpassed that of dogs in the 1980s. Since British Whiskas outsold its competitors three to one, parent company Mars saw an opportunity in the U.S. cat food market for Kal Kan. (Though Kal Kan controlled a leading share of the American cat food market, the company had long been associated with dog food by the general public.) In 1988, Mars renamed Kal Kan brand cat food as Whiskas, and the company's Crave brand became Whiskas Dry. Mars used the same recipe for U.S. and British versions of Whiskas; however, each used local ingredients. Kal Kan's cat food received new packaging--a label with a cat mask logo--and a new slogan: "The cat food your cat prefers is now called Whiskas." Changing the names of Kal Kan's cat food brands gave parent company Mars international efficiency in marketing cat food. As one competitor told Fortune magazine, "One thing Mars does better than any public company is understand the true importance of the international markets."

After switching to Mars' global brand, though, Kal Kan's position in the cat food marketplace slid. As Saporito observed, "Kal Kan's big cat food brand, Whiskas, has turned into, well, a dog." In fact, the company lost half of its market share in cat food during the change to the Whiskas name. So, late in the 1980s, Kal Kan worked to expand the cat food market in America. John Murray, vice-president of sales at Kal Kan, revealed in a 1991 ad in Supermarket Business that "we felt that to take on existing leaders with similar products was unlikely to be successful. And from the retailer's standpoint, for us to go for a share without enlarging the market would be to swap pieces of the pie. As far as we were concerned, the name of the game was trying to enlarge that pie." Expecting about $300 million in Whiskas sales, the company upgraded its product's quality and palatability by utilizing meat-based formulations and less fat. In the process, Kal Kan created better-smelling cat food.

Kal Kan also increased its advertising budget to promote Whiskas to American cat owners. Cat owners offered testimonials for the cat food in television commercials and other advertisements. With the product innovations backed by these new marketing efforts, Whiskas became a national brand in the United States, too.

Pet Food in the 1990s

During the early 1990s, a broad recession eroded international pet food sales, yet Mars remained the leader in the international marketplace. Kal Kan's parent controlled 60 percent by value and 60 percent by volume of the industry. Mars sold products in 30 countries, including the bestselling brands in the world--Whiskas and Sheba--and in Europe--Kit-E-Kat. Pedigree's Whiskas, sold in six countries, was the number one brand. For its part, Kal Kan offered 29 textured varieties of Whiskas in the United States, including chunky, minced, and choice cuts. Kal Kan also offered three additional varieties of dried Whiskas.

To capitalize on its ability to offer variety in pet food products, Kal Kan began offering more specialized items. In 1990, for instance, Kal Kan launched Whiskas Select Entrees. Made of minced meat and priced higher than standard products, Whiskas Select Entrees were on par with Mars' Sheba brand, which was made with meat chunks.

Kal Kan instituted several ancillary services to pet food buyers beginning in 1991. Kal Kan first employed in-store nutritional centers that year, as well as sponsored the "Help Keep Animals in Our Lives" Campaign as a charitable activity. The company donated redeemed Kal Kan coupons to the World Wildlife Fund as a public service.

In 1992, Kal Kan changed advertising agencies to D'Arcy Macius Benton & Bowles. The pet food company also joined other major corporations--Kellogg's and Coca-Cola, for example&mdash a sponsor of the U.S. Olympic team. Kal Kan coordinated "petathlons" in which dogs in three weight classes and their owners competed in events such as 30-meter dashes, slaloms, hill climbs, tunnels, mazes, and hurdles in 20 U.S. cities. Gymnast Peter Vidmar, an Olympic gold medalist, chaired the events, which were judged by the U.S. Dog Agility Association. In addition, Kal Kan donated a percentage from its sales of Pedigree brands to the U.S. Olympic team, guaranteeing a donation of at least $1.5 million. Unlike other sponsors, however, Kal Kan presented one caveat. As Andrew Evan Serwer noted in Fortune magazine in 1992: "Both Kal Kan and the U.S. Olympic Committee stress that Kal Kan is not the official dog food for members of the U.S. Olympic team."

Such events complemented parent company Mars's plans for global expansion and marketing. Mars thought, explained Saporito, that "because we live in a homogenizing universe, many products can be sold the same way everywhere. One world, one brand, one message. That's why Mars has heavily backed such global sporting events as the World Cup and the Olympics. This simplicity of sell generates savings in advertising, packaging, distribution, and staff."

New Products During the 1990s

In 1993, Kal Kan's scientific brand dog food, Expert, debuted as a competitor to Hill's Science Diet and Iams brands for the specialty vet market. Marketed through supermarkets, Expert missed its target audience, since consumers typically purchase specialty dog foods at their vets' offices or in pet stores. Sales were disastrous. Nevertheless, the company persevered in introducing the new product to the marketplace, including launching a companion product--Whiskas Expert Diet for cats. Kal Kan is "an enormously tough competitor," admitted one pet food industry representative. "And they stick with it; but the downside is that they throw good money after bad. No publicly traded company would ever stay in a business that long and lose that much money." When all was totaled, Kal Kan lost $50 million introducing Expert to consumers.

Undeterred, the company continued developing and marketing new products. For example, Kal Kan first offered Whiskas Ultramilk, a lactose-free beverage for cats, in 1993. More digestible than regular milk and better tasting, Ultramilk was made from flavored malt, a favorite of cats. The cat drink was richer and creamier than milk, yet equal to it in nutrients. Shelf stable, Ultramilk sold in local grocery stores. Kal Kan introduced Ultramilk in the following markets: Boston, Baltimore, Hartford/New Haven, Philadelphia, New York, Washington, and Phoenix.

Kal Kan also introduced several snack foods for pets in 1993. First, it launched Whiskas Crunch, a low-fat snack for cats that acted as an appetite stimulant. This crunchy mixture sprinkled on canned cat food increased a pet's total food intake.

Then Kal Kan announced Pedigree Dentabone for dogs, which provided 20 percent of a dog's daily nutrition. In addition, Dentabone offered dogs full-range chewing for dental care, specifically reducing plaque and tartar. Pedigree Snackos also debuted in 1993. These air-dried beef strips served as a protein supplement for dogs, notable for increasing a pet's muscle tone. The company also began marketing tender beef-and-chicken dog treats called Pedigree Tandem.

By 1994, Kal Kan helped Mars to achieve the status of the largest pet food business in the world. Annual sales for Kal Kan's parent company neared $4 billion. So, despite some setbacks, Kal Kan continued to introduce new products. In 1996, for example, Kal Kan initiated special formulations of dog foods for different age dogs, notably Pedigree Lifestages Dry Dog Food and Dry Puppy Food.

Innovations to existing products continued as well. The company improved Whiskas Senior Dry Cat Food, a new formulation for older, inactive cats. As an incentive to purchase the pet food for older cats, Kal Kan offered coupons promoting the Whiskas line. In 1997, Kal Kan developed a soy-free formula for Pedigree Snackos. Kal Kan promoted Snackos with a buy one, get one free offer through Petsmart. Whiskas Dry Cat Food also gained a new flavor in 1997. Kal Kan introduced Whiskas Dry Cat Food with Salmon and Rice as a highly digestible food that facilitated skin and coat maintenance in pets. The product claimed to be manufactured with real salmon and no artificial flavors or colors. Endorsed by Waltham Centre for Pet Care and Nutrition, the new formula also included Vitalife, a combination of 40 vitamins, minerals, and nutrients especially for cats. Ads advised cat owners to "Make friends for life with Whiskas."

In the years beyond 1997, Kal Kan no doubt would work to maintain its position as a leader in the pet food industry. More new products and enhancements to existing formulas of dog and cat foods could be expected in the future.

Kal Kan Foods, Inc. History

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