Puppy love helps former Goldman bankers capitalise on pandemic L
The huge rise in pet ownership sparked by the pandemic has turned a morsel of an idea into a feast as a dog food company set up by two former Goldman Sachs bankers raises £40m to fund its expansion.
London-based Butternut Box, set up by David Nolan and Kevin Glynn five years ago, expects to sell about 22m meals this year – almost double last year’s total.
Glynn, 31, says: “We’ve seen a huge increase of puppy sign-ups on our site. A lot more people are working from home and have more time to spend with their pet.”
More than 3.2m households in the UK have acquired a pet since the start of the pandemic, according to the Pet Food Manufacturers’ Association, bringing the total to 17m. Millennials are the main drivers of this trend, with more than half of new owners aged 16 to 34, according to the association.
“Online sales can be up 30pc to 40pc, depending on which month you look at, compared with pre-covid,” Glynn adds.
The cash injection will go towards a new factory, new recipes and product ranges, such as supplements, and expanding overseas. Investors taking part in the round include L Catterton, the Lvmh-backed private equity firm that sold its stake in Sweaty Betty last week, as well as White Star Capital, Five Seasons Ventures and Passion Capital.
L Catterton last year sold Lily’s Kitchen, the upmarket pet food brand set up by Henrietta Morrison in 2008, to Nestlé for a rumoured £100m.
Butternut Box has raised more than £80m to date, with the entrepreneurs “still owning a significant share of the business”, says Nolan, 34.
The two friends packed in their jobs at Goldman Sachs to launch Butternut Box with £100,000 from two Goldman mentors. They set up shop after Nolan’s dog, a Staffie called Rudie, recovered from an upset tummy after eating healthy, simple meals, such as mince and rice, cooked at home by Nolan’s family. When Glynn heard about Rudie’s recovery, he suggested they should cook for more dogs.
In the early days, they would prepare the meals themselves and drop off boxes to customers in a Citroën van.
Butternut Box customers can choose from chicken, turkey, beef, fish or lamb meals, with vegetables, for just over £1 for small dogs. The orders are bespoke, taking into account a pooch’s calorie intake, breed and weight. The pouches are cooked and packaged fresh and then frozen each week. Most ingredients come from the UK.
“If it’s good enough for dogs, it’s good enough for us. That’s why we taste test our meals to make sure they’re just right,” the company says on its website. It also sells treats and biscuits.
The firm made sales of £10.8m for the year to December 2019, up from £3.6m the year before. Losses widened to £7.8m from £5.5m. “We’re still lossmaking this year with a view to reach profitability next year underpinned by the strategic investment in the operations,” Glynn adds.
To keep up with demand, Butternut Box opened its own factory in Doncaster this year, where it already employs more than 200 staff.
“We plan to launch Ireland and the Netherlands this year and we will be looking at more European countries next year, that’s the focus,” says Glynn.
Jean-philippe Barade, a partner at L Catterton and head of the firm’s London office, said: “Butternut Box continues to leverage its innovative digital platform to raise the bar in the growing pet food market, and we look forward to collaborating with the entire Butternut team.”
However, Nolan says Brexit and the pandemic have slowed down efforts to conquer Europe – the company’s main aim after raising £20m at the beginning of last year. “Some things that would have been incredibly easy, now you’re doing four, five different trials, nominal size shipments, just to see if you can test the pipes and see if it gives you confidence to open into another market,” he says.
“Those two factors haven’t made it any easier, even practical things like meeting people and hiring a team on the ground, but when there’s a will, there’s a way.”
Nolan says the shift to online and the boom in pet ownership during the pandemic have been “an accelerator”, but the company’s set up – catering directly to consumers with regular deliveries – meant it was well-placed to capture new customers regardless.
He adds: “We’re aware how much of a struggle it has been for other people, we’ve been in a lucky place and we recognise that.”
‘We plan to launch Ireland and the Netherlands this year and we will be looking at more European countries’