Nestlé Purina has announced today that it has acquired a majority stake in UK based Tails.com, a direct-to-consumer, tailor-made dog nutrition business. We spoke to Bernard Meunier, Purina EMENA CEO and Calum Macrae, Purina Regional Director with responsibility for the UK to find out more about how it came about and the future plans for both businesses:
This is clearly a very exciting step for both Purina and Tails.com. When did you identify this opportunity and at what point did discussions begin with the management team?
BM: Personalised pet nutrition is something we have been following with interest for some time, as with any other innovation in pet care. Tails.com is a notable and successful player in that area so we made contact with James, the co-founder, and began to talk about ways we could work together.
CM: When it came to the point where Tails.com was seeking new investment, we already had that relationship and things moved on from there.
Why is Tails.com the right fit for Purina?
CM: When we got to know them, the values of their business were very clearly aligned with ours. We both want to make pets’ lives better – Tails.com simply does that in a different way, through highly tailored nutrition. That’s something additional to what we offer.
BM: It is an impressive business that has grown quickly and achieved significant scale – both in terms of customer numbers and revenues. They have also developed a best in class user experience through their personalised products and services.
Bernard Meunier, CEO, Nestlé Purina Petcare: Europe, Middle East & North Africa (EMENA)
What will Tails.com add to Purina’s overall offering to pet owners?
BM: Tails.com has come at the pet care market from a different angle, using digital and technological innovation to bring very advanced personalisation to pet nutrition. They make tailor-made foods based on a dog’s unique nutritional needs. This is a concept that really appeals to us, but requires significant technological expertise. Tails.com already has those capabilities, which is why our new relationship is so exciting for Purina.
CM: Yes, it’s the ability to provide individually tailored nutrition to pet owners - that’s quite unique.
How important is cost in this type of model?
CM: One of the things that’s very attractive about Tails.com is that they are providing incredible value to pet owners without asking them to pay the earth for it. As a pet owner you are getting an individually tailored recipe for your pet which is dynamically reformulated over time – as your pet’s needs change – and delivered to your door. The only way you can do that is to integrate everything - supply chain, consumer experience, ordering and blending - all supported by technology. Tails.com has found a way to do that that allows them to keep costs very reasonable.
BM: I agree, one of the successes of the model that Tails.com has, compared to similar start-ups, is that they manage to deliver all of this at competitive prices and keep things affordable for pet owners.
Nestlé has identified pet care as a clear focus area and one with potential for growth. A lot of the talk around this deal is about growth and accelerated growth – what are the most obvious ways that Purina will help Tails.com grow? Which markets are you looking at?
BM: We have a huge footprint around the world and, in time, we will use that geographical reach to help Tails.com to expand to other markets, particularly in Europe. We will help bring Tails.com to the attention of new pet owners.
CM: We have successful businesses in every major pet care market in the world. That knowledge and that insight can help the team at Tails.com choose suitable new markets, while our existing infrastructure can help them accelerate quicker.
Calum Macrae, Regional Director. Nestlé Purina Petcare
And in the UK?
CM: Absolutely, Tails.com has already shown tremendous growth, but the business is still only four years old and their growth rate is huge. The potential in the UK remains enormous, actually.
What else can Purina bring to Tails.com beyond growth?
CM: We have more than 120 years of pet care experience and expertise in Europe and we can help in areas like pet nutrition, pet behaviour and consumer insight across all markets. In the end, all of these elements will be brought together to help Tails.com to grow.
This represents a notable departure from Purina’s existing business model, could some Purina brands now begin to go bespoke or direct-to-consumer in the same way?
BM: At this stage our focus will be helping the team at Tails.com to grow and continue to deliver their personalised experience to more and more pet owners.
CM: Tails.com is much more than direct to consumer. There are a lot of direct to consumer players out there, but it is the combination of the consumer experience – which happens to be direct – and hyper personalised nutrition that makes the Tails.com model so powerful.
Why is it important that Tails.com continues to be managed separately from the Purina business?
BM: It is in the nature of the business model; the entrepreneurial spirit that has already been shown; the success the business has already seen in recent years in managing to grow to be the number one personalised pet nutrition company in Europe. We will give them all of the support they need, but at the same time leave the business to be run based on the same vision and technological lead that has already been built.
CM: We believe we can bring benefits, but at the core of the model is Tails.com’ own expertise. It is important that the model is allowed to flourish. It’s not about integrating Tails.com into our business.
What has impressed you most about James and the team at Tails.com?
BM: They have been resilient, they have been persistent, they have managed to breakthrough in a very cluttered and hectic start up scene. Tails.com is very well respected and the feedback they get from their consumers, for a four year old business, is quite amazing. Also the values they have built up for such a young organisation are a match for our own and that makes the fit even more obvious.
CM: I’ve been really impressed by the fact that, as a business, they’ve been totally focused on delivering an experience and a nutritional proposition to pet owners that is pretty much unmatched out there. They’ve built something very unique in a very crowded pet food market.
There may be consumers out there who are concerned about possible changes to their service at Tails.com, what would you say to them?
CM: Really nothing will change in the short term. Over time, obviously, what we hope is that we have things at Purina we can bring to Tails.com which ultimately will mean they are able to provide an even better proposition, even better products and an even better experience, that’s all.
BM: I think the fact that Tails.com will continue to be run separately from the main Purina business, keep their independence, their brand and their ability to develop this successful business model should reassure anybody who is concerned.
What are the next steps now that the deal is done?
BM: Nothing too immediate, but we will be giving Tails.com all of the support and resources that they need to fully exploit the great business model that they have developed and reach as many dogs and dog owners in the UK and, later on, abroad.
Is Purina looking at more deals like this in the near future? Are there other areas, like direct-to-consumer or personalised nutrition, where there is an obvious gap?
BM: We wouldn’t talk about other potential deals. Right now we are very happy to be sharing this news and will focus on building our relationship with Tails.com and supporting them for the future.
And finally, what does this mean for the UK as a whole?
CM: This is a real vote of confidence for the UK pet care market which is one of the biggest in Europe. Tails.com will continue to be based in Richmond, as we have said, separate from our existing Purina business. The UK has a vibrant tech scene and is the home of many great start-ups. London is one of the main hubs in Europe for digital and technological innovation and Tails.com has grown out of that. We are very excited about working together and very much looking forward to the future.