Freshpet, Inc. Barclays 19th Annual Global Consumer Conference

Great. Glad to be here.

Yeah. Quite a bit has changed. Let me start with, first, the obvious is John is new to us. John joined us in the last year, with a very deep experience base in the pet industry. He was both the CFO of a roll-up of vet clinics, but yet prior to that, he was at Zoetis, and after that, he was at Zoetis for a period of time. So it brought a whole new voice to the company that gave us a much better lens on the animal health space, and we think that's really value add. From a market perspective, there are three other things that I would call out. First is, obviously, we've had an enormous amount of competition enter the market for the first time. Frankly, we've been waiting for this moment for many, many years.

It came later than what we would thought it would have. We were not surprised to see as many people express interest in this because we believe it further validates that this is the future of pet food. We have seen everybody from Hill's and Blue Buffalo and some items from Mars and even from Nestlé enter the market, and you kind of look at it and you say, "Okay, this validates that this segment is real." A lot of people were wondering whether or not these new launches would somehow find the weak underbelly of the Freshpet business. To date, I can tell you they haven't. I am not even sure what the weak underbelly is at this point, but nobody has certainly exposed any real weakness in our business, and we have moved along quite a bit.

It is our hope and our expectation that all this innovation and new entrants will help make the category a more robust and a bigger category, and we will have a very, very large share of that category. The next thing I would highlight is that we have, in the last year, really made a very strong pivot towards what I would call the omni-channel, what we have been describing as the omni-channel. If you go back two or three years, people loved our fridge network, but they also viewed it as a little bit of a weight hanging around our neck in a world where people are less frequently shopping in-store and were instead shopping online.

We found a way to build a marketing distribution system, which basically created a level of access that is really unprecedented in the pet food space, meaning you can buy Freshpet almost anywhere, almost any way you want. Our fridge network is a critical anchor in the fulfillment part of that. About 80% of the volume that goes online actually comes out of our fridge network in-store. So it is a key enabler to a whole variety of things, everything from Instacart to Walmart+ and other ways in which you get the product. The third thing I would highlight is a fairly significant change since last year, is that we are now commercializing the new technology, production technology we have been talking about for quite some time.

We now have one full-up line up and running and two of the light versions of the line up and running, and we are very encouraged. It is a testament to the long foresight, the vision that we had for how we were going to win long-term, how we are going to build an increasingly strong competitive moat in manufacturing, scale, and expertise. It also opens up an enormous number of possibilities for us on product innovation.

Enormous amounts of innovation that can come out of this that is frankly greater than what we can get out of the existing manufacturing system. So it's higher quality, lower cost, much broader innovation. That's a big change. If you put all those together, we kind of feel very good about the progress we made in the last year and feel good about the position that we're sitting in today.

Yeah. Obviously, if we had category growth, it creates a tailwind for us. We'd feel much better if we had a strong tailwind. But it's also important to recognize that we're still in the early innings of the growth of the Freshpet food business. Our household penetration is still very small compared to the total size of the market. The MVPs that we have, which are our most valuable pet parents, we're only about 25% into the TAM there. Yes, it would help if we had some tailwind, but the reality is there's a lot of consumers who are interested, who would be high-potential consumers for us who we haven't gotten to yet. They may be a little bit harder to get in this environment, or the bar might be a little bit more difficult, but the opportunity is still there.

We're not dependent on it, but it does help.

Yeah. I guess I'd start with, as we watched every one of these entries come, we were doing an assessment of what does this tell us about the strength of the business that we've built, because we were building this thing expecting competition. We were trying to define moats that we thought would be most defensible for the long term, and now we had a chance to test them. I can tell you what we feel pretty good is that we are now able to produce the highest quality product at the lowest cost. We also feel very good about the consumer franchise we've built, the loyalty that it has, the strength of the brand equity that we've built, the breadth of the product line that we have.