News Industry Profile 2014 Lily S Kitchen



Industry Profile 2014: Lily’s Kitchen
10th October 2014

By Sandra Pearce

Thinking outside the box

2014 has been a tumultuous year for Henrietta Morrison, kicking off with January’s Channel Five documentary on dog food and now catapulted into the controversy over the launch of Lily’s into Tesco

It’s been a tough period for Henrietta Morrison and her team, who have been swamped with Facebook posts, Tweets, calls and emails about the launch of the new pet food range, Lily’s, into Tesco. 

Those up in arms say Henrietta, founder of the Lily’s Kitchen brand, has sold out the independent retailer in favour of the supermarket behemoth. Criticism is levelled at the new entrant being called Lily’s – how can their customers tell the difference between the slightly cheaper Tesco-exclusive range and their specialist Lily’s Kitchen offering? Especially when the packaging and design of the two look so similar.

“We were surprised with the reaction we got, but we did also get positive comments from retailers,” she says.

She explains the name choice for the Tesco range, saying: “I did not want to come up with another distinct brand. I wanted to keep it personal. I wanted them to hold hands with each other. So people could see they were part of the same family. Separate brands, but the same family.”

Yes, other manufacturers have launched distinct brands, one for grocery and one for the independent retailer – but that is not what her company is about, she says. “We are all about transparency… transparency and integrity.”

This is the first time the notion of a ‘diffusion line’ has made an appearance into the pet world. More commonly the province of the fashion world, a diffusion line is a secondary line of merchandise that retails at a lower price than the original ‘signature line’. So you have Karl and Karl Lagerfield, McQ and Alexander McQueen, and Emporio Armani by Giorgio Armani. And now, Lily’s by Lily’s Kitchen.
“I completely understand it’s a very innovative way to approach pet food… but I like to do things thinking out of the box, things that are different. The obvious ideas are not worth the blood, sweat and tears, that’s why we challenge ourselves daily to really make a difference,” she says.

Why does a dog need blueberries?
Thinking outside the box was what brought Henrietta into the pet food industry in the first place. Most of us know how Henrietta had turned to home cooking to try and find a solution to her Border terrier Lily’s earache and skin condition. What is less known is that at the time, she was two-thirds the way through a garden design course (Henrietta has always had an allotment and loves gardening), and when Lily’s condition improved within just two weeks of her home diet, Henrietta quit that course, convinced she was on to something.

“I am a business-minded person and thought there has to be a solution here. I wanted to make a difference,” she said. “I wanted to make a really good quality food that I could take out of the cupboard every day and trust.”

Her resolve was strengthened when she discovered that all her neighbours were cooking for their own dogs – no-one was buying commercially prepared dog food. It was all about giving choice to the owner. “I wanted to change the situation,” she says.

“I was so angry about the lack of transparency on pet-food labels. Owners found it difficult to select the right food or really understand what they were choosing. There were lovely pictures of vegetables and meat on labels, but I never looked on the back to read what exactly was in the food. I saw the picture and assumed that meant that was going in.”

The next six months were spent researching the food she had been feeding Lily, talking to vets conventional, homeopathic and herbalist, and creating her own foods, all of which were tested on Lily. If Lily turned her nose up at an offering, it was rejected. When she had finally perfected her recipe, she visited over 30 kitchens and manufacturers across Europe and the UK – and no-one wanted to know.

“I said I wanted blueberries, that I wanted fresh meat and not carcass. I was told what I wanted was completely impossible, that I could put my pretty labels on it but I could have chunks and jelly or chunks and gravy. They asked, ‘Why would dogs want to eat blueberries or apples?’.”

At the end of the year, Henrietta found three manufacturers who were prepared to make her food, one in the UK and two in Europe. “With hindsight, I guess I was lucky we were then in the middle of another recession, and they said they would make my order to my recipe, and were happy to work closely and push the boundaries.”

With her home re-mortgaged to pay for all this – “I was a woman on a mission,” she says – the first batch of Lily’s Kitchen rolled out. “The food we make is expensive,” she admits, but that’s because she is not willing to compromise on quality and uses 14 different herbs, some of which are in the eye-watering price bracket. “We are not posh pet food, we are just good pet food.”

She still uses the same three manufacturers today. “What they love is that we are always pushing them. They have never made anything like our food before.”

Take for example Breakfast Crunch, which was launched in February 2013. This dry, baked food is a mix of fresh chicken and turkey, oats, bananas, apples and yogurt. “It’s unusual to have a baked complete food,” she says. And using fresh meat rather than dried meat meal is ‘very difficult’. “It’s like making a stew, and then baking it. The run is a lot slower, and you have to deal with the moisture that runs off; it’s a very complicated process. Our dry food is the only dry food made using only fresh meat and no meat meals,” she says confidently. “That is the level of natural and product integrity that we invest in our foods.”

Where’s the choice?
Fast forward to January’s Channel Five documentary The Truth About Your Dog’s Food, in which Henrietta was interviewed. She had viewed it the day before, and told staff that it would be ok, there was ‘nothing to worry about ’ in terms of volume of incoming calls. That night, she and her daughter went to the cinema, thinking it would be business as usual.

“I came out of the cinema, and I had so many messages. Our website had crashed and the people who do our website had to work through the night. There was a tsunami of enquiries. We had thousands of calls every day, and had to set up 24-hour telephone monitoring. This went on for weeks.”
Waitrose stockists’ shelves ran bare, and many were making daily orders to keep up with demand.
“It’s a wonderful thing to have happened,” she says, “but the really great thing, the one thing I am really proud of, is when independent retailers came up to me and said I had transformed their business. Their customers were now looking at labels and they were able to have conversations with them. It gave these shops a lease of life. There was this burst of interest over ‘What am I feeding my dog? I want something better.’ It revitalised my business as well as the whole industry. People were showing interest in pet food that was not there before.”

Big grocery and pet retailers were calling weekly. She finally agreed to a meeting with Tesco, who
wanted a natural pet food. Research was done with Tesco shoppers, and it was established that the vast majority had never heard of Lily’s Kitchen. Here was a whole new consumer group. Considering Tesco sells almost a third of all pet food in the UK, this presented a huge opportunity to produce something truly high quality for the supermarket shopper, she said.

“I wanted to do something innovative with Tesco. The only way, the fairest way that I felt respected the independent retailer, was to reserve the specialist range for them, and to create something separate just for Tesco.

“The new range is designed to target those people who do not go into independents or who are not even aware of Lily’s Kitchen; we are targeting a brand new customer, who until now never had a healthy alternative to choose for their pets. I want to make really good pet food, and why should pet owners who shop in Tesco be excluded from that?” she asks. “It’s extraordinary that a better offering has not been provided for consumers there.

“If you buy your Lily’s Kitchen from your pet shop, you will continue to buy from them. You’re not going to suddenly go to Tesco to get your food there.”

So Lily’s was created. There are differences between the two. Lily’s has a lower meat percentage (55%) compared to Lily’s Kitchen (65%), and Lily’s uses fewer herbs than the larger range of herbs in Lily’s Kitchen, hence its lower price point. Lily’s is also made in two new sites, separate to the three that make Lily’s Kitchen. Lily’s has a total of 19 wet and dry skus for dogs and cats, whereas Lily’s Kitchen has 72 skus. And Lily’s is by far a better product than anything on offer for pets in supermarkets, she says.

“It’s not about duping the customers. I want customers to know what is going on. I feel like we have been completely transparent, and because of our relationship with independent retailers, we created a separate range.”

It’s all a bit déjà vu for Henrietta, who was criticised when Lily’s Kitchen first went into Waitrose. “But what everyone found was that seeing it in a supermarket environment made them aware of the brand. They then went on to the website to find out more, and it put the brand in front of a whole lot of new customers,” she said. Many small retailers even found that they picked up new customers who had originally found the brand in the grocery chain, but came to the independent for more choice. Independents can offer a huge point of difference, she said.

Going forward
The dog tins in the Lily’s Kitchen Signature Range is about to have a new look – a redesign has been worked on since May, and has nothing to do with the criticisms about the similar look between Lily’s and Lily’s Kitchen.

“I probably misjudged this,” she says with candour. “But we are not going to produce something that looks completely different. That is not my style. I will always use garden imagery and hand-drawn illustrations, as that is part of the brand.”

In terms of going forward, there is much lined up specifically for the independent, including a raft of new products to be launched over the next few months. One of the first will be an Advent calendar for dogs.

“Many of my team just deal with independents,” she adds. “We invest in retailers with bespoke point of sale, we go into shops and help with window displays, we do stands and send samples. We invest a lot of time and money, and do taster days in-store with some. We are upgrading and innovating the whole time.”

Lily’s Kitchen has recently hit the milestone of achieving £15 million worth of retail sales over five years, and now has 27 staff. Yet put it into context against the dog and cat food market, valued at £2.2 billion a year, and you can see the company is ‘very small, niche’. But eventually she would like Lily’s and Lily’s Kitchen to be household names. “My icon is Ben & Jerry’s,” she says. “It is a successful business and is ethical. It’s exciting when you can be an activist and change the paradigm and make a difference.”

And being an activist in the pet food market is about giving people a choice. “When I was feeding Lily, I did not really have a choice. It was very limited. I am sure everything is going to change over the next two to three years. We have been a catalyst for change.”

It can only be good if more people buy natural food made from high-quality fresh ingredients for their pets – there is room for everyone, she adds. “I am not interested in just making something for profit. I want to make a difference.

“There are now a few pet food companies copying our recipes and messaging… but the dog knows when a tin is filled with mechanically-recovered carcass rather than fresh meat. I’m not interested in making a pretend food just for money. Making a difference to pets and their owners is what gives everyone here our daily buzz. We adore our customers – both the humans and the furry ones.”

A business has to grow, and expanding with Lily’s is ‘a good option’. “It’s everybody taken care of. Independents have their own range, Tesco has a natural range, and for us, these are new customers and we can all grow.”

Growth will eventually mean exports, for which demand ‘is enormous’, but that will have to wait until a team is put in place, she adds.

For now, it’s business as usual. “We have had a few retailers saying they will see how it goes. Fair enough. I think this (the controversy) is an indication about how passionate people are about Lily’s Kitchen. Everybody has their own ideas and opinions. And I respect that.

“I live for the moments where I talk to customers who are so happy and relieved that their pet is so much happier and healthier. Pet food is a very emotional business. We are there to give pets a better life. All we can do is have integrity in our products and integrity in how we deal with people – and, course, focus our attention on producing the best pet food in the world.”