21.12.2020
What is Dagsmark Petfood’s brand made of? Transparent production, traceable raw materials, a small carbon pawprint, domestic origin, and researched health effects. Love for pets is sealed with IPR protection to secure future growth.
Do you know where your pet’s dry food comes from? Dagsmark Petfood was born when its founders realised in the summer of 2016 that there was no domestic dry food option available for dogs and cats. Chair of the company’s Board, serial entrepreneur and dog owner Pekka Siivonen-Uotila was horrified when he examined the distant countries of manufacture and origin on the bags of dog food available. He found out that no dry food for dogs had been manufactured in Finland for more than ten years. As a man of action, he called his acquaintance, another dog owner and the company’s future CEO Laura Strömberg.
“I quickly got excited about Pekka’s business idea to start producing domestic dry food for dogs from safe, healthy and researched raw materials. We decided to get things moving right away”, Laura Strömberg says.
Inspired by Laura and Pekka, three other dog lovers and experienced entrepreneurs also got involved in setting up domestic pet food production: Jukka Kaitaranta, Topi Jurvanen and Börje Norrgård. The first taste of domestic kibble was on the market as early as the following year.
The demand for domestic pet food is growing, and the company has strong growth targets on its home market in Finland. However, the business and protection strategy also provides for the possibility of international growth.
“Kolster joined us early on as we have wanted to make sure that the protection of our own business and brand is on the right track from the start. IPR is clearly one of those areas of special expertise that you should not pursue by yourself. It has been good to look at protection as a whole and engage in sparring with Kolster’s experts with regard to needs and priorities”, Laura Strömberg says.
Dagsmark Petfood's CEO Laura Strömberg and dog friends
Cheese puff machine got things moving – recipe and production methods refined
Dagsmark Petfood managed to roll out the first small batches quickly onto the market, but scaling production to higher volumes has been a big effort. The initial phase included intensive product development as well.
“First we did a lot of desk research to create a recipe that is optimal for a dog’s nutrition and consists of Finnish raw materials”, Strömberg says.
The next step was to decide how to use the available machines and equipment to produce the right kind of high-quality end products.
“We got off to an agile start by experimenting. One of our founders, Börje Norrgård, also has a previous company called Weekend Snacks. He had a spare extrusion machine that had been used to make cheese puffs. The first products were manufactured using this low-capacity machine, in the spirit of a start-up company”, Laura Strömberg says.
As the good news about domestic dry food that is well-liked by pets spread, more production capacity was needed. Alongside the traditional extrusion method based on heating the raw materials, the company also began to develop a new type of cold pressing method and pellet technology. With Kolster’s help, a valid utility model for the method was applied for, and also obtained, in Finland.
“The cold pressing method has been proven to retain the nutritional values of raw materials slightly better. However, for reasons related to industrial-scale production capacity and other quality issues, such as shelf life and transporting quality, we have returned to the traditional extrusion method, at least for the time being.”
Growth force from funding rounds – production to expand to cat food
Dagsmark Petfood has ensured sufficient production capacity by outsourcing its production of dry dog food to a domestic partner. As a result, production has been increased to 1.5 million kilograms per year. At the same time, the company has invested significantly in its own new production facilities in Loimaa in Southwest Finland. The goal is to expand operations to new product groups as well. Next year, domestic local food and other pet treats will be on shop shelves and available for tasting for our feline friends, too.
“We have invested significantly in a production facility that enables a wider range of products, as well as in our own equipment that we will use to start the production of cat food next year. There is an even greater shortage of domestic cat food products on shop shelves than is the case with domestic dog food”, Strömberg describes the current situation and strong growth prospects.
In three funding rounds and through share issues, the company has so far raised EUR 3 million in seed and growth funding. In addition, EUR 2.5 million has been invested in the production facilities, machinery and equipment in Loimaa. Funding has also been needed to build brand recognition and for marketing, so that consumers learn to recognise domestic pet food options on the shelves.
“Protecting the main brand and trademarks to safeguard investments is very important to us now that we are building wider brand recognition and differentiation on the market”, Strömberg says.
Finnish pet food also of interest in China – including to trademark hijackers
Interest in Dagsmark Petfood’s safe and healthy pet foods has also stirred in China.
“We have received surprisingly many inquiries from China. The quality of Finnish food products is known in China, and clean Finnish food is now of interest to pet owners as well”, Laura Strömberg says.
The company is considering and maturing export strategies: how and when would it be possible and profitable to embark on international expansion? The up-and-coming sales channel on both the domestic and export markets is e-commerce. Products are increasingly being made available through both the company’s own and partners’ online shops – possibly also in China in the future.
“We have wanted to prepare for the Chinese market in advance by filing trademark applications in China for our brand names that emphasise their local character and Finnishness, such as LAPPI™, LEVI™, HÄME™, SAVO™, HANKO™ and EIRA™.”
Despite the good foresight, filing trademark applications with the Chinese Trademark Office resulted in a big surprise for the small Finnish company. It turned out that one of the trademarks, LEVI™, was already registered in the name of a Chinese company. In practice, it prevents Dagsmark Petfood from selling its products on the Chinese market under this same brand name.
“This is most likely a trademark registered in bad faith and for the purpose of financial gain. Trademark hijackers sniff out emerging brands and anticipate their entry onto the Chinese market, with the goal of then selling them back to their rightful owners”, Kolster's IP expert says.
“We are not throwing in the towel in China yet. Our focus is on growth at the moment. We will later consider our China strategy and whether we want to take steps to revoke the Chinese registration with Kolster’s help”, Laura Strömberg says.
“With determined work, it is possible to defend your trademark rights against Chinese trademark hijackers and other brand infringers. Despite its loopholes, the Chinese IPR system works relatively well, and China’s reformed trademark law unequivocally prohibits fraudulent trademark applications. This year, we have managed to get good results in IP courts for our clients Allaway and Saga Furs, for example”, Kolster's IP expert says.
Domestic origin, traceability and a small carbon pawprint as brand values
Dagsmark Petfood seeks differentiation and brand recognition on the market with its own brand values.
“The quality and purity of raw materials as well as the origin and traceability of products are the foundation for everything. Domestic production and employing local small businesses are points of honour for us”, Laura Strömberg says.
The basic raw materials for the pet food include fishmeal made from Baltic herring and sprat, antibiotic-free chicken meal, potato, forest berries, oats, linseed, and rapeseed oil. The fishmeal is produced by the Kasnäs-based family company Salmonfarm, and Raisioaqua, a pioneer in sustainable fish feed production, manufactures the kibble. The high-quality and Europe’s only antibiotic-free chicken meal is processed by Honkajoki from the by-products of the Finnish food industry. Dagsmark Petfood has been authorised by the Finnish Food Authority to use a label for antibiotic-free pet food on its packaging. With its other raw materials, Dagsmark Petfood relies on small local producers.
“We want to operate as a completely transparent company that has a face. We tell you where the products and their raw materials come from. That is what sets us apart from our global competitors. We are a pioneer in raising public debate around the eco-friendliness and origin of pet food. In addition, we strive to make sustainable and green choices in all our operations.”
Dagsmark Petfood is one of the first companies in the pet industry to also have calculated its annual carbon footprint already for the second time – or, in pet terms, its carbon pawprint.
“The goal is to provide environmentally conscious customers with pet food that burdens the environment as little as possible. For example, choosing domestic food that contains oats and herring can lead to savings of up to 90% in CO2 emissions when compared to imported food that contains rice and beef”, Laura Strömberg says.
During the year, the company has also managed to significantly reduce its carbon pawprint through the use of renewable energy and new packaging materials containing even less plastic.
“For us, carbon footprint calculation is one concrete step towards more sustainable business. This is indicated on our packaging with a ‘Carbon pawprint calculated’ logo.”
Growth spurt in the middle of the COVID-19 pandemic – aiming at tripling turnover
The pet food business has traditionally been almost entirely dominated by big international brands. There are now some cracks in their dominance. Pet owners already know to appreciate domestic local food as an alternative to products where the origin of raw materials is difficult to trace due to global supply chains.
In Finland alone, the value of the pet food and treat business is approximately EUR 400–500 million. Dry dog food is the largest segment in terms of production volumes, but cat food is even bigger in terms of the monetary value. There are more than one million cats and over 600,000 dogs in Finland. So there are enough mouths to feed and indulge for more than one company.
“We are aiming for a market share of 5–10% in selected product segments. In 2020, we will have a turnover of close to EUR 5 million, and our goal is to triple it in the next few years”, Strömberg says.
Dagsmark Petfood’s vision is to be a pioneer in the Nordic countries, a green pet food factory that offers a wide range of healthy products for both cats and dogs. At the same time, it wants to change the market and the world for the better, for dogs, cats and people alike.
“I believe that the significance of our operations for this entire industry is greater than our own size and business”, Strömberg emphasises.
In a growth spurt, the role of the IPR and legal partner is also emphasised.
“It is valuable for a small company that a single partner can provide a wide range of different services according to growing needs, such as help with international distribution agreements in the future.”
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