Fresh and frozen pet foods have become a trend in recent years, and their sales have exploded. One of the reasons for this is that many different quality dog food delivery services and cat services have emerged.
One of the fresh and refrigerated pet food manufacturers — Freshpet, has had a great year and is expected to have a 35% increased growth in sales when compared to 2021.
According to the estimates, the company’s net sales should reach $575 million at the end of 2022.
By the end of December 2020, the company’s sales amounted to only $318.8 million. However, at the end of 2021, the sales reached $425.5 million and grew by 33.5%.
Although they’ve had higher sales numbers, the profits and losses are not what you would expect.
Freshpet’s gross profit for 2021 was valued at $162.1 million ($189.5 million adjusted gross profit), or 38.1% of their net sales. In 2020, they profited $132.9 million ($154.1 million), or 41.7% of their net sales for that year.
So, although the number was higher, the profit to sales ratio was actually lower.
The decrease in gross profits was due to increased costs at Freshpet Kitchens because of wage increases, investments, ingredient cost inflation, increased depreciation, share-based compensation, lower plant start-up cost, and COVID-19 costs.
In 2021, the selling, general, and administrative expenses were also much higher — $186.8 million ($146.5 million adjusted costs), compared to 2020, when they were just $134.9 million ($107.2 million adjusted costs), which led to higher net losses.
Net loss for 2021 was valued at $29.7 million, while the numbers were much lower in 2020 — only $3.2 million.
The SG&A costs grew with logistics issues and higher price of shipping, depreciation expense, higher media expenses, and operating and sales expenses.
But, the company believes in success. They’ve invested a lot in capacity and its workers. They are planning to make their operation as reliable as possible despite the pet food inflation and other changes in the market.