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Royal Canin

Royal Canin

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Yale School of Management
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Though most people think of Mars as a snack food company, Mars Petcare contributed more to the company’s revenue (58%) than any other division. The pet care division encompasses popular brands such as Pedigree and Whiskas, as well as a chain of 975 VCA animal hospitals. But many considered Royal Canin to be a crown jewel of Mars’s Petcare holdings.

Headquartered in Gard, France, Royal Canin was founded by veterinary surgeon Jean Cathary in 1968 to serve the special nutritional needs of vulnerable dogs and cats. While traditional brands manufactured pet food for healthy, adult dogs and cats, Royal Canin focused on providing food for pets at the early and later stages of life or those stressed by chronic or acute conditions. Eschewing mass advertising, Royal Canin may have been not well-known among the general population or even pet owners, but it was widely recognized by pet professionals throughout the world.

The market for pet care was vast. Of 125 million households in the U.S. alone, an estimated 100 million had pets. Americans spent more on their pets ($66.75 billion) than they did on childcare ($47 billion) in 2016. Pets the world over occupy an increasingly important place in the lives of their owners, providing a source of unconditional love that became especially important during the COVID lockdown in the spring and summer of 2020. Spending on pets during the pandemic boosted sales in the category significantly.

In the wake of the pandemic, managers at Royal Canin undertook a systematic review of the ecosystem of stakeholders in which the company operated. The ecosystem mapping exercise was something that the company carried out every five years. Teams from the company took an “outside in” approach, analyzing stakeholder pain points, and working collaboratively with those stakeholders to develop solutions to their problems. Many of the opportunities the company identified were long-term; the specialized nature of Royal Canin’s product lines meant that it was not uncommon for real economic returns to be deferred seven to ten years. Olivier Reymond, VP Veterinary Business & Corporate Affairs at Royal Canin noted, “Obviously, this is not philanthropy, but we say, ‘Maximizing profits should come as a lagging indicator.’ It’s not the thing you do first.”

By July 2021, management had completed its mapping of the U.S. pet healthcare ecosystem. The U.S. pet care ecosystem was complicated and included a range of stakeholders such as veterinarians, breeders, vet technicians, retail stores, pet owners, and institutions. Royal Canin’s objectives in this exercise followed from the Mars, Incorporated Compass – to identify stakeholder problems and see if the company could identify how addressing these pain points could yield mutually beneficial innovations.

The ecosystem mapping exercise yielded specific pain points for various stakeholders that Royal Canin could address with new products and/or business models. By 2022, the inquiry was already yielding results for breeders and veterinarians with innovative solutions. One clear pain point for pets that remained a perennial problem was their owner's lack of awareness about the importance of nutrition in their pet's lives and how specific foods could help them thrive. But how could Royal Canin’s knowledge of their stakeholder ecosystem help them reach these pet owners?

In addition, Royal Canin’s managers took stock of their overall position in the market. Much had changed in the previous five years. Online pet food sales had increased, and the premium pet food segment had attracted additional competitors. Royal Canin had maintained its commitment to selling through specialized channels and resisted placing many products in generalist online retailers. But was that a wise strategy in 2023? Were the company’s key sources of competitive advantage under threat? Royal Canin’s Global President Cécile Coutens noted, “We develop the science, we test the science, we test product, we open the door, and then there is always a possibility that lots of local brands or grocery brands are claiming or making similar claims for their products without doing the underlying work.”

Citation: James Quinn, Ravi Dhar, Jon Iwata, and Jaan Elias, "Royal Canin," Yale Case 23-019,  April 19, 2023.