Lehigh Valley Suite Spot: Q&A with Freshpet CEO Billy Cyr
By Nicole Radzievich Mertz on October 17, 2022
Editor’s Note: This is the first interview of a monthly series featuring Lehigh Valley executives from a wide range of industries and company sizes.
Freshpet CEO William Cyr could pass for one of the production workers on the factory floor.
Clad in a white hardhat, safety glasses and black jacket with the name tag “Billy” sewn on, Cyr walks around a tall machine cooking fresh meat and toward the operators of a longer conveyer boxing packaged pet food at the Lehigh Valley plant. He stops to chat with those workers, their responses easy and unguarded. Cyr asks about one employee’s father and another’s girlfriend who also work there. He notes their promotions and later points out a stool he procured for one worker with a knee issue.
“We have 600 people who work in this building, and I walk around and talk to everyone. I get to know them and their life stories and their motivation,” Cyr said. “I’m genuinely interested in who they are, and these conversations inform my knowledge about what we need to do as a company.”
Fully staffed in a historically tight labor market, Cyr considers how worker insights fit into the fact patterns he gathers from labor analytics, production output, supply chain reports and piles of other data he digests daily to keep the fast-growing company in a competitive position in a volatile economy.
While the company is challenged by inflation and supply chain issues, Cyr knows Freshpet’s fundamentals are solid. Consumption of its fresh, high-protein products is growing. Net sales rose to $146 million in the second quarter, a 34.4% increase year over a year. There’s room for more growth as owners prioritize their pets’ health, choosing refrigerated meals over dry food.
Freshpet, headquartered in Secaucus, N.J., moved its manufacturing facility from Quakertown to the Lehigh Valley in 2013 and has since expanded twice at its campus in Hanover Township, Northampton County. Its operations here include manufacturing, distribution, and R&D.
The company recently announced that it will build a 99,000-square-foot Innovation Kitchen in the Lehigh Valley, which will produce innovative new products that cannot be produced on the existing lines. Freshpet is also opening a 400,000-square-foot operation in Texas to serve that part of the country. Cyr will keep his home base in the Lehigh Valley, close to the operation and less than an hour from where Cyr grew up in Palmerton, Carbon County.
Raised in the blue-collar town once known for zinc smelting and educated at Princeton University where he majored in history and East Asian studies, Cyr landed his first job after college at Procter & Gamble in Cincinnati. He worked there for 19 years until he led a leveraged buyout of P&G’s Sunny Delight business in 2004, partnering with private equity. The people he met during the buyout ultimately led him to Freshpet in 2016 and back home.
The LVEDC recently sat down with Cyr to talk about the company and industry trends. Here are some excerpts from the conversation:
The Lehigh Valley, within a day’s drive of a third of the population, has a strong manufacturing sector, among the nation’s 50 largest. In particular, the Lehigh Valley comprises nearly 45% of Pennsylvania’s employment in dog and cat food manufacturing. Freshpet continues to expand here. Why is the Lehigh Valley such a hub for pet food production?
You have to start with access to the ingredients that we use. We use a ton of chicken. And there’s a ton of chicken between here, the Delmarva Peninsula and eastern Pennsylvania.
The chicken that we buy has to be fresh. So, we need to be very close to the place where the chicken is harvested. If it spends too much time in transit, it loses the quality that we need.
On the most recent earnings call, you talked about the impact of inflation and the need to raise prices. How is inflation impacting business?
I’ve been in consumer products businesses for 37 years. I’ve never seen so many materials go up so significantly in cost at the same time. There have been times where you would get a hurricane in the Gulf, and so diesel goes up, and the resin used in packaging materials goes up. But it’s a single event that caused broad ripples.
What we’re facing now is much broader, for example: we buy sunflower oil, which mainly comes out of the Ukraine and Russia.
We also buy a lot of turkey. The price of turkey has gone through the roof because of Avian Flu – and this strain hits egg layers. We buy a lot of eggs. Regular chicken hasn’t really been impacted by it, but the egg layers have been so the price of eggs has gone through the roof.
It’s mind boggling to me how many things have all happened at the same time. They’ve created this massive inflation.
You think that the law of averages would say that the next year, you’re going to get this bout of rapid inflation behind us. I can’t say that that’s the case, though, because the war in Ukraine is continuing. We have the inflation that’s impacting our energy costs as a result of the war. We still have pandemic-related supply chain issues.
How do you stay fully staffed in a tight labor market?
If you read the newspaper, they’ll tell you the labor problem is a wage problem. Yes, wages do need to go up in certain places. Wages are the price of entry. It’s what you have to do to get somebody in the door, but those people have ambitions. They want to be able to take care of their families. They want to have a schedule that enables them to have a life outside of work.
I asked our HR director to help me understand the profile of someone who works the night shift. She said we have a lot of single mothers on the night shift because you can get someone to sleep overnight with your kids while you work, but it’s hard to get someone to get your kids up in the morning, drive them to school and pick them up after school and take them to all their activities.
This tells you how people figure out how to make work fit their life needs. Our job is to understand that and enable them.
All of us can sit in the ivory tower and think that our workers just want to make more money. But they need the job to fit in with their life.
How have changes in pet ownership during the pandemic affected Freshpet’s business opportunity?
On average, the number of pets in households went up. There are 69 million households in the United States that have dogs.
We are in 4.9 million households, so the number of households where pet ownership increased is insignificant to us. What is more important is how much time people are spending with their pet and how much more important the pet became.
During the pandemic, people realized how important these creatures can be to them. And as a result of that, people started moving up into the more premium pet foods.
How do you foster loyalty from younger generations like Gen Z, many of whom haven’t developed brand loyalties yet?
Between the age of 18 and 24, more than half of Gen Zers will get a dog.
Gen Z has twice the predisposition to buying Freshpet over Boomers because Freshpet has the values that are so important to them. That dog is incredibly important. So, the product that they feed their dogs is important – and so is the way in which we make our products.
We use wind to power this facility where the food is made, and wherever it isn’t possible to reduce our emissions, we buy carbon credits. We’re incredibly sustainable and all the action activities we take as a company.
Our outreach to them is via digital and social as well as broadcast, but broadcast is much more targeted than one typically thinks. The message that we use is directed at an audience that has that set of values.
Your academic background is not in engineering or business. How did your college experience prepare you for a career in manufacturing?
My father told me very early on that you go to college to study what you’re interested in. If you go to learn a specific trade, it’s going to be obsolete in 10 years. What won’t be obsolete is if you go to college and learn how to read analytically, write well, formulate arguments, figure out how to think in a much more aggressive way.
I’ve always loved history. I stumbled on to the East Asian Studies because Princeton had a language requirement. I took Chinese, and it was the hardest thing I’ve ever done.
But it probably taught me more than I’ve ever learned from anything else. Because you don’t really learn well until you struggle with something, and I was not good at it.
What insights did you learn by studying Chinese?
It taught me that there’s a completely different way of looking at things. A good example would be the world of pronouns. We’re all convinced there’s a he and she and they. In Chinese, it’s all the same. They don’t have a pronoun problem because the pronoun for she and he is the same. But they have unbelievably descriptive terms, like a sister who is older than you is called something different than a sister who is younger than you because hierarchy is important to them.
It was eye-opening to think the world doesn’t have to look at things the same way. It helped me to see things differently.
What is your approach to leadership?
I always tell people that one of the things they have to do is figure out what they do well and do that well and let other people do the other things.
I’m a consumer of very large quantities of information and a very rapid communicator. There are a lot of other things that I’m not very good at, that I’m better off letting somebody else do.
I communicate to as many people as I possibly can. It was part of building a network. I crave interactions.
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