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OurPet’s Company (OPCO) is “One to Watch”

A recent report out from one of the leading market research firms today, Packaged Facts – which has been at the forefront of consumer packaged goods, food and beverage, as well as demographic sector analysis now for over five decades – clearly indicates the strength of the U.S. pet products and services market, which did sales last year of around $73 billion. This is a huge pie for any company to carve a slice off of. The report’s trend lines show increased pet ownership rates, as well as increased ecommerce spending on pets, and a population of pets that are living longer, just like their owners. These trends appear intact for the foreseeable future and it seems like everywhere you go on this planet, people just love their pets.

While some consider the pet industry to be essentially proofed against recession, it is better to simply think of the industry today as being driven by family-oriented household spending, and therefore core to spending habits. Most pet owners consider their pets to be a regular member of the family and they will subsequently go well out of their way to care for a pet, spending a great deal of money for the well-being, as well as overall happiness of that family member.

Little wonder then that, even by the American Pet Products Association’s (APPA) more conservative estimates, the supplies segment last year was around $13.75 billion. With 45 million U.S. households currently owning dogs and 30 million households owning cats, any way you slice up the data, the numbers look good. The Packaged Facts report was keen to emphasize a 38 percent jump last year in the number of pet owners shopping online too, with heavy ecommerce hitters like (NASDAQ: AMZN) making it easier than ever to streamline product flow to end markets.

In an industry largely dominated on the services side by players like big box retail outfit PetSmart (NASDAQ: PETM) – which provides services like grooming and pet training, in addition to miles of aisles of pet products – the pet supply market is saturated with cookie-cutter tropes. Only a handful of companies are dedicated to creating defining brands and are capable of successfully cultivating what is essential to connecting with consumers in the pet products space: constant innovation and a tight feedback loop with the end users. A strong brand in this game is essential to success, but a company has to really make that connection with consumers through the products, winning them over to the superior style, design, continuity, and affordability of the brand.

One look at the latest product from rapidly developing proprietary pet supply company, OurPet’s Co. (OTCQX: OPCO), and it is plain to see that this operation really lives up to the vision of its founder, Dr. Steve Tsengas. Intelligent applications to toy design and product engineering, driven by deep insights into cat and dog biology, as well as psychology, have continually defined OPCO as a rising star within the industry.

Launched in May this year, the company’s new Catty Whack® electronic toy for cats was scientifically developed to stimulate the natural hunting instincts of our feline friends, using an erratic feather wand that darts in and out of five different holes and an enticing audio queue. Feeding the animal’s instinctual desires, as well asproviding therapeutic mental diversion that is also good exercise, directly addresses the needs of the animal to make them calmer and well-adjusted to domestic life. Only three months after the product’s debut, the Catty Whack managed to take home the New Product Showcase Award at the pet supply industry’s major conference, SuperZoo 2015. The Catty Whack, featuring the company’s electronic RealMouse® sound and erratic movement technology, was voted “Best New Cat Product” in the New Product Showcase by pet industry retailers themselves, illustrating how captivating the design, quality, and overall execution truly is. The company wheeled out a bevy of new products at SuperZoo 2015 in Las Vegas this year, with toys and feeding solutions at the heart of the OPCO booth.

The Catty Whack stole the show though, and this one product is a perfect example of the wide array of trend-setting and highly unique ideas available via OPCO’s OurPets® and Pet Zone® portfolios. This dual-brand portfolio is respectively set up in order to provide a tailored experience for the company’s pet specialty trade customers on the one hand, and those in the mass-market, as well as food and drug channels on the other. The company creates an entire range of products designed to promote the comfort and enjoyment, as well as the health and safety of pets. From accessories and toys to well-designed feeders and bowls, OPCO even makes a constantly evolving selection of pet waste management solutions. Many of the company’s highly unique products are one-of-a-kind market entrants and nearly every offering from OPCO is protected by the company’s growing IP library of over 160 issued and pending patents.

Record Q2 revenues reported by OPCO in early August were no surprise to investors who have been following the company closely. And while quarterly net revenues were up only four percent compared to last year, net income shot through the roof, pulling in a 77 percent gain on strong receptivity in pet specialty end markets, primarily due to the company’s recently introduced bowl designs, as well as new cat toys and accessories. The PetZone brand is also doing quite well in the mass market, food and drug channels, and a significant uptick in overall profit margins for the quarter was further enhanced by noticeably lower SG&A expenses. These guys run a tight ship it seems and the company even touted an upcoming rollout for a series of three new and proprietary feline waste management products early in 2016, which shows just how aggressively the company is delivering on consumer response to its brands of pet products.

Dr. Tsengas pointed out in the company‘s August 3 earnings conference call that ecommerce was picking up incredible amounts of steam for OPCO, and the segment currently represents about as much as 10 percent of the company’s footprint, which spans direct-mail catalog and internet, as well as leading pet specialty retailers and food, drug, and mass merchandisers. A strong relationship with ecommerce juggernaut doesn’t hurt of course and the company’s imminent expansion from Amazon Canada and Amazon co-existing, with the upcoming Amazon UK closing, will set OPCO up very nicely for maximum product throughput capability. Already tapped for Amazon Japan and India, the sky is the limit for the company’s international brands of pet products, and because the language of design is universal, consumer resonance barriers to entry will be at a minimum.

OurPet’s Co. has honed its design process down to creating holistic products that unify the behavioral, lifestyle, and health needs of both pets and their owners. The result is truly astounding, with products so clever that consumers can’t say no. An example of this is the WonderBowl™ selective feeder, which uses a small infrared tag on the pet’s collar in combination with a properly positioned and unit-based sensor to open the transparent lid for feeding. This brilliant design helps keeps food fresh, ensures that only the correct pet eats from the correct dish, and also keeps anything from getting into the food. The product directly addresses an unmet need that can often be a big problem in multi-pet households and demonstrates how OPCO beautifully addresses that underserved demographic with an elegant solution.

Whether it is coming up with new toys to help stimulate a pet’s mind and therefore contribute to preventing unwanted behaviors, or creating gorgeous designer dog bowls in durable stainless steel, OurPet’s Company is constantly rifling great products out to a loyal user base. It is this kind of forward thinking in product design that is capturing the most sought after consumer dollar demographics in the pet supply space and OPCO is proving itself to be quite the dynamo, churning out creative solutions to underserved or unmet needs in the market.

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