Dog town: with cheeseburgers, pretzels and pizza, Redbarn Pet Products has uncovered customers for gourmet animal treats that resemble human food.

AT their Long Beach factory, entrepreneurs Howard Bloxam and Jeff Baikie churn out thousands of cheeseburgers, Danish, pretzels and pepperoni slices every day.

Look a little closer, though.

Instead of McDonald's or the frozen-food section of the corner supermarket, these items are bound for per stores and the pet food sections of grocery stores.

Redbarn Pet Products Inc. has tapped into one of the hottest new markets in the $13 billion pet food industry: gourmet foods or "treats."

"Pet owners want to give their dogs and cats the same things they buy for themselves," said Bloxam, who is co-president with Baikie. "They see a cheeseburger in the store and they want to buy it for their pets, too."

Redbarn has ridden the gourmet trend to rapid growth: the company is on track this year to post revenues of $15 million in 2003, placing it on Inc. magazine's list of fastest growing companies and the Business Journal's list of fastest-growing private companies.

To keep up, Bloxam and Baikie have spent much of the last year trying to secure larger quarters for their 100 employees and ever-expanding production lines. They are now in escrow on a property in Carson.

Accidental pet moguls

Now both 42, the pair grew up together in Montreal, and while they eventually went their separate ways--Bloxam had a business licensing logos for T-shirts and Baikie went into his family's video rental business--they never lost contact. When Bloxam's distribution business bit some bumps in the late 1980s, he joined up with a pet food company in Canada. By 1992, he was one of their main U.S. distribution representatives, based mostly in Long Beach.

"I had pets as a kid and loved them, but I never imagined ending up at a pet food company," Bloxam said.

By 1994, he decided to form his own company. Within a year, he had persuaded Baikie to join him and by 1996, the pair opened up Redbarn Pet Products (The company took its name from a red barn that Baikie had on some property he owned in Canada.)

The question was finding a niche in a $13 billion per food market that is dominated by a handful of major manufacturers like Nestle-Purina Pet Care Co., Mars. Co. and Proctor & Gamble. "We realized we could never take on the big boys; they make pet food far more cheaply than we ever could," Bloxam said.

From the outset, the focus was on developing upscale products with a twist. Instead of selling a standard dog bone, the bones were prepared with beef, chicken, lamb and peanut butter fillings.

Redbarn benefited from good timing--the company carne on line just as the public appetite for luxury pet products was beginning to boom. "Over the last three to five years, we've really seen this gourmet pet food market take off," said Carol Boker, managing editor of Pet Product News.

Product line expansion has been considered key--instead of the handful of products that most niche players develop, Redbarn has 120 separate products, about three-fourths for dogs and one-fourth for cats.

Most of the ideas for Redbarn's products originate in-house through tweaking of pet food treat products. The first "tester" of the new products is often Baikie's dog, named Baxter. Then Redbarn tests the products at trade shows around the, country.

"We don't use all those focus groups and market research techniques," Bloxam said. "Because we don't, we can move much faster to get products to market. And that's our strength: we can have several product lines in development of ready to take to market at any given time."

New tricks

Now, Bloxam and Baikie are laying the groundwork for a push into mainstream grocery store chains.

"We've done a pretty good job at Petco and neighborhood pet stores," Bloxam said. "But most per owners buy their pet food at the grocery store. If we can penetrate that market, then you'll see our sales figures really go up."

Redbarn has made inroads with Albertson's Inc. and Ahold Group, parent company of the Stop & Shop chain on the East Coast. "Their rawhide bone with the peanut butter and jelly filling is the number one item among specialty rawhides," said Stop & Shop buying consultant David Grimes. "With the very loyal customer following they have, we've expanded their product lines from five to more than a dozen."

Bloxam said he expects fierce competition from the big per food companies in grabbing a share of the gourmet market. "We just have to keep one step ahead of them, which is the reason why we have 120 product lines," he said.

Of course, one way for a major per food company to grab a larger share of the gourmet market is to buy out companies like Redbarn.

"We've had one serious offer over the last couple years," Bloxam said. "We're not looking to sell the company, but we're not going to reject any offer that comes in without looking it over."

PROFILE

Redbarn Pet Products Inc.

Year Founded: 1994

Core Business: Manufacture and distribution of high-end pet foods and products

Revenues in 2002: $12 million

Revenues in 2003: $15 million (projected)

Employees in 2002: 65

Employees in 2003: 100

Goal: To increase sales in supermarket chains; consolidate to a larger facility in Carson

Driving Force: Increasing demand among pet owners for gourmet foods and luxury toys for their pets