Industry: Consumer & Lifestyle
Products: Pet treats
Ask cat lovers about catnip -- or Nepeta cataria -- and they're likely to regale you with an amusing description of the effects this member of the mint family has on their feline friends. Unless a cat is among the unlucky few that lack a genetic sensitivity to nepetalactone, the volatile oil in the catnip plant's stems and leaves, their reactions generally range from rolling on the floor in fits of ecstasy to quietly zoning out and drooling, all to the amusement of the humans around them.
Having spent many years working in the pet food industry, and as the proud guardian of a cat of his own, Zavala was familiar with catnip's hilarity-inducing properties. He also thought it would be amusing to see cats engage in social drinking with their human companions.
"A lot of the inspiration for our pet wines came from my cat, Apollo," Zavala recounts. "He is a very social cat in general, and I thought it would be really run if he could have a glass of wine for himself."
Though the first bottle was created as a joke for his friends, Zavala quickly realized there was an actual market for his innovative product. "That was the idea for it," he continues. "I started working with Apollo and testing it out on him to see if he would like it. It was enjoyable to watch him drink it and then laugh at the catnip effects of the beverage."
Fast-forward two years and Zavala's company, named after Apollo and the mountains in his home state of Colorado, is producing around 75,000 bottles of pet wine a year in a 2,700-square-foot facility with a lean staff of four full-time employees supplemented with the occasional part-timer when they need extra hands for large production runs.
Apollo Peak sold $500,000 worth of cat and dog beverages in 2016, after adding dog wines last summer. Zavala says their top seller is still The Pinot Meow, his first cat wine concoction containing water, organic catnip, organic red beets, sea salt, and ascorbic acid.
"I think that The White Kittendel has a better effect on cats than The Pinot Meow because it has two different types of herbs that cats are attracted too," Zavala adds. The rose-inspired product includes valerian root to turbocharge its feline appeal.
For discerning canine companions, Zavala recommends The CharDOGnay. With water, organic chamomile extract, organic yellow beets, sea salt, and ascorbic acid, the fine white "is definitely the most appreciated by dogs," he says. "But humans like The ZinfanTail and The Malbark because they have peppermint and can help dogs' breath smell a little better."
Zavala says Apollo Peak's catalog of pet beverages -- which also includes cat- and dog-friendly champagnes -- are produced very similarly to tea, only using beer-brewing equipment. His team uses three large brew kettles to create two-barrel batches. "We can produce multiple small batches to produce a larger-batch scale product," he adds.
Though he doesn't expect the company's total production will increase much this year, he continues to work on new pet beverage varieties. "We want to get more dogs and cats to enjoy it," he says. "In our early days, we just wanted a fun beverage that cats could try. With our newest varieties, we're really working on getting better taste profiles as well as making them fun and unique."
He predicts a duck-flavored beverage will be available in the near future.
Challenges: Regulations on pet food. Zavala says his company has to register their products separately in each state in which they intend to sell. "It's super expensive for a company like mine that is making very small batches and has 10 to 14 different product lines," he notes. "A lot of these states charge $200 registration per bottle per year. We're incurring close to $2,000 per year in registration fees in some of these states. That's definitely the biggest challenge in this industry."
Apollo Peak's other challenges include managing overhead and dealing with taxes. "I think any business owner would agree with me that taxes are absolutely ridiculous on companies like ours," Zavala adds. "We're overburdened with taxes, and it really hinders our growth. How can we have cash flow to move around if 30 to 40 percent of our profits go to the government?"
Opportunities: As the first pet beverage to market, Zavala says Apollo Peak has essentially created an entirely new segment within the pet food industry. "I think we have a huge amount of opportunity to grow this business as a result," he explains. "This year, my goal is to get into larger retailers. With volume comes efficiencies, and I think we're going to be able to solidify some really good deals with some larger-scale retailers because our products are so unique."
Zavala sees industry events like SuperZoo as potential catalysts for growth. "It's the largest pet conference out there," he says. While Apollo Peak's pet wines are currently available in more than 200 retailers across the U.S., Zavala thinks the exposure they will receive at the 2017 SuperZoo will allow them to pick up around 100 more. "We're really trying to focus on our wholesale game."
Needs: As with most startups, Apollo Peak needs funding. "Some folks might snark at that and say, 'Hey, you were on Shark Tank. You got funding,'" Zavala says. "But the truth of the matter is we did not get that funding. I'm sure a lot of good deals go down [on the show] but there is a whole process afterwards where [the Sharks] can renegotiate the deal."
That is what happened to Zavala, and he wasn't having it. "At the time, I was very headstrong," he muses. "I told them they could walk. A year later, I sometimes wonder if I should have done differently. If funding were available now, we would take it. I think that's definitely our biggest need at this point. We would be able to grow the business quicker than we're currently doing it."