A Growing Appetite for Healthy Pet Food

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And while Lacombe says orders jumped following the recent scare, she has noticed that her client base has migrated from strictly kosher consumers to a broader base of pet owners who are interested in having fresh and local ingredients used for their own animals. "We're endorsed by the Chicago Rabbinical Council and the FDA," says Lacombe. "There are no byproducts from other countries. It's all manufactured here, and all the ingredients are from here."

Riding the Organic Gravy Train

Indeed, one of the key factors driving the specialty pet food segment is that many owners who have become increasingly concerned about the origins of the ingredients in their own diets are looking for similar offerings for their pets.

One of the fastest growing areas is organic pet food. According to the Organic Trade Assn., in 2005 organic pet food sales reached $30 million, up 46% from the previous year. In 2004 the association predicted that the category would grow an average of 17.4% a year until 2008. Currently, it comprises 4% of the organic, non-human, foods category.

One of the first companies to recognize the rising organic trend was Spectrum Pet Care, based in Montgomery, Mo., which began manufacturing all-natural and organic dog and cat food in 1995. Considered a huge driver in the organic pet food segment, the company now offers an expansive list of eight specialty categories, including organic food for horses, fish, birds, and reptiles. Last year the company launched a holistic line of supplements for dogs, cats, and horses.

"Something Brown"

Another company, Castor & Pollux Pet Works, based in Clackamas, Ore., opened its doors in 2000, selling the first pet food made with certified organic, free-range chicken. Last year the business introduced six meat-based dog and cat foods combined with fruits, vegetables, and kibble.

"People's animals are like their babies," says The Honest Kitchen's Postins. "They enjoy participating in creating a meal for their cat or dog, rather than scooping something brown out of a can." Postin's dehydrated, raw products, which look like muesli, require the addition of warm water to prepare.

Postins, who previously worked for a large pet-food manufacturer, says she launched The Honest Kitchen in 2002 with a $7,000 loan from her husband because she wanted to create a raw diet for her own pets. "I started it in my own kitchen. I intended for it be a cottage industry, but gradually it snowballed into this huge thing."

Human-Grade Kibbles

According to Postins, the company has experienced about 100% growth since its inception. Last year the company earned $2.4 million in sales and Postins expects that number to reach $3.5 million this year.

The Honest Kitchen's products are sold online and at 800 retailers in the U.S., including Whole Foods (WFMI) and Pet Food Express, as well as being distributed in Canada, Japan, and Singapore. Postins says her company stands out among rival offerings because it's the only pet food certified by the FDA as human grade. The Honest Kitchen's product line is manufactured in a factory that makes cereal and other products for people. "Every ingredient in the plant is fit for humans to eat," she says. "That's important, especially in this day and age. With all of these scares, people are really searching out safe pet food."

Which means high-end manufacturers that have pushed their products' health benefits for years could soon be watching their healthy margins grow even fatter.

Perman is a staff writer for BusinessWeek.com in New York.