Food for thought: Scrumbles and fast growth through pet food

We’d both spent our time working with retailers and building brands but had an itch to do something for ourselves. Then we had our cat, Boo, who was quite sickly. We were in and out of the vet with her and eventually got a probiotic paste. That was transformative for her, but it was difficult to get as it required a prescription, and she wouldn't eat it half the time. We wanted it to be part of her everyday diet, and that became the origin of Scrumbles.

We took ourselves to the British Library, where you can get Mintel and Market Monitor reports, and quickly established there was a growing interest in better digestive health for cats and dogs.

We finished work but quickly realised we didn't have nearly enough money to get the business off the ground, so we went back to working three or four days a week to keep the bills paid. We then spent the rest of our free time, evenings and weekends pulling the business together. We didn't sell our first bag to the local pet shop until June 2018, and independent stores were an important part of our business for a long time. We spent all our weekends at cat or dog shows or knocking on pet shop doors, trying to build a distribution base.

It was very challenging. Every customer needs a lot of time and attention, and it doesn't scale very well. I think we succeeded through grit and perseverance, but we knew we had a good product because customers came back and waxed lyrical about it.

There were a couple of milestone moments. One was appearing on Dragons’ Den, on the first day of our second year of trading. We did £100,000 in our first year, taking the long way round selling to independents and shows, but Dragons’ Den was transformative. Suddenly we were in front of a couple of million people. That earned us an audience, and we were able to convert a lot of those into customers.

Then, on the retail side, we unlocked Ocado and Fetch, which are part of the same group. They placed big first orders, which was a major injection of capital and helped us significantly step up the number of customers we could serve.

Then, the next pivotal moment was landing a listing in Sainsbury’s. We got the email from the buyer to confirm on the last day before the Covid shutdown. It was fantastic timing in some ways. We were all masked-up and bubbled, but people turned their attention to their pets, and for the first time, we weren’t competing against the incumbents as the new guys. We were a credible choice among the brands. It completely blew up in a very short space of time.

The initial funding came from our own savings, and Aneisha’s mum loaned us some money, but it was very challenging. The biggest early outlay was about £50,000 on packaging. It was the biggest thing I’d ever bought aside from our house. It was probably 70,000 bags, which seemed like a hell of a punt to take, but it was a pivotal moment for the business.

When we went into Dragons’ Den, we were open-minded, but when it came to it, I couldn’t bring myself to give up so much of the business. We took on private investors through EIS and SEIS [the Enterprise Investment Scheme and Seed Enterprise Investment Scheme], but it was more family and friends plus people from our professional network. They were important for our cash flow in the early days. The banks weren't particularly interested. In fact, when we took our business plan to the high street banks in the beginning, no one would even give us an account.

We’ve definitely taken a different approach to some of our peers who were raising every six months and giving away a lot of their equity. We were quite happy to give some away, but we wanted to maintain control.

About four years ago, though, we raised institutional money with BGF, mainly as a defensive move. With the Ukraine war and the inflation, there was a lot of movement and consolidation in the market. Our peers were raising money, and we felt we might find ourselves outmanoeuvred. Ultimately, it turned out that we were able to manage the business efficiently, leverage our increased scale for better terms and develop the business to be very sustainable in terms of its cash generation since then.

We’ve had a couple. Wilko went bust owing us over £100,000, so that was quite scary. Unfortunately, we’ve had to swallow most of that as bad debt, but again, because we manage our cash flow quite sensibly, we were able to survive it.

We first went to market with a range of dry foods. It was our own chosen format, which we developed it, in part, according to our needs as pet owners. We didn’t recognise at first that the relatively high price (compared with a tray of wet food or a bag of treats) made it difficult to convert customers in the beginning. It was a fantastic product, and when people tried it, they loved it, but for a customer who is already happy with what they are buying, it was a big ask.

Building a range of wet foods and treats later in our first year was transformative. Customers could try the brand for just a few pounds and that created a point of entry from which we could eventually convert them to a fully-fledged Scrumbler.

Partly because we were essentially bootstrapping the business in the beginning, and had quite large capital outlays around packaging, we never wanted to hire people we couldn't pay for.

I am also a natural salesman and naturally attracted to new opportunities, but I’ve learned that focus is important. It’s easy to go after the new thing and forget you’ve got a big core business that, if you continue to build, gets you a compounding effect. You also need to be unafraid to identify things that aren't working and cut them.

We have team members and third-party support from accounting and auditing partners, but for the day-to-day we’ve just built in-house capability, growing and learning through the journey of the business. Aneisha is an absolute whiz on the finance side, entirely self-taught.

I’m very proud of the team we now have. We are a really effective, productive business. We have 11 or 12 people delivering over £50 million in turnover a year. In terms of revenue-to-people ratio, we match some of the biggest and most impressive tech companies in the world.