Manufacturer with R$550 million in sales exports 80% of what it produces and bets on acquisitions

02/23/2024

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Upper Dog has become a best-seller for dog chews on Amazon in the United States — Foto: Divulgação

In the fiercely competitive pet market, a Brazilian company has made significant inroads among both local and American consumers. Upper Dog has become a best-seller for dog chews on Amazon in the United States with its Natural Farm brand and has recently expanded its portfolio with another acquisition.

At the end of January, it acquired Sergipe-based Adora Pet for approximately R$40 million (including the acquisition and investment in the factory). Adora positions Upper to serve the Northeast region, as its operation in Imperatriz, in the state of Maranhão, was more focused on the North and Midwest. In the Southeast, products come from the factory in São Sebastião do Paraíso, in the state of Minas Gerais, while the administrative operation is based in Sorocaba, in the state of São Paulo. The company also has international distribution centers in Atlanta and Miami.

Upper had previously purchased Petiscão in Minas Gerais and is negotiating with a company in Canada, which could be its first international acquisition. “We’re open to new acquisitions. M&A has incredible power,” said Marcelo Barbosa, the Pará-born founder and CEO of Upper. He notes that upgrading the factory in Imperatriz saved two years in construction and production expansion.

The growth in domestic manufacturing is primarily aimed at supporting exports, the primary sales channel, accounting for 80% of the business—driven by the United States, Canada, and Australia. Upper is also preparing to make its debut at specialized fairs in Europe, seeking distribution in that market. “Our production criteria, from natural ingredients to recyclable packaging, align closely with the European consumer profile,” the CEO remarked.

The brand’s portfolio also includes Dogfy, Mr. Dry, Mr. Clean, and Caninosso, and the company operates in the white label model, producing for third-party brands. In 10 years of operation, it has become one of Latin America’s leading suppliers of natural food and chews, snacks, and hygienic mats for dogs and cats.

Growth continues rapidly. In 2023, with a 45% increase, it achieved revenues of R$550 million. For 2024, the projection—a conservative one, according to the owner—is R$700 million, representing a 27% increase. At this rate, the company will reach its first billion in two to three years before the founder turns 30.

Mr. Barbosa has been an entrepreneur since childhood, purchasing watches at the market and selling them in raffles to employees of his father’s company in Belém do Pará, strategically close to payday. However, it was at 17, when his then-girlfriend and now wife became pregnant, that he realized the need to establish a formal business.

“We got married, and that teenage responsibility to become a man kicked in,” he recalled. He began managing the logistics area of the family business, which produced tanned leather, and identified an opportunity to utilize a by-product of the industry: chewable leather. Without a structured business plan, he established a production plant with 20 employees.

Sales started to grow, and Upper acquired a disused plant in Imperatriz, relocating production from Belém—the company’s initial market, which no longer has an operation. Leather was replaced by healthier options for pets, such as rebar and bovine esophagus, previously unused in the meatpacking industry.

The chewables line accounts for almost 85% of Upper’s revenue, followed by snacks and hygiene products. Adora’s acquisition adds tens of millions to the main category. In 2023, the revenue of the Sergipe factory reached R$20 million, but Upper aims to increase that to R$50 million this year.

Upper was already valued at R$1 billion during a private equity approach, but with its rapid growth, it decided to wait. The company is collaborating with Bradesco BBI to explore potential prospects for future capitalization. “We’re open to talks, but we’re in no rush. Today, the focus is more on acquisitions,” he asserted.

The original story in Portuguese was first published on Valor’s business news website, Pipeline.

*Por Maria Luíza Filgueiras — São Paulo

Source: Valor International

https://valorinternational.globo.com/