AutoPets thinks outside the litter box with rebrand, rapid growth

A company known for self-cleaning litter boxes is ready to change its name to reflect growth as sales in the pet care industry continue to grow.

Injection molder Automated Pet Care Products Inc. has sold more than 600,000 self-cleaning cat litter boxes since it started 20 years ago, but the manufacturer is ready to be known for more than just its Litter-Robot.

AutoPets recently launched a feeder robot and "premium line of stylish yet functional" cat furniture to help anchor a growing line of accessories including all-natural cat litter and organic catnip. Sales for the Auburn Hills, Mich.-based company increased more than 90 percent year over year in 2020, and business is expected to double again this year, according to Jacob Zuppke, the 32-year-old president and chief operating officer.

The company opened an expansion of its manufacturing and assembly facility in 2020 in Juneau, Wis., where it nearly doubled in size to 63,000 square feet.

The ongoing expansion will allow AutoPets to scale its U.S.-based assembly and fulfillment, bring more product shipping in-house and quadruple throughput to keep up with its growing demand from customers around the globe.

It's been said that an owner's love for their pet knows no bounds. What executives at AutoPets have found is that theory often applies to pet spending budgets. Convenience is one selling point, but for many, pampering pets is a lifestyle.

That's where an upcoming rebrand comes in, Zuppke said. In July, AutoPets plans to change its name to Whisker and phase out its old corporate moniker completely. The rebrand coincides with the rollout of Whisker.com — a "refined pet accessories business" expected to become an increasingly large revenue source alongside the $500 litter boxes and $250 pet feeders. The Litter-Robot will remain a flagship product and the company's direct-to-consumer business model won't change.

"It's very hard to launch a brand platform under the name Litter-Robot, because essentially you're saying 'poop box,'" Zuppke said. "We're stepping back to build what I define as our Apple or our Dyson: A brand platform that allows consumers to fall in love and emotionally connect."

To meet an influx in demand — spurred largely by the COVID-19 pandemic keeping people house-bound with their pets — the company is increasing its manufacturing footprint by 60 percent beyond the 2020 expansion. It is investing $9 million in its plant in Juneau, where it plans to add another 200 employees by the end of 2021 and another 300 over five years.

"Over 10 years ago we purchased a building in Juneau that was six times larger than what we needed at the time, but it was the right building in the right place for us to grow into," Zuppke said in a news release from the Jefferson and Dodge Counties' Thrive Economic Development group.

AutoPets currently employs around 200 workers in Juneau and 100 at its headquarters in Auburn Hills.

Zuppke said the company is hiring another 25 engineers for Auburn Hills this year and is spending between $1 million and $1.5 million to renovate its headquarters and double usable space to 50,000 square feet.

"We successfully scaled the business beyond what we had planned for, and then COVID happened, which for the pet care industry was an accelerant," Zuppke said.

The U.S. pet care industry reached a record $103.6 billion in 2020, up nearly 7 percent from revenue in 2019, according to the American Pet Products Association's annual report. Sales spiked initially from consumers panic-buying kitty litter like they did toilet paper, but spending remained steady. Globally, the pet care market is expected to grow by more than half to $325.7 billion in 2028, according to market researcher Fortune Business Insights.

AutoPets is clawing at international markets, too. In March, it launched in the United Kingdom and Europe after expanding to Canada in 2020. It will begin exporting products to China later this month. Sales abroad have already grown to around 10 percent of total, Zuppke said, and that number is projected to reach 25 percent in the next couple of years as it grows elsewhere in Asia and Europe.

The company will spend upward of $10 million this year for advertising on television, YouTube, Google and social media, with plans to increase the budget to $15 million next year, Zuppke said.

"It's tough to market to other areas," he said. "For example, in the U.K., they don't call it a litter box. That's literally a trash can. They call it a cat toilet. We have to learn each market."

Marketing happens to be Zuppke's forte. The rebrand is his brainchild, said Brad Baxter, who founded the company with his father, Jim, in 2000 and recruited Zuppke in 2015 before eventually making him a co-owner.

Baxter originally chose the name Automated Pet Care Products for a practical reason no longer relevant today: paper phone books.

"I love the new name of the company, but obviously there's going to be some sadness over kind of giving up the old name, which I started over 20 years ago," Baxter said. "At the time, Yellow Pages were still being used, so my thought was, 'I'm going to name the company after literally what we're doing' ... and it started with an 'A.'"

Much has changed since then, including the company's trajectory and focus on accessories, though AutoPets remains a "hardware company at heart," Baxter said.

"I think that our approach is going to make it very successful because we are curating those products for our customers," he said. "If they're not ready to buy a $500 litter box, maybe they're ready to buy a cat toy that exposes them to our other products."

In 2019, an investor group led by Chicago-based growth equity firm Pondera Holdings LLC took a 50 percent stake in the company. Zuppke said he and Baxter together own the other half of the business and continue to oversee it.

"As CEO and COO of the company, Brad and I are running the company day to day and even month to month and quarter to quarter," Zuppke said. "They are there as financial and strategic advisers."

One of the private equity firm's suggestions was adding another board member with engineering expertise. So, Zuppke said he went on LinkedIn and landed on Tim Saeger, former executive at iRobot and Bose, who joined the board earlier this month and will advise on product development.

"AutoPets immediately stood out to me as a business at the forefront of product innovation in a fast emerging category," Saeger said in a news release.

Zuppke said the company will keep developing products such as the Wi-Fi-enabled pet feeder, which launched last year, to continue solving "problems for pet parents that they may not have even realized is a problem."

Another area of focus is data collection, Baxter said. The company's engineered products are all integrated with Wi-Fi and can be managed with an app, though an internet connection is not required to use them. Collecting data on how often and how much an animal eats or how frequently a cat uses the litter box could provide insights into a pet's health.

"Software and IoT [internet of things] is a big part of what we're doing now," he said. "When we started, that didn't even exist."

The company would not disclose revenue figures or the number of litter boxes and feeders sold annually, citing competitive concerns.

"Litter-Robot continues to be a major success story, but our newer products are growing at a very rapid rate, and they will quickly become a very large part of our revenue mix," he said.

Despite complaints across industries about a labor shortage, AutoPets has not struggled to find workers to support its explosive growth, according to Zuppke. At the start of the pandemic from March to June 2020, the company told employees they could stay home and still receive two-thirds of their pay or go to work and receive $2 more per hour. Since then, the company has kept the pay increase for employees with perfect attendance, putting starting pay at $17-$18 per hour.

Zuppke said the labor base is strong in Juneau, and wages and flexibility helped the company recruit from neighboring plants. AutoPets moved there in 2011 when it switched from vacuum molding to injection molding and needed to be closer to its tooling provider. It has no plans to uproot its supply chain.

"We've got a really exciting journey ahead of us," he said. "We've got so much runway ahead of us that we have no desire in selling out at this time."