Royal Canin is a billion-dollar brand that has been growing double digit for more than a decade. It is the biggest growth contributor for Mars Incorporated, a +35B USD corporation. This is somewhat surprising, as traditional management theory would consider Royal Canin’s business model to be inefficient.
The Economics of Mutuality team recognized that typical explanations were unable to account for such remarkable growth and embarked upon a partnership with Royal Canin in 2017 to discover the hidden drivers of success. It soon became clear that the principles behind the Economics of Mutuality had been responsible.
The concept of mutuality places equal value on collective wellbeing and next quarter’s profits because it recognizes that financial returns can be spread across time and space when the business-customer relationship is long-term and healthy.
Royal Canin chooses to invest in social and human capital. This business approach leads to a greater understanding of the pet care sector – including its challenges. For example, through conversations with veterinarians and pet breeders, the Royal Canin team discovered that 1 in 5 puppies was not living beyond 2 weeks.
Very little research into puppy litter mortality rates existed. Therefore, Royal Canin launched a major study with the National Veterinary School of Toulouse and over 300 breeders across a 5 year period. The result was a groundbreaking product that helps to reduce neonatal deaths – Puppy Protech, a milk replacer/supplement.
Classic management theory would have advised against developing Puppy Protech, a product with a narrow market unlikely to generate substantial returns. However, the team knew that financial capital was only part of the story. Such insight has contributed to Royal Canin becoming the most valuable brand in its sector.
Loic Moutault
President, Royal Canin
The Economics of Mutuality has now been successfully applied in a diverse range of business conditions. Royal Canin has demonstrated its power to deliver exceptional results in a global, up-market, largely business-to-business context.
Royal Canin Case Study Video
Featuring Loic Moutault, President, Royal Canin;
The Oxford Economics of Mutuality Virtual Forum 2020
Loic Moutault
President, Royal Canin
The Economics of Mutuality team worked with Royal Canin to map their ecosystem and identify key pain points. One significant issue that emerged was online retailers undercutting veterinarian’s prices for Royal Canin products. This eroded trust between veterinarians and pet owners, as well as between veterinarians and Royal Canin.
Rather than letting competition from online retailers undermine stakeholder relationships, in 2019, Royal Canin launched Individualis — a custom nutraceutical product for pets. Veterinarians prescribe specialized food tailored to the needs of individual pets, which Royal Canin manufactures and sells directly through veterinary practices.
In creating Individualis, Royal Canin identified and quantified social capital problems that were external to its business, yet integral to its success. The codification of these breakdowns allowed for prioritization and funding of the development of Individualis, not only as a product innovation, but as a way to address ecosystem tensions.
Royal Canin stands apart from its competitors having developed more than 500 different formulas to meet the specific needs of cats and dogs according to their size, life stage, lifestyle, breed, sensitives and pathologies.
At present, Royal Canin is collaborating with the Economics of Mutuality team to build a scalable multi-capital management dashboard with Economics of Mutuality metrics – pragmatic and actionable tools to be used by the business for management and performance purposes. The new metrics will be analogous to financial metrics already in use and will help to drive management practices and decision-making that positively impact people, planet and profit.
The aim is to create a Mutual P&L that will be used internally to modify the presentation of the existing financial P&L. It will provide an alternative mode of profit construction distinct from a single-minded focus on financial profit maximization by taking into account the business unit’s impact on selected human, social and environmental capital issues.
