Premium pet food sustains category
Volume sales of pet foods have been flat, but a rash of premium brands have kept the category profitable for retailers. Dog owners spend an average of $239 annually, and cat owners spend $209 annually on pet food, according to American Pet Products Association.
While consumers are price sensitive, they won’t cut corners when it comes to what they feed their pets. A recent report by Mintel found that healthy eating trends are driving innovation and marketing strategies in the pet food market. The trend also is driven by the soaring obesity rates among cats and dogs.
“Manufacturers are specializing pet food to life stage, diet needs, health needs and beyond. Products with a natural, organic and health positioning continue to show the greatest growth,” said Mintel’s report.
Hill’s reformulated Science Diet, Nestlé Purina’s Purina One Beyond and Del Monte’s acquired Natural Balance all bear out that trend.
Private label’s share of the pet food market was 12.6% in 2012 product, down one percentage point. Walmart’s Pure Balance natural product is making inroads since the product is positioned in the growing healthier premium segment of the market.
Packaged Facts' recent Pet Owner Survey found that 38% of pet owners believe that natural/organic brand pet products are better than standard national brand products, and 63% said they are very concerned about the safety of the pet products they buy.
As a result, U.S. retail sales of natural pet products totaled $4.1 billion in 2012, according to Packaged Facts estimates, representing a compound annual growth rate of 17% over the 2008-2012 period.
Dry pet foods are gaining market share as wet and moist pet foods are falling out of favor. A study soon to be published from the Global Market Development Center, or GMDC, in conjunction with Radian and Nielsen, found that dry dog food ranks second in terms of category dollar share in the drug channel. The drug pet food segment showed a 7% gain in dollar sales last year, according to the GMDC study.
While the drug channel commands only a 1% dollar market share of the pet food business, Mintel’s research shows the channel saw sales advance a significant 11.5% from 2010-2012. Dog treats command the largest share of sales in the drug channel, but that segment had a sales slide of 5% last year, according to GMDC.
Destination sets need to include healthy pet food choices. Drug store retailers in particular have an opportunity to tie in those better-for-your-pet choices with their overall health-and-wellness positioning.