Sixty-eight percent of U.S. households—some 85 million families—own a pet, according to the 2017-2018 National Pet Owners Survey from the American Pet Products Association (APPA). Overall pet industry spending came in at a record high of $66.75 billion in 2016, up 10.7% over 2015, with pet food alone accounting for $28.23 billion, the APPA reports. That spending doesn’t seem to be waning: Expenditures on pets are increasing exponentially in the U.S., according to Pet Food Market in U.S.—Industry Outlook and Forecast 2017-2022, a recent market research report by Arizton Advisory & Intelligence. And because the pet food category is recession-proof, its growth prospect remains high, the report notes.
The good news for grocers is that more than 80% of respondents who generally shop at pet-focused retailers indicated they would buy a similar product from a grocery or discount store, according to American Nutrition, a custom manufacturer of pet food and treats for branded companies and retailers.
“The pet category is enormous and growing by approximately 4% every year, which equals about $2.5 billion annually,” says Joe Toscano, director of industry and trade relations for Nestle Purina. “The pet category is shopped by almost three-fourths of all U.S. households … and it is also the second-largest store trip driver, behind pharmacy only. It is a well-known fact that pet specialty retailers are losing trips, most likely due to the rise of e-commerce. Grocery retailers tend to have shoppers in their stores almost weekly. If retailers can show these consumers that they have in-store what the consumer is making an extra trip to pet specialty for, they can certainly win.”
Understanding trends driving the pet products category can help retailers make sure the products they carry make their stores destinations for pet owners. Here, Winsight Grocery Business explores some of the hottest trends driving category purchases.
Heeding the ‘Humanization’ Call
Humanization is the overarching theme in the pet category today. “People love their pets like family, and as consumers become more judicious about what they themselves eat, they tend to seek out ‘better-for-you’ foods for their pets as well,” Toscano says. He notes this trend has sparked growth in products made with limited ingredients and real meat as the No. 1 ingredient, as well as items that are natural and grain-free. “Pet parents are even looking for healthier treat options, such as reduced calorie or those that include dental benefits,” he adds.
That inclination to treat pets as people also is fueling a move toward organic pet food, says Tom Wien, director of marketing for Cardinal Pet. “Organic pet foods are one of the fastest-growing categories in our industry today, expected to increase by 14.6% annually through 2019, according to research by Packaged Facts,” he says, noting that a Morningstar report predicts the global market for organic pet food will reach $13.14 billion by 2021.
The move toward healthier pet food ties into another industry trend: clean labels touting that products are free of artificial flavors, colors and preservatives.
“Label transparency is becoming a primary focus for pet treat consumers. For the past several years, people have been making a push for cleaner ingredients for their own food, and we are seeing this more and more within the pet world,” says Lara Gusa, brand manager at Blue Dog Bakery. “The healthier trends we’re seeing for 2018 also include more plant-based foods and ingredients in pet treats—for example, pea and chickpea flour can replace wheat or other grains for grain-free treat varieties,” Gusa says.
Health-Forward Pet Products
Freeze-dried raw pet food is also an up-and-coming category that is increasing exponentially as pet owners become more health-conscious about what they feed their pets, according to Avinash Kumar, a research consultant who worked on the Arizton Pet Food Market report. “Freeze-dried raw pet food offers essential nutrients and does not contain any types of preservatives or other ingredients,” Kumar says. “Since there is no water in the freeze-dried product, it eliminates the growth of microorganisms.”
Several manufacturers have developed new products to appeal to this relatively new penchant for healthy pet food.
Cardinal Pets offers Full Life For Pets, a line of dog treats, chews and training rewards geared specifically toward the grocery/supermarket channel. It was developed to combine the quality of pet specialty store products with the convenience of supermarket shopping, Wien says.
Blue Dog Bakery will be launching a new line of meat snacks in 2018 made with 100% USA meat.
Meanwhile, Toscano says the company’s Purina One line will transition to an all-natural formula with no artificial colors, flavors or fillers, and feature real meat as the No. 1 ingredient in 2018. Also coming in this year: Purina One treats made with real chicken as the No. 1 ingredient, Beneful Select 10 made with 10 simple recognizable purposeful ingredients, and Beneful Simple Goodness (soft, tender, meaty morsels, with visible real vegetable inclusions).
The Push for Premium
A burgeoning demand for premium and superpremium products is a subset of sorts of the humanization/healthy pet food theme. In fact, interest in high-end, premium pet food and treats is a key driver for increased spending in the category, the APPA reports.
That trend is something the pros at Rachael Ray Nutrish, manufactured by Ainsworth Pet Nutrition, definitely see.
“Looking at trends, the ultra-premium end of the pet food market is really what is driving the growth,” says Annina Silverman, the company’s director of marketing. “Pet parents are becoming more educated about animal nutrition and are seeking real meat-first, natural products, many of which eliminate potential food allergens, like corn or grains that may cause sensitives or digestive upset in their pets. By offering these higher-end pet products, retailers are offering the same types of food that are available in pet stores, and letting shoppers know that they can skip that extra trip.”
Rachael Ray Nutrish offerings include new products in its real meat treats line: Turkey Bacon; Meatball Morsels with beef, chicken and bacon; and oven-browned chicken Sausage Bites.
The trend toward owning dogs under 25 pounds is creating a niche market for dog food and related products. According to Packaged Facts’ September 2017 National Pet Owner Survey, small dogs are the most popular by far among U.S. households: 43% have small dogs that weigh between 8 and 24 pounds, and 12% have toy/very small dogs weighing under 8 pounds each.
Toscana calls the small dog phenomenon “a booming trend in dog ownership right now”—one that prompted Purina to introduce the Bella brand, food specifically developed for small dogs.
New Little Bites recipe for dogs is Rachael Ray Nutrish’s answer to the small breed craze. “Through urbanization trends, we see growth in small dog ownership and the desire for specific products tailored to tinier pups,” Silverman says.
Small dogs have even spurred development of a new product—litter for dogs, a category Packaged Facts dubbed “one of the most intriguing growth opportunities” looking ahead to 2021. Fourteen percent of toy dog owners and 12% of small dog owners have purchased litter for use by their dogs, according to Packaged Facts’ survey data.
Purina markets SecondNature dog-specific litter, and Mars’ Pedigree website devotes a page to litter box training for small dogs, the report notes.
Mammals and Reptiles Are Having Their Day
The trend toward small mammal ownership (think rabbits and hamsters) is creating a growing demand for items such as bedding and litter, cage/cage accessories and hay. According to Packaged Facts’ new Small Animal Products: U.S. Pet Market Trends and Opportunities report, kids are a key factor in the growing popularity of what are referred to as “gateway pets.” “Sales in 2016 for small animal products were up 3% from sales of $610 million in 2015,” the report says. “With a compound annual growth rate (CAGR) of 3% between 2016 and 2021, sales of small animal pet products will enjoy steady and continued growth over the next five years.”
Even reptiles are having their day. The growth in sales of pet reptile products is on par with or better than products designed for other small household pets, per Packaged Facts’ recent Reptile Products: U.S. Pet Market Trends and Opportunities report. “Growth in the mass merchandiser and internet channels has helped improve overall sales, as have stronger sales in the food segment,” says David Sprinkle, research director for Packaged Facts, who notes that the pet parenting trend applies to reptiles, too. “What do these reptile owners want? The same things other pet owners want—namely safe and convenient items that make their pets easier to feed and care for.”
Beating the Specialty Store
Whatever approach grocers take in managing their pet category, one thing is clear: They stand to benefit if they focus on making the pet aisle the best it can be.
“Pet owners want high-quality, specialty-type products for their pets, yet today’s shoppers are busier than ever,” says Wien. “If they can get the items they need for their pet during their normal grocery shopping trip without having to go out of their way to a pet specialty store, it will make a huge difference in their lives.” Because of this, Wien says, “The pet product category can be a big drawing card for supermarkets. If consumers know that a certain supermarket carries the brand or type of pet products they need, they may very well choose it over its competitors.”