A steady stream of product introductions and a shift to higher-margin, healthier and nutritious offerings are helping the pet aisle remain strong.
By Richard Turcsik
It’s often said that in this economic downturn no category is recession proof, but dog and cat food and treats come pretty close. After all, are you going to be the one to look into those sad, pleading eyes and tell Fido or Fluffy that they can’t have their favorite food or treats?
“The industry has been particularly resilient,” says Kurt Gallagher, director, communications, at the Pet Food Institute, based in Washington, D.C. “We’re seeing and hearing from our members that sales are up.”
“We’ve discovered that tough economic times don’t have quite the affect on the pet care category as they do on other categories within the store,” says Paul Cooke, vice president of trade and industry development for St. Louis-based Nestlé Purina PetCare. “Pets are one of the most emotional categories outside of baby, so even during a recessionary period, owners will continue to provide for their four-legged loved ones.”
“Most pet owners consider their dog or cat a member of the family, so they’re not going to sacrifice their well-being,” says Jeff Waters, executive vice president of Meadville, Pa.-based Dad’s Pet Care. “The economic reality has resulted in some to scale back, but they’re still purchasing products.”
Some of those scaling back are looking at private label. “Private label is just absolutely booming,” says Frank Arviso, director of sales at ProPet, LLC., a private label manufacturer of dry dog and cat food, dog treats and biscuits based in Saint Marys, Ohio.
ProPet emulates the market leaders by offering store-brand versions of popular products. “With all the problems in the world people are looking to save money and our quality is awful darn close, if not as good, equal to or better than, our branded neighbors. Our real value is our pricing. The retail price will always be 10% to 30% below national brands,” Arviso says.
Many retailers are looking to grow their pet category by increasing their offerings of premium products. “It looks like there is a switch going on from the mid-priced to either the premium/super premium or to the economy,” says Gallagher. “And it seems like the premium/super premium is gaining more than the economy.”
“Premium pet food consumers are seeking nutritional knowledge for their pets,” says Steve Sholtes, industry affairs manager at Cincinnati-based Procter & Gamble, manufacturer of the Iams brand. “They want to be sure they are buying brands that are trusted, contain nutritious ingredients and provide benefits that address specific concerns. In this economic environment consumers have demonstrated that they are willing to pay extra for premium brands but they are scrutinizing ingredients, features/benefits and guaranteed analysis more than ever to ensure they are spending their money wisely. Many consumers realize foods that provide better quality of life and preventative benefits can lessen the chance of veterinary visits down the road.”
Sholtes says the explosion of prebiotics and probiotics being added to human food has carried over to the pet food aisle. “Consumers see the value of having prebiotics in a brand like Iams and in a formula that is right for their dog. They also want to be assured that products containing these ingredients will be efficacious so that their pet will actually realize the benefits,” he says.
To that end, Iams is relaunching and expanding its Healthy Naturals line, beginning in January, with additional SKUs to ship in February. The dry food line has been reformulated to include prebiotics and the packaging has been improved to better convey the “Naturals” messaging.
Mirroring human trends
“Human trends significantly impact the pet products category, especially when it involves natural and organic products,” says Cooke of Nestlé Purina. “Natural pet sales are increasing at a double-digit rate in the natural channel.”
To address the humanization of pet foods, Nestlé Purina has added more gravy to its Friskies Gravy Sensations pouch cat food and is introducing Beneful IncrediBites dog food featuring 14 6-ounce stay-fresh pouches in each box with kibbles that are smaller than Beneful Original dry formula, allowing small dog owners to “spoil their dogs the happy healthy way,” Cooke says.
Franklin, Tenn.-based Mars Petcare US is also improving the palatability of its offerings. “Against the current economic backdrop, pet food shoppers will start seeking more value in their purchases,” says John Anton, marketing director. “Additionally, there is a simultaneous increase in the demand for premium, health-oriented foods, driven by the increased humanization of pets. Mars Petcare is working to innovate and respond to these demands, most recently with the new Pedigree + line of wet food that provides dogs with proactive nutrition to combat common canine concerns—everything from glucosamine for joint health to Omega 3s for enhanced skin and coat.”
Mars has also reformulated its Pedigree Brand dry dog food to include more vegetables and whole grains and a tastier recipe.
For small dogs, Mars has introduced Cesar Bistro. “Cesar Bistro entrees not only provide small dogs with perfectly balanced and exceptional ingredients, but it provides our small canine companions with a classic bistro dining experience,” Anton says.
Dad’s also touts the exceptional ingredients in its Dad’s and Rachel Ray’s Nutrish lines. “One of the biggest trends in pet foods and treats is ‘buying fresh and local,’” says Waters. “Much like the way people are buying food for themselves, shopping at their local farmers market for the freshest ingredients possible. We refer to this group of consumers as ‘locavores.’ At Dad’s, the cornerstone of our company is all about sourcing the freshest ingredients from local farms whenever possible.”
Secaucus, N.J.-based Fresh Pet has carved out a “fresh” niche for itself by selling refrigerated dog food packaged in tubes, tubs and single-serve cups. Business has been so strong that it is now expanding into cat food, available in Whitefish and Salmon, Chicken and Shrimp and Turkey and Liver.
“Everyone talks about the humanization of pets, but the question we always ask is if consumers are always interested in that area, why don’t we eat chicken that comes in a bag like dried pebbles?” asks Scott Morris, co-founder/marketing director. The cat food is packaged in a 5-ounce cup with a see-through lid. “They are all fresh products with a short date code—12 weeks—and everything is highly meat based and virtually grain free.”
Natural foods are also gaining in popularity, says Bambi Mohr, sales manager, for Nature’s Dog by Canus, a Waterbury, Vt.-based pet food and shampoo company. Canus has introduced a bacon treat to join its existing peanut butter and chicken flavored products.
“We are all-natural, wheat-free, soy-free, preservative free and of course goat’s milk is our niche ingredient,” Mohr says. “In the pet category the big push is in the natural segment. It is really fueling the sales and growth.”
Cat litter goes au naturel
What’s up with cat litter? According to many industry observers, the category continues to plod along quietly, racking up minimal sales gains but still serving as a great vehicle in terms of building and maintaining traffic down the pet aisle.
Yet consumers, spurred on by new products in the category, are developing a greater interest in the natural segment end of the cat litter business. Industry officials say that while overall cat litter unit and dollar sales are increasing by less than 2% per year, natural products sales are growing by as much as 10% annually.
“This is a mature category where the larger brands are fighting for market share amongst themselves,” says Paul Zobel, director of sales and marketing for Muscatine, Iowa-based World’s Best Cat Litter. “The natural segment is where the growth is coming from.”
Zobel says that it is important that retailers continue to give more shelf space to natural cat litters to satisfy consumer demands. Suppliers, he says, must also keep up the momentum with the segment. “At World’s Best we are jumping into the social media sites on the Internet, sending sample kits and offering coupons on the Internet.”