A few warning signs in petfood industry to watch

Unlike the larger economy, the petfood market seems to be humming along. Last week, Nestle Purina announced it expects its petfood sales in Latin America to surpass US$1 billion sometime next year. And a USA Today article listed pet supplies as one of the few categories enjoying increased US consumer spending this year, while most categories are still seeing declines.

Yet the picture isn't entirely rosy for petfood: The article quotes Bob Vetere, president of the American Pet Products Association, saying that while the 7% increase in pet supplies comes partially from growth in sales of organic petfood and other "high-end" items, economy-priced petfood is also selling briskly, with mid-priced products getting the squeeze.

This is certainly not a new phenomenon, especially for petfood, but the recession and its lingering effects seem to be exacerbating the situation. If you have mid-priced petfood brands, this could be a warning sign.

In another good news-maybe not so good news story, a last month a company called Pethealth Inc. released a PetPoint Report, the "first and only monthly gauge of both pet adoptions and relinquishments affecting animal welfare." It's based on aggregate data from almost 850 US animal welfare organizations using the company's PetPoint software.

First, the good news:

* Adoptions of cats rose 3% in September 2010 over 2009, while dog adoptions grew by 2%.

* Owner relinquishments (surrendering to animal shelters or welfare organizations) of cats and dogs decreased by 6% and 5%, respectively.

* Euthanizations declined 10% for cats and 7% for dogs.

All very positive -- and yet:

* Those owner surrenders of cats still totaled nearly 25,000 in September, with over 18,600 dogs surrendered.

* These animal welfare organizations took in over 37,700 stray cats and over 23,000 stray dogs in September.

* Average adoptions prices declined for cats and dogs older than 1 year old, while adoption prices for dogs younger than 1 were flat (meaning overall, shelters are taking in less money).

PetHealth says it will be releasing this report monthly, though I believe you have to subscribe (probably for a fee) to receive it. These numbers bear watching as a sign that many pet owners in the US are still hurting financially.