Industry opinion: 'Big Food' increasingly eyeing petfood market

The acquisition of Big Heart Pet Brands by J.M. Smucker (Smucker's) is the latest in an increasing trend of 'Big Food' expanding into the petfood market, according to Washington Post National Business Reporter Drew Harwell.

As petfood sales in the US continue to grow, and the specialty petfood segment in particular remains profitable, human food companies such as Smucker's and Mars are increasingly interested in entering the waters. Smucker's is purchasing Big Heart Pet Brands for US$5.8 billion, and in 2014 Mars acquired petfood lines Iams and Eukanuba. The overarching goal, say analysts, is to secure a strong market share across all prices, brands and blends in the petfood industry. According to Harwell, additional benefits include the inherent market diversification and money savings as human-food ingredients are repurposed for petfood products.
Big Heart is America's biggest seller of pet snacks, with about US$2.3 billion in net sales over the past year, said the company. Smucker's expects petfood will contribute more to its bottom line than Jif, Pillsbury, Crisco and its namesake jams and jellies, combined. "We recognize that pets are cherished members of the family," said chief executive Richard Smucker. "With approximately two-thirds of US households having at least one family pet, we will now be able to serve the mealtime and snacking needs of the whole family."

Dr. Tim, Dr. Tim's Pet Food, wins America's favorite vet award

The American Veterinary Medical Foundation (AVMF) has named Dr. Tim Hunt of Bayshore Veterinary Clinic in Marquette, Michigan, as the 2014 winner of the "America's Favorite Veterinarian" contest. Hunt was nominated by Kris Mitchell, a client at Bayshore Veterinary Clinic (which Hunt established in 1993). Mitchell nominated Hunt because he willingly performed a cesarean section on her bulldog on Christmas morning.

The contest was inaugurated in 2013 via the AVMF’s Facebook page, and celebrates the relationship pet owners share with their veterinarians. In 2014 the contest grew to allow the public to vote to select the winner. The twenty finalists selected received over 86,000 votes from across the country. Hunt received over 12,000 votes to secure the title.
Hunt is a Detroit native. He earned his undergraduate degree and Doctorate in Veterinary Medicine from Michigan State University. In addition to his work as a small animal veterinarian, Hunt serves as a volunteer veterinarian in Alaska for the Iditarod and has founded the Alaska Veterinary Rural Program, where he conducts spay/neuter clinics and provides veterinary care in impoverished villages.
"I am very proud and honored to have been voted the winner of the 2014 America's Favorite Veterinarian contest conducted by the American Veterinary Medical Foundation," said Hunt. "I cannot say just how thankful I am for all that voted. I am so lucky to have such a great staff at Bayshore Veterinary Hospital and supportive family in that we all share a mutual love for animals and it really shows. Thank you Marquette, Michigan, a small town of 20,000 people and all those from various places around the USA. Honestly, I am speechless.

"To the 19 other finalists in the contest, thank you for being such great vets. Your great work has surely been noticed by many people and is appreciated more than you will ever realize."

Petfood market driven by growth in specialty pet foods, PMMI finds

Trade association PMMI released its Pet Food Market Assessment 2013, which found the pet food market is driven by many of the same factors as the human food market, including intense competition, growth in specialty products such as premium and functional pet foods, and demands of the Food Safety Modernization Act.
Five pet food manufacturers produce more than 70 percent of the pet food products currently sold in the US, the report found. More than 85 percent of the pet food sold in the US is manufactured in the US, as well, which the report attributes to perceptions of quality, transportation costs and a highly saturated marketplace.
The US makes up 38 percent of the global market for pet food, accounting for US$19.85 billion of the US$56 billion global market in 2011, a projected US$20.54 billion in 2012 and US$26.6 billion by 2015. However, double-digit growth is expected in the Latin American and Asian pet food markets. “Brazil stands out as the fastest-growing market for pet food. India and China are growing at double digits, too, but by 2016, we expect to see Brazil as the world’s second-largest pet food market,” said Jorge Izquierdo, vice president, market development, PMMI.
Much of the pet food market's growth has been in organic, natural and premium pet foods, which have all grown at nearly 20 percent per year for the past two years. Global demand in this market will account for nearly 32 percent of the petfood market in 2013, the report projects. On the other hand, some products outside the premium pet food category have grown very little, such as wet dog food, which is projected to grow less than 1 percent in 2013. 

AdWeek looks at evolution of dog food advertising in America

Speak! dog food's advertisement set trends for petfood advertisers today.

A recent article from AdWeek takes a look into how advertising for brands in the dog food industry has changed over the course of US history.
In 1908, one of the few choices for Americans looking to feed their pets was Milk-Bone dog biscuits. In 1922, Ken-L Ration's introduced the world’s first canned dog food, which captured 90% of market share by 1941. After World War II, General Foods unsuccessfully launched the Gravy Train, but consumers had to add water to the dry kibble, making it messy, the article says.
However, a dog food revolution took place in 1961 when Gaines-Burgers introduced a petfood patty cross between wet and dry dog foods. By 1962, Gaines-Burgers had competition in the dog food market with Speak!, bite-size treats that could be used both as petfood and a pet treat. Speak!, though, had an advertising scheme that was ahead of its time, according to Packaged Facts senior pet market analyst, David Lummis.
“It picks up on the same marketing theme we see today: user convenience. Speak! comes in its own bowl. You can serve half and put the other half in the refrigerator. This ad is very smart,” Lummis said.
Despite the fact that Speak! dog food went out of business shortly after its ad debuted, the company's petfood advertisement represents the evolution of dog food over time, Lummis said. The 1962 ad places the dog sitting on floor, while the 2010 Purina ad puts the dog looking at eye-level with its human companion.
“There’s been a societal shift in the past decade—the anthropomorphization of pets,” Lummis said. “Today, the market is all about dogs as members of the family. In fact, what’s so audacious about the 2010 ad is that Purina doesn’t even show the food.”

Alltech provides petfood industry insight at International Animal Health Symposium

Alltech will provide insight and offer solutions to challenges in the petfood industry at its 27th International Animal Health and Nutrition Symposium.
The Symposium, entitled "The Game Changers: Creative Concepts for Agribusiness to Respond to Relentless Commoditization and to Innovate for a Greener Future," will be held at the Lexington Convention Center in Lexington, Kentucky, USA, from May 22-25.
Symposium attendees will hear from and interact with pet industry experts during the following informational seminars: "What do we know about traceability? Protecting a brand," by J. Farrell of Tuffy's Pet Foods Inc.; "Keeping Salmonella out of petfoods," by J. Kersey of The Nutro Co.; "Prebiotics in petfoods - Teaching old dogs new tricks for gut health," by A. Carciofi of Universidade Estadual Paulista in Sao Paulo, Brazil; "Game Changers for pet food regulations — Prospects for an international standard," by N. Cook of Pet Food Institute; and "Fungi and mycotoxins in pet foods: Detection and protection," by M. Copetti of Universidade Federal de Santa Maria in Rio Grande do Sul, Brazil.
Additional seminars include: "Using the gene chip to produce revolutionary new products and address the antioxidant dilemma," by F. Edens of North Carolina State University,USA; "Communicating with customers: Impact of social media," by Alltech's B. Frey; "Targeting chronic diseases in feline and canine populations," by veterinary consultant, E. Moser; "Getting more out of ingredients - Novel enzyme applications," by Alltech's P. Rigolin; "The challenge of obesity in companion animals," by R. Rompala of Kent Nutrition Group; "Selenium form - Impact on bioavailability and fertility in dogs," by F. Rutz of Universidade Federal de Pelotas in Rio Grande do Sul, Brazil; and "Ingredients and animal health: Oligosaccharides and novel protein sources," by P. Spring of the Swiss College of Agriculture.
To register for the 2011 Alltech International Animal Health and Nutrition Symposium, visit Alltech’s Symposium website.

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.

Natural petfood market in the US grows

According to consumer research firm Packaged Facts, the US petfood market grew 20.9% between 2004 and 2008, Omaha.com reported.
The 2007 recalls increased natural petfoods’ sales as consumers related higher priced foods with safety, the company said. The trend continued into 2008. For the first 11 months of 2008, the top two claims of petfood manufacturers were for “natural” and “upscale” products.
The firm forecasts petfood sales to grow through at least 2011 despite the economic conditions, with natural product sales remaining an important driver.