Petfood sales to reach US$33 billion in 2018

Driven by increased focus on pet health and the increasing impact of the human-animal bond, US sales of petfood will rise 16% between 2015–2018 to reach US$33 billion, according to Packaged Facts in "Pet Food in the US, 11th Edition."
Packaged Facts estimates petfood sales in 2013 were US$28 billion. The petfood category experienced much of its growth outside of the core mass market, particularly in channels like farm/feed, Internet and pet specialty. Sales are expected to remain relatively flat through the rest of 2014, though opportunities exist in the premium food sector as pet owners purchase these products to protect the health of their animal companions, according to the report.
"Looking ahead, the trick will be to find ways to grow this mature market, since at its current pace pet population growth is not sufficient to drive higher levels of market growth," said Packaged Facts research director David Sprinkle. "For several years much of the dollar growth in the petfood market has come from converting pet owners to higher priced foods as part of the humanization trend."
Premium petfoods will account for 42% of petfood sales in 2014, followed by regular petfood at 30% and value petfood at 12%, with treats comprising the remaining share of sales. On both the dog and cat sides of the market, the premium share of sales has expanded, mostly as a result of growth in the superpremium segment. Treats have also grown their share of the market, primarily due to the robust interest in treats among dog owners, many of whom have turned to functional treats as a way to ameliorate pet health conditions and promote overall wellness. Cat owners, on the other hand, have not proven as likely to indulge their pets in superpremium fare, and have also been slower to embrace functional treats, suggesting areas for market expansion as cat food and treat marketers continue to trend into premium and functional fare, with products and trends often crossing over from the dog side, according to the report.

Lincoln Bark wins Abe's Golden Bear Award

Lincoln Bark has been honored with the “Abe’s Golden Bear Award” for excellence in pet products for 2014. Each year, Abe’s Market, an online marketplace for natural products, selects 13 companies in different product categories for their excellence in natural qualities and eco-friendliness.

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Lincoln Bark's treats highlight their signature ingredient, the super-food Chia seed. The seeds promote cardiovascular health, joint mobility, improved digestion and healthy skin and coat for dogs, according to Lincoln Bark. The company manufactures palatable and nutritious snacks containing no wheat, corn, soy, artificial preservatives, gluten or added hormones. Made and sourced in the USA, all of Lincoln Bark’s treats are made from high-quality, human-grade ingredients.
“It is an exciting honor to receive this award,” said Lincoln Bark President Bobbye Cochran. “Abe’s offers an extremely trusted marketplace for natural products from passionate companies, and we are elated to be recognized among the best.”

Petfood brands turn focus on desire to make pets' meals at home

A growing market in the petfood industry revolves around a pet parent's desire to have a hand in making their pet's meals. Companies are launching premium-priced products that require humans to refrigerate, freeze, dice, heat and/or mix in additional ingredients such as meat and vegetables.

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"We're seeing it as a shift," said John Sturm, vice president of food and treats for Petco Animal Supplies Inc. "Just putting the bowl on the ground and walking away isn't the humanized experience that pet parents are looking for." Sturm said petfood ingredients became more of a focus for pet parents after a string of petfood recalls, including one in 2007 that involved chemically tainted wheat gluten and affected more than 150 brands. Some owners began cooking food themselves for their pets, but cost and time sent them back to pet store shelves. The idea, however, took hold in the petfood industry, leading some companies to create petfood brands that require partial preparation but still do much of the meal planning so owners don't have to.
Petfood retailers are also giving credence to the trend. Over the next 18 months, Whole Foods Market Inc. said it plans to expand its selection of organic and animal welfare-rated petfood. "We want people to know that the petfood they buy in our store would be something that they would be just as happy buying for themselves," said Dwight Richmond, global grocery purchasing coordinator at Whole Foods. And considering that more than 80% of pet owners consider their pets to be members of the family, paying attention to this trend seems like the prudent thing to do.

IBISWorld estimates 7.8 percent annual growth in online petfood sales

IBISWorld estimates that revenue for the online petfood and pet supply sales industry has increased in the past five years an average of 7.8 percent annually to $3.2 billion.

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Rising pet ownership in the United States and growth across the e-commerce sector have caused the industry to experience overall growth, despite the recession. Furthermore, increasing demand for premium petfood and online animal pharmaceutical sales also contributed to industry growth during the past five years.
While most pet owners indicated they reduced spending on pet supplies during the recession, according to a survey conducted by Pet Business, many consumers gravitated online to purchase more-affordable substitutes in lower quantities. Per capita disposable income, expected to increase 3.1 percent in 2014, is expected to cause revenue growth of 2.5 percent in 2014.
With rising revenue, industry profit margins have increased over the five-year period. According to IBISWorld Industry Analyst Andy Brennan, "Industry profit has risen due to improvements in automation, which caused wages to decline as a proportion of revenue." Furthermore, premium petfood and supplies have boosted profitability because they typically have higher markups. Rising profit has caused the number of industry firms to increase at an average annual rate of 1.2 percent to 3,612 in the five years to 2014. Niche players like 1-800-PetMeds and discount retailers like Walmart have rapidly gained market share within the industry. Niche operators will likely continue entering the industry during the next five years, especially those that specialize in targeted markets, such as supplies for exotic animals or health-oriented products.
IBISWorld forecasts that industry revenue will increase in the five years to 2019. During that time, stores will benefit from an increasing number of pets in the United States and rising per capita disposable income. However, online pet retailers also will experience increasing competition from brick-and-mortar stores that also sell petfood and supplies, including grocery stores. "This trend is largely due to the closing of a tax loophole that has allowed many Internet retailers to forgo charging sales tax," says Brennan. This factor is expected to cause profit margins to decline, since firms will need to reduce prices to remain competitive.
For more information, visit IBISWorld's Online Pet Food & Pet Supply Sales in the US industry report page.

New report on the US petfood market offered online

MarketResearchReports.Biz has added a new report, Pet Food Market-US-March 2013, to its online database.
According to the American Veterinary Medical Association, pet ownership has declined since 2006. Due to a waning number of end users, marketers must consider ways to encourage petfood buyers to feed their pets a variety of new food/treats, tap into the under-developed elderly pet owner demographic, and drive interest for premium products and shopping experiences among key Hispanic pet owners, the report says.

Glass is two-thirds full for petfood industry, says Petfood Forum 2013 speaker

For the petfood industry, the glass is two-thirds full -- things could be a lot better, but they could be a lot worse, according to David Sprinkle, publisher and research director of Packaged Facts speaking at Petfood Forum 2013, April 16.
Today 38 percent of households have dogs, up from 35 percent in 2007. About a quarter of households keep cats which has been a pretty steady number. "Nothing bad about long-term trends," said Sprinkle. "Other pets, such as birds and fish took a hit during the recession. But they are a small part of the market. The only problem there is small pets are often starter pets."
Petfood as a whole is showing 5 percent annual growth in sales in 2013. Sprinkle said that is more solid performance than consumer package goods overall. "Any consumer product manufacturer would kill for these numbers.”
Packaged Facts also surveyed the performance of different retail channels for petfood. The biggest surprise was that sales through mass market retailers, grocery stores except Wal-Mart, have been shrinking slightly or holding steady. The growth is in specialty channels such as gourmet and specialty food stores and independent natural food stores.
Growth for sales from pet stores is up from 52 percent in 2012 to 54.3 percent in 2013, while sales from veterinarians are going down.
"There is innovation and growth in the market, but it is at the specialty end, and you should be watching that," said Sprinkle.
To see a summary of Sprinkle's talk, view the Consumer petfood spending trends for 2013 video.

Fresh butcher meat fuels a new pet food trend

A new trend in pet food has consumers turning to the butcher for fresh meat to feed their pets.
One retailer, Albright Farms, in Monkton, Maryland, USA, offers cuts of meat and bones specifically for pets. The meat products, from grass-fed and locally raised animals, are another way to promote sustainability of local farming.
“Our mission here is to get as much out of the animal as possible,” said Jake Dickson, an owner of Dickson’s Farmstand, a New York retailer of meats for pets. “Both in terms of profitability, but also philosophically — doing honor and justice to that animal.”
Dickson's Farmstand offers an array of animal parts, such as blood from hearts, tongues and livers as well as slabs of New York strip. Some of the meat trimmings are also ground up into sausage. Though, this meat is a more expensive choice for dog food, running about US$10 for a 1 1/2-pound package at Dickson's.
Another New York retailer following the petfood trend is Fleisher’s Grass-Fed and Organic Meats. The company's US$4, two-ounce ready-to-eat packages contain organic chicken and beef hearts, liver and tongue, and are sprinkled with beef fat.  
“If you’re not feeding your dog human-quality food it’s a terrifying thing,” said Jessica Applestone, owner of Fleisher's. “It’s very true that there’s much more of a movement, and we’re very happy to see it. People see that pushing a better diet for their dogs results in less vet visits.”

The Honest Kitchen releases pet food customer survey results

The Honest Kitchen shared customer feedback from its 2011 pet food annual survey.
The survey was distributed through the company’s monthly newsletter and on its Facebook page, and was completed by more than 2,500 customers. 
The company said that nearly 78% of pet owners noted an improvement in their pets' digestion after feeding The Honest Kitchen's dehydrated whole foods. Another 75% of pet owners noted their pets' increased activity level and almost 59% said their pets' weight improved. Nearly 69% of respondents said they noticed a reduction in their pets' symptoms, with 35% saying they were able to reduce their pets' medication. About 70% of those polled noted an improvement in their pets' skin and coat after eating the pet food, and nearly half (49.5%) said their pets' itchiness improved. 
“There is a strong, direct correlation between the foods pets eat and how healthy they are,” said Lucy Postins, founder and chief executive. “Many pet owners notice that their pets’ health improves on a fresh, minimally processed diet, and these statistics from our most recent survey are really representative of the feedback we've been receiving from our customers (and their vets) since our company was founded almost nine years ago.”
The survey was distributed, recorded and analyzed by The Honest Kitchen. Customers used The Honest Kitchen as their pets’ sole diet or as a component of a varietal approach to feeding, the company says, and more than 50% of the respondents have used The Honest Kitchen for more than one year.

Packaged Facts: US pet market outlook strong for 2011-2012

A report released by Packaged Facts on the US pet market found that despite slow growth due to the recession in 2010, sales of petfood and pet products are expected to increase at a faster rate in 2011 and 2012.
The report, “U.S. Pet Market Outlook 2011-2012,”  looks at US pet market retail sales and trends overall and in four core categories: veterinary services, petfood, non-food pet supplies and non-medical pet services. It found that sales of all pet products and services rose 4.3% in 2010 to US$55.07 billion. Sales of veterinary services increased the most in 2010, to US$19.69 billion. Non-medical pet services experienced the second largest growth increase at 5%, to reach US$6.11 billion. Sales of petfood increased 2.8% to US$18.35 billion and sales of pet supplies increased 2% to US$10.92 billion, according to the report.
Despite a recession, Packaged Facts' report says that the US pet market remains healthy, attributing this strength to factors such as the human-animal bond, an aging pet population and big-spending baby boomers. Packaged Facts expects the annual sales rate to recover to approximately 5% in 2011 and to nearly 6% in 2012, reaching US$61.4 billion. 
“The market bulwark will continue to be the most health-oriented category, veterinary services,” said David Lummis, the report's author. “As the population of senior pets continues to rise and market participants continue to adapt human-style technologies and medications and develop new pet-specific ones, the veterinary category will experience a 9% compound annual growth rate, which is much higher than other segments. As a result of its faster growth, veterinary services will continue to grow as a share of the total pet market.”
Packaged Facts' pet market outlook report can be purchased online.