Freeze-dried pet foods show strongest sales growth

Pet owners who splurge on the freshest, healthiest food continue to spur sales growth at pet specialty retail outlets. According to new data from GfK’s point-of-sale panel in the US, freeze-dried products have shown the strongest sales growth at pet retail, but grain-free and other established categories remain “most valuable players” in this $7.6 billion market.
In the past year, pet specialty retail sales of freeze-dried dog and cat food have jumped 64%, from $25 million to $40 million. These figures do not include pet food products that combine kibble with freeze-dried pieces.
Grain-free also remains a powerhouse in terms of sales growth, posting a year-over-year rise of 25% and now accounting for $2.4 billion annually (dog and cat food only) at pet specialty. Over the past 12 months, there have been more than 1,500 new grain-free products introduced in the US for cats and dogs, compared with 1,280 the year before.
The natural category – which includes most grain-free, freeze-dried, and similar products – continues to dominate the pet specialty market, accounting for $5.2 billion in sales out of a total of $7.6 billion in total pet retail food sales. But non-natural still represents the remaining $2.4 billion in cat and dog food sales at pet specialty – roughly one-third of the market.
Other food categories (cat and dog only) posting notable growth at pet specialty retail include:

• “Part freeze-dried” – sales surged 83% in May 2015 year over year
• Frozen – sales rose 32%, from $52 million to $69 million
• Dehydrated – saw 42% growth at the register

“Having a data-driven, nationwide perspective on the pet specialty marketplace is essential for retailers and manufacturers alike,” said GfK’s Maria Lange, business group director, POS tracking. “With a clear view of the market, stores can make smarter stocking and discounting decisions, and manufacturers can design products that truly meet the needs of today’s pets and pet owners. While the natural trend is still driving most pet food growth in the specialty retail channel, stakeholders need to find the right balance between ‘rookie’ categories – like frozen and freeze-dried – and proven ‘stars.’”
GfK’s POS tracking division uses the world’s largest retail network to track products and deliver market insights based on point-of-sale (POS) data for countries worldwide. The team can look at which channels are popular with retailers and manufacturers and why, as well as which retail trends are affecting the overall market.

Freeze-dried, refrigerated/frozen petfoods continue strong growth

The natural food category, which has been driving the petfood market for over 10 years, continues to spawn trends that rise and fall on much shorter timeframes—challenging manufacturers and retailers to keep pace while making a profit, according to GfK's latest data.
The latest point-of-sale data from GfK’s pet specialty store panel in the US shows that sales of gluten-free dog and cat food have already begun to plateau, posting 39.2% growth from January through August 2014, as compared to 91.2% for the same period in 2013. By contrast, freeze-dried food recorded a 43.8% sales rise in that timeframe (similar to 46.9% in 2013), while the controversial refrigerated/frozen category saw a lift of 17% (consistent with 17.5% in 2013).
The GfK pet retail panel includes neighborhood shops and superstores alike, representing over 11,000 pet specialty outlets in the US. GfK captures and reports dozens of metrics—from pounds sold to new products introduced—covering more than 350 manufacturers and over 22,000 SKUs.
Collectively, the freeze-dried, refrigerated/frozen and gluten-free categories accounted for over US$566 million in sales in the first eight months of 2014, more than double the US$243 million they posted in the same time frame in 2012. Gluten-free remains the heavyweight in pure dollars, though, representing US$450 million in sales, versus US$71 million for refrigerated/frozen food and US$45 million for freeze-dried.
Natural food is still the category "to beat" in dog and cat food, according to GfK, accounting for 79% of all new items introduced from January through August 2014, and for US$3.3 billion in sales during the same time frame—two-thirds of all petfood sales (US$4.9 billion total). Both natural sales figures represent upticks from the same time period in 2013.
One element of natural food that appeals to pet specialty retailers is the higher-than-average price points these SKUs command, says GfK. Natural dog and cat foods (including treats) sell for US$2.55 per pound on average, compared to the average of US$2.18 per pound for all petfoods in general. The price per pound for freeze-dried dog and cat items is essentially six times higher than the average price for all categories (US$11.51 per pound versus US$2.18). Refrigerated/frozen food, meanwhile, is more than double the average price per pound (US$5.11 versus US$2.18).
“Natural remains pretty much the only game in town when it comes to high-growth dog and cat food items,” said Maria Lange, senior product manager of GfK’s retail and technology team, which manages the pet specialty panel. “Dog and cat owners have shown a willingness to pay extra for emerging benefits—such as gluten-free and freeze-dried—that often mimic the ones seen in human food. Manufacturers and retailers need to give their customers access to the latest talked-about SKUs while keeping actual sales dollars in perspective; categories posting the highest growth and capturing the most headlines may still be minor forces when it comes to meeting revenue targets.”
Although the refrigerated/frozen food category has been beset by negative media stories about recalls and Salmonella risks, sales have continued to grow (at about 17% to 20% annually) over the last four years. And, despite the added burden of installing refrigerators and freezers and culling expired items, the percentage of outlets—neighborhood and superstores—carrying refrigerated/frozen food has grown from 65% in 2011 to 75% in 2014.