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.

Del Monte reports 5.4 percent pet food segment sales increase

Pet food manufacturer Del Monte Corp. reported a 5.4 percent increase in sales for its pet food segment, although the company's overall net sales dropped 1.7 percent in its fourth quarter of 2012 ended April 29.
Del Monte's pet food segment's operating income increased 24.3 percent to US$92.2 million on net sales of US$490.4 million in fiscal 2012, up from an operating income of US$74.2 million on net sales of US$465.2 million during the fourth quarter of 2011. The company attributes the pet food sales increase to volume growth in new products and pricing actions, offset by volume declines in existing products.
“Our fourth quarter results reflect solid performance from our new pet product launches and savings from productivity initiatives and we are optimistic about our business momentum,” said Dave West, Del Monte’s CEO. “Our recent innovation launches of Meow Mix Tender Centers, Meow Mix Paté Toppers and Nature’s Recipe Grain Free had strong distribution gains.”
In fiscal 2012, Del Monte’s pet product segment posted net income of US$323.2 million on net sales of US$1.86 billion, compared with net income of US$377.7 million on net sales of US$1.78 billion in fiscal 2011. Del Monte posted an overall operating income of US$370.2 million on net sales of US$3.68 in fiscal 2012, compared with operating income of US$339.3 million on net sales of US$3.66 million in fiscal 2011.

Pet Food Brazil Manual says 69 percent of 2011 pet industry revenue came from pet food

The Brazilian Association of the Pet Product Industry updated its Pet Food Brazil Manual, which says the country now has one pet for every two inhabitants, causing the pet industry to reach BRL12.2 billion (US$6.5 billion) in 2011, with 69 percent of the revenue from pet food.
The Pet Food Brazil manual was released as an update to the older, PIQ PET Manual, which was developed six years ago by the association's technical groups, comprised of professionals from petfood companies and universities. The manuals aim is to provide the public, academic and private institutions of the sector with a reference for food quality and safety, as well as to provide information on technical and quality standards of raw material, nutritional parameters, applicable analytical methodologies and the ideal production conditions in order to ensure safe pet food production.
"Our country holds important position and the quality of the products needs to meet consumers' expectations. The use of the Manual increases the reliability on the industry and also ensures the compliance with all rules and regulations in force," said the association's CEO, José Edson Galvão de França.

Online petfood industry revenue of US$595.8 million by 2016, report projects

IBISworld released a new report on the online petfood and pet supply sales industry, which expects rising pet ownership to drive demand and boost pet food sales to 2016.
The report estimates that slowly improving economic conditions will boost consumer spending, which will drive online petfood industry revenue to a projected US$595.8 million by 2016. Over the past five years, IBISWorld estimates that revenue in the online pet food industry has grown to $484.7 million. The report also attributes higher demand for premium pet foods and online animal pharmaceutical sales to this growth over the past five years.
"Rising pet ownership in the United States and growth across the e-commerce sector has caused the industry to experience overall growth, despite the recession," says IBISWorld analyst Kevin Culbert. "Niche players like 1-800-PetMeds and discount retailers like Walmart have rapidly gained market share within the industry."
However, the report found industry revenue declined marginally in 2009 as consumer spending fell, but increasing per capita disposable income is expected to cause revenue growth of 2.5% in 2011. Rising revenue is also driving up industry profit margins, which have risen over the past five years due to improvements in automation driving down wages as a portion of revenue. A full copy of the report can be purchased online.

Pet Food Express says petfood antitrust lawsuit dismissed by US District Court

Pet Food Express announced that Royal Canin’s antitrust lawsuit against Pet Food Express was dismissed by Judge Marilyn Patel of the US District Court, Northern District of California.
The case focuses on a 1997 distribution agreement between the two companies that was signed by Royal Canin’s predecessor Pet Products Plus, but that Pet Food Express claims was violated when Mars Inc. purchased Royal Canin and sold the petfood to PetSmart stores. 
Pet Food Express is now seeking US$22.8 million in damages from Royal Canin, for what Pet Food Express calls a "breach of contract" by Royal Canin. The trial date is set for May 31, 2011.

All American Pet Co. offers new products at convenience, drug stores

All American Pet Co. Inc. (AAPT) launched a new product strategy focused on the drug store and convenience store marketplace.
The company's Grrr-nola Dog Food Bar and Grrr-nola Natural dog food products are now available to consumers on the shelves of convenience and drug stores. This new product availability comes after a 67% increase in pet product sales over the previous year for 37,700 US drug stores.
"We are very excited about the opportunity to focus on this very large and un-tapped distribution channel for our new product forms. In addition to the health advantages, our convenient packaging now allows us to achieve a much broader product placement footprint, thereby touching many more customers," said Lisa Bershan, president of AAPT.

Tractor Supply sees growth in petfood sales

Tractor Supply Co. has seen an increase in its petfood sales as non-traditional customers come in looking for a deal in the current economy.
According to the company, its second quarter same-store sales surged by 6.1% due to core consumable categories, which include animal and pet-related products. In addition, the livestock and pet product segment is outperforming all other product categories and in 2009 represented 39% of sales, up from 33% in 2007. "In good times or bad times, it's convenient to go in and get a large bag of feed," said Morgan Keenan Analyst John Lawrence.
As more and more households add pets, Tractor Supply has adjusted accordingly. "We've continued to grow our offerings as pets went from outside the home to inside, and the pet population has grown," said Tractor Supply Vice President Ken Wilmes. The company has even launched its own brand of dry dog food called 4health, with plans to expand the line to include wet dog food and cat food.

Spending increasing in Latin America petfood, pet care market

Latin Americans are spending more money on products and services for their pets despite the poor economy, according to an online article from The Independent.
A July 15 report from Euromonitor International indicated that Latin American and Caribbean pet owners are spending more money than previously on pet care goods and services, such as petfood, toys, fashion accessories, health care and grooming. This trend spreading in Latin America is driven by Americans, who treat their pets like children, and the "pet parents" who believe that animals have equal or almost equal rights to people, according to the report.
Euromonitor statistics reported spending on petfood and pet care products increased dramatically across Argentina and Chile from 2004 through 2009. In Argentina, spending increased from US$0.2 billion in 2004 to US$0.6 billion in 2009, and in Chile spending increased from US$0.3 billion to US$0.5 billion in the same period.