The Pet Aisle Special Report: Providing Pets with Proper Foods

Pets rely on their humans to feed them, and while pets do not much care about the latest nutrition trends, their humans do.

People are more interested than ever in foods that offer health benefits, and they are including this preference when they shop for foods for their pets. Retailers that pay attention to pet food trends can benefit from offering the right foods, which can include everything from all-natural and organic to raw foods and refrigerated foods.

According to Humanization of Pet Food, a report by Nielsen, certain pet food segments, including healthy treats, specialty pet foods and other more premium options, have seen significant growth as consumers seek what they perceive to be what is best for their furry family member. The pets-as-family trend continues, the report notes, citing a Harris poll that found 95 percent of pet owners consider their pets to be part of the family. These consumers seek certain qualities when they shop for pet foods. They look for foods that use terms related to nature, which hints that the food was made in a kitchen and not a lab. Other key concepts include healthy instead of indulgent, and non-traditional ingredients such as fruits and vegetables in chews. Consumers also want to buy foods that do not contain genetically modified organisms (GMOs).

Industry observers agree that pet owners are looking for healthful foods for their loved ones, and that the grocery store should be a good place to find these foods.
“Pet food trends typically are shaped by human food trends,” says Paul D. Cooke, vice president/director industry development for Nestle Purina Pet Care, based in St. Louis. “Currently, consumers are looking for more natural products that fit their needs, as there is a growing emphasis on health and wellness.”

Cooke adds that Nestle Purina offers several products to meet these consumer demands, such as Beyond, Purina ONE SMARTBlend True Instinct Grain-Free, and Dog Chow Natural and Puppy Chow Natural. Just as important as what is in the foods, Cooke says, is what is not in the foods, such as additives and preservatives.

Cooke predicts that there will be a continued focus on health and wellness in pet foods. “We anticipate this segment could make up nearly 25 percent of the market,” he says. “Since more consumers are looking at their pets as part of the family, we’ll constantly work to improve our product offerings to meet the consumer demands in the grocery space, whether those improvements come from a nutritional and ingredient aspect or making sure our packaging is best-in-class so our products are fresh, durable and consistent.”

This shift in how humans see their pets has been well documented over the past few years, says Steve Joyce, vice president of marketing for Ainsworth Pet Nutrition, based in Meadville, Pa. “Now more than ever, our four-legged companions are considered part of the family, and, as a result, consumers are more willing to spend money on them,” he says. “This evolution in consumer sentiment has driven significant changes in the pet food category.”

Among the significant changes, says Joyce, is that in the grocery and mass channel there has been a dramatic shift in the sales mix as consumers move from corn-based, value and premium diets toward meat first, super premium diets. Pet specialty stores have long offered foods to satisfy consumer demand for meat first, super premium diets. “Because of this shift in consumer preferences, manufacturers are launching new brands or line extensions to fulfill this demand,” he says.

One of the biggest trends is raw foods. Also, foods that contain inclusions in addition to kibble are gaining. Ainsworth’s Rachael Ray brand recently launched dish from Nutrish dog food, which has real pieces of chicken, apples, carrots, potatoes, and peas mixed in with the kibble. Joyce says that another trend in the pet food industry is ancestral diets. “These are high-protein, grain-free formulas that are designed to more closely mimic the diets of the canine’s ancestor, the wolf,” he says.

The ancestral diet is gaining popularity. According to the Chicago-based firm Mintel, in its Pet Food US 2015 report, 55 percent of pet owners are concerned about the amount of filler ingredients in pet food, such as grains and meat by-products, and 49 percent of pet owners feel that the best diet for their pet is what they would have eaten in the wild, such as all-meat diets without artificial ingredients. Millennial pet owners are especially interested in these pet foods that resemble wild diets, with 60 percent agreeing that such diets are best for their pets. The researchers attributed the success of these products to rising interest in natural foods in the human food industry.

Joyce expects that grocery will keep up with these trends, but says there are challenges. “From a product mix standpoint, we will continue to see new, higher end, meat-based diets grow in grocery,” he says. “It will also be interesting to see how quickly the e-commerce channel grows. As platforms like Amazon Prime become more common, we expect that more and more consumers will purchase pet food online.”

Think Fresh

Others agree that the humanization of pets is a good way to explain pet food trends. “When people think about food for themselves they think, where is it coming from, where is it being made, is it truly healthy,” says Scott Morris, president and co-founder of Freshpet, based in Secaucus, N.J. “They want to take away the mystery and science and they want it to look like food. If it’s a carrot they want it to look like a carrot.”

Freshpet, which manufactures items such as refrigerated food that comes in rolls, recently launched several items, including Freshpet Select Stews New & Improved Recipes for dogs. The stews are available in two recipes, Grain Free Beef with Pumpkin & Spinach and Grain Free Chicken with Cranberries, Carrots & Spinach. The fresh, refrigerated meals are packaged in re-sealable deli-style cups.

Another trend, Morris says, is that consumers, especially Millennials, are unimpressed with large pet food manufacturers. “Big companies are having a hard time today being innovative and attracting consumers who don’t want food coming from giant conglomerates,” he says. “That is starting to really push out to pet foods. People are looking for smaller companies, smaller brands, mission based versus these giant heritage big brands.”

Morris notes that consumers also want these brands to be available in grocery stores. Retailers can leverage the people who are shopping the perimeter of the store by making sure center store categories are interesting. “There is nothing more interesting and exciting than pets,” he says. Freshpet is helping by offering products that shoppers have to buy often. “You can’t buy 40 pounds of it and store it in your fridge. It’s only good for so long, so it’s a major traffic driver.”  
Generally, pet owners are happy to buy something while shopping at the grocery or mass store. According to Rockville, Md.-based Packaged Facts, in its February/March 2016 National Pet Owner Survey, 41 percent of pet owners buy their pet food at Walmart. Ten other channels attracted at least 10 percent of pet food buyers: PetSmart (34 percent), Supermarkets (29 percent), Petco (24 percent), the veterinarian (20 percent), supercenters/discount stores other than Walmart (20 percent), dollar stores (14 percent), other pet store chains (13 percent), independent pet stores (13 percent), wholesale clubs (12 percent), and agricultural/feed-seed/farm stores (10 percent).

Made in USA Still Important

Another important trend is that consumers want to know where their pet food comes from, says Cecil Campbell, vice president of sales and marketing for FM Brown’s Sons. “They’re taking a holistic approach when making their buying decisions, and knowing where their food was made is an important aspect to this approach,” he says. “A large majority of our products are Made in USA and we’re proud to manufacture high quality foods right in our own facilities. Forming a direct link with a product is important to consumers, and nothing says quality like the Made in USA badge of honor.”

These trends are important not just for dog and cat owners but for consumers who are shopping for other animals too. FM Brown’s Sons, based in Sinking Spring, Pa., makes premium foods for birds and small animals. “Economy sales are still strong, but many people want to provide their pets with more than just a staple diet that meets their basic nutritional requirements,” says Campbell. “This means people are willing to spend more money on higher quality pet food.” Higher quality, he says, includes features such as sustainability, natural processing, organic ingredients, gluten-free and gourmet recipes.

In fact, says Campbell, premium pet and wild bird food sales now account for the same annual dollar sales as economy blends. Supermarkets can benefit from this consumer trend. “Our grocery customers are seeking to compete with the pet specialty channel in the premium food category by improving the quality of the pet foods they carry, and expanding their inventories. Due to the tremendous growth in private label sales, grocery stores are hoping to capture more of these premium sales by providing gourmet private label options to rival those sold in pet specialty stores.”

The treat category is also moving toward healthier options, says Kevin Claypool, vice president of sales for Petlife Americas Pet Care Corp., based in Clinton Township, Mich. “Consumers are now looking for healthy all natural treats with limited ingredients, and don’t want any products made in China. I think the reason is consumers themselves are getting much more health conscious and they want the same for their pet.”

Petlife Americas recently launched Cluckastic Tasty Dental Chews, which are made with real U.S.A. chicken breast and turkey, and have natural brown rice, coconut oil for its superfood benefits, and cheddar cheese and chlorophyll to treat and prevent bad breath.

Limited ingredient treats are on-trend now, says Claypool, especially those with ingredients that consumers can pronounce and recognize. Grocery is catching on with the trend. “Grocery is now starting to recognize that they have to start carrying these healthy natural treats to be able to compete with independent pet stores, and the mass pet stores.”

Pet Food: By the Numbers

According to IRI, a Chicago-based market research firm, sales of pet foods at supermarkets, drugstores, mass market retailers, military commissaries and select club and dollar stores totaled nearly $14 billion in the 52 weeks ended May 15, up 1.6 percent compared to the same period the previous year. Sales of dry dog food were down 2.2 percent to just under $5.0 billion. Sales of wet dog food were up 4.2 percent to more than $1.4 billion. The segment that performed especially well was refrigerated and frozen dog food, which increased 22 percent to $148.4 million.  

Cat food sales were flat. Sales of dry cat food totaled just more than $2.3 billion, down 0.1 percent. Sales of wet cat food were up nearly 3.9 percent, to $2.1 billion.
Dog treats fared well, up four percent for a total of approximately $2.2 million. Cat treats are gaining, up 13.6 percent for a total of more than $524.6 million.