SPECIAL TREATMENT 1997

RICHARD TURCSIK

Pet treats have become a high-profile, high-profit item in the pet food aisle.

Dog biscuits, bones and soft chew treats and soft chewy cat treats are adding incremental, high-margin impulse sales to the category. They are also helping supermarket operators win back customers from mass merchandisers and pet superstores.

"Pet treats are a high-margin product that supplements what we are doing in the rest of the aisle," said Nathan Sliva, category manager at Randalls Food Markets, Houston.

"The snacks and treat category has good margins, since the sales are mostly impulse," said Brian McColgan, buyer, Bozzuto's, the Cheshire, Conn.-based distributor "If a store is out of an item, the consumer will most likely trade off to another product."

In terms of margins, Price Chopper Supermarkets finds the pet treats to be the most profitable areas in the pet aisle, said Barbara Page, public relations manager for the Schenectady, N.Y.-based chain. Page said that at Price Chopper, at least 75% of pet treat sales are impulse.

"Pet treat sales need to be fueled by the use of off-shelf displays.

The shippers are the best vehicle to grow and increase impulse sales in this category," she said.

Shippers have worked for Price Chopper. Page noted that cat treat sales are up as much as 29% and dog treats are up 6%. Leading brands at Price Chopper include Pounce and Whisker Lickins in cat treats and Chew-Eez, Price Chopper Jerky Sticks and Pupperoni in dog treats. Private-label dog treats have been introduced at the chain within the last year.

Dog and cat treats are also selling well at supermarkets supplied by Spartan Stores, the cooperative wholesaler based in Grand Rapids, Mich.

"Dog treats are a little more than 10% of our total dog food sales, and cat treats are a little more than 3% of our total cat food sales. Both dog treats and cat treats are trending up," said Gary Evey, a company spokesman.

At Spartan, Evey said dog biscuits are generally outselling the treats, with the most popular brand being Milk-Bone. Spartan dog snacks and dog biscuits are also popular with the canine set, while Whisker Lickins and Pounce cat treats are popular with felines.

Spartan recommends a vertical block in cat treats, placed next to the cat food, and a horizontal set above the dog foods on dog biscuits and treats, Evey said.

At Big Y Foods, Springfield, Mass., dog treats account for about 12% of dog product sales, while cat treats account for about 3% of cat product sales, said John Corcoran, category manager. On average, the treats offer Big Y margins of between 25% and 35%.

"Sales have been up in dog treats, but flat in cat treats," he said. "Dog bones, treats and bulk bones, and cat treats sell best, and the new trend is anything that is lamb and rice based."

Big Y merchandises its dog and cat treats between the wet and dry dog and cat foods, respectively, and frequently uses buy-one, get-one-free promotions to build volume. Also, like the other chains SN polled, the retailer uses shippers supplied by the manufacturers.

"Approximately 25% of the sales are impulse and we find off-shelf displays and pet treat shippers to be mandatory," he said.

"We compete with pet superstores by reaching hot sale price points with display activities to capture impulse sales," Corcoran added, noting that the chain also is taking other steps to improve the category.

"We recently did efficient assortment in the dog treat section, eliminating 14 stockkeeping units and adding four," Corcoran said.

Bozzuto's has called in manufacturers to help it improve its treat category sales.

"We are now doing a category review of dog and cat treats that involves Nabisco [manufacturer of Milk-Bone] and Heinz Pet Co.," McColgan said, noting that supermarkets still maintain about 40% of category sales, and that at Bozzuto's treat sales remain strong, up 7% to 9%.

Spartan Stores is another wholesaler who also regularly updates product offerings.

In the dog biscuit and treat area, Spartan updates its product offerings about three times each year to bring new items to the consumer. In the cat treat area, it has increased the number of products it stocks. It also offers shippers at key times throughout the year to capitalize on the impulse nature of these sales, Evey said.

Rosauers Supermarkets, Spokane, Wash., is also looking closely at the items stocked in its pet aisle in a bid to improve sales.

"The pet food stores have taken a lot of our business away," said Pat Redmond, buyer.

Rosauers has been expanding its pet department offerings by stocking more treats, in addition to nonfood items, like carriers and bowls.

At Rosauers, rawhide bones and large bags of dog biscuits are selling well.

"The 5-pound bags of doggie bones seem to be doing well. I think they are also doing well in the warehouse-club stores," Redmond said. "We stack them up like kindling and they sell."

Redmond said treats were merchandised in a separate section, but now are being merchandised in-line with the other pet foods.

"We thought about placing them on an endcap, but an endcap really isn't big enough anymore," he said.

At Randalls, pet treats are merchandised separately in the department, Sliva said.

"We don't do an over-and-under set. We have one straight set up and down, where the treats are basically on top of the biscuits. We found that works better than integrating the treats within the set," Sliva said.

Randalls has done some tinkering with its cat treat offerings in recent months, discontinuing several items because of poor sales, Sliva said.

"Pounce came out with some new items, and in reviewing the category, we found that a lot of the Pounce items were not doing very well. [The company] added some items, but they lost more than they added to make room for them. The Bonkers never really did well for us, so we took it out," he said.

Vern Buford, head grocery buyer at Rice Food Markets, Houston, said pet treats sell well only at his scale Epicurean stores.

"The new entrants in the category have expanded it for us, but I don't see it as being a continually growing category. There are only so many people who are going to buy so many treats for their dogs," he said.

According to Information Resources Inc., Chicago, pet treats are a growing business. For the 52-week period ended Dec. 29, 1996, dog biscuits/treats/beverages had sales in supermarkets of $411.3 million, a 0.6% increase over the previous year.

Cat snacks/beverage sales had even stronger growth, up 9.3% to $55.4 million during the period.