WHAT'S NEW, PUSSYCAT?

BARBARA MURRAY / Additional Reporting: JON SPRINGER

The population of pet cats in the United States has exceeded that of dogs, so that there are about 64 million cats kept as pets, according to the American Pet Products Manufacturers Association, Greenwich, Conn.

That's a lot of cats, and their owners spend a lot of money on them.

The challenge for supermarkets is to encourage these folks to continue to spend it in the grocery store, as they have been doing. Information Resources, Inc., Chicago, pegged sales of canned cat food, for example, in the food store channel at a flat $987 million for the year ended June 18, while the mass merchandisers had $237 million, but gaining by 14%, and the drug store channel had $16 million, also a flat performance.

Supermarkets generally stock the 20% of cat products that bring 80% of the sales, said Mike Jadrich, corporate director of in-store solutions for Supervalu, Minneapolis, Minn. New items in cat care, such as pearly litter beads and vitamin-enhanced canned cat food, keep the category interesting, as well as the toys and care items that more and more often are merchandised in the pet aisle. Some supermarkets are investing in and updating their pet-food aisle, while others seem content to coast, according to consultant Bill Bishop, a partner in Willard Bishop, Barrington, Ill.

With so much going on in the category -- from the recent availability of Iams pet foods to the hot contest for e-shoppers -- it seems this is a good time for retailers to walk their pet aisles and make sure they don't look the same as they did five years ago. "The added Iams line has been a welcome addition to the pet food aisle," said Cheryl Coveney, spokeswoman for Stop & Shop, Quincy, Mass. The chain began offering it in March along with the national rollout.

The pet-treat segment is up significantly, by about 40%, according to IRI. Joel Adamson, vice president of marketing for Omaha, Neb.-based Sergeant's Pet Products, said the company's two most significant new products are Feline Uri-Health, an herbal extract that helps inhibit the growth of bacteria, and Sergeant's Prow-Trim treats for overweight cats. "About 50% of the cats in the U.S. are overweight," Adamson said.

Adamson, who checks the pet aisles frequently, said "There is an interest in reactivating the pet aisle, with the move of the Iams brand into grocery."

Major food retailer Safeway, Pleasanton, Calif., appears to be going into a national distribution model with e-tailer Pets.com, San Francisco, with Pets.com saying the agreement includes selling Safeway's private-label pet products on its Internet pet store. "Safeway already has an exclusive relationship with localized grocer Groceryworks.com," wrote Matt Stamski, Gomez Advisors' senior analyst covering the on-line pet industry. "The Safeway relationship functions much as the Amazon investment," another partner to the larger Pets.com, known for its brown-and-white dog sock puppet. Pets.com struck the deal with Safeway as part of its acquisition of competing Petstore.com, Emeryville, Calif., for $14 million in cash and stock, in June.

"Safeway will alert shoppers to its new pet partner in its stores, thereby extending the halo effect of a trusted brand recommending a service to loyal customers," Stamski wrote in an on-line analysis last month. "Be prepared to see the inveterate sock puppet in a pet aisle near you," Stamski wrote.

Debra Lambert, spokeswoman for Safeway, said that the chain "is still working out the details" and had nothing further to add at this time. Safeway's Denver division is currently holding microchipping clinics at more than four dozen stores, according to Jeffrey Stroh, director of public relations for that Safeway division. Microchips, embedded under the pet's skin, is the only permanent form of identification. Pet owners with the Safeway Club card will be able to receive the microchip and registration in the national database for $30. A donation from the sale of every microchip will be made to a local animal charity.

It seems that 2000 might be a golden age of pet care. Pet superstores regularly carry cat food that is low in magnesium and ash; that promises to reduce hairballs, clean teeth, freshen breath and even reduce stool odor.

John Catsimatidis, chairman and chief executive officer of Red Apple Food Group, which operates 45 Gristede's and other metro New York supermarkets, said he believes supermarkets "are very much competitive, because we carry a lot of products. Anybody in the city who wants to be a specialty operator has a problem, because the supermarket can carry as much, if not more, and its cost of operation is less."

The release of Iams pet foods to the grocery channel last spring, and the convenience of one-stop shopping, gives supermarkets an edge. Stop&Shop, with its larger stores, carries a full range of pet products, including "cat condos," indoor climbing structures for cats, and Feline Pine, a type of litter recommended for declawed cats, said Coveney, spokeswoman for the chain. "The supermarket channel concludes that 'the mass outprices us,' when in fact, price is only one of the considerations here," said Bishop, the consultant. "We have a lot of understanding of consumers that might be heavy buyers. They typically want more variety, and [they want] something that's easy to shop. They are not so much price-driven, although they do want a fair price. It's very well documented that the educated and health-conscious consumer wants more high quality, high nutrition items," Bishop said. Space is always tight, especially in smaller-sized urban markets, but cat food has grown exponentially in New York City, the Red Apple chief executive said. In Gristede's stores, more canned cat food is sold than dry, which is counter to the trend nationally, but which is a peculiarly urban phenomenon, perhaps because cans are easier to carry home. "In the city stores, we sell more cat food than dog food," and Stop & Shop customers purchase canned cat food more than dry, Coveney said. Stop & Shop offers pet tips on its Web site, currently listing advice on how to train a cat to use a litter box, from one of the chain's vendors, Ralston Purina.

Nationwide, canned cat food dropped 4.6% in equalized units sold for the year ended June 17, according to ACNeilsen, Schaumburg, Ill; also, the APPMA survey said dry food is fed twice as often as canned. Dry cat food was up 5.8% in equalized units, and in dollar sales in total U.S. food stores with $2 million or more in sales, dry type cat food increased by 5.4% compared to one year ago, the biggest gain since 1997, ACNeilsen statistics say. Two to five pounds is the size of dry food most commonly bought, according to APPMA. Dry cat food also sold best in the food channel, but again, the mass channel gained the most, 18%, even though its total dollar sales were less than half of the food channel's.

According to IRI, the best-selling dry cat food was private label, followed by Purina Meow Mix, Purina Cat Chow, Friskies Dry, Purina One, Friskies Chef Blend, Purina Kit N Ka Boodle, Purina Kitten Chow, Purina Cat Chow Special Care, and Purina Deli Cat Dry Cat Food.

In canned cat food, Friskies remains the top selling brand, according to IRI, followed by Fancy Feast, private label, 9 Lives, Friskies Fancy Feast, 9 Lives Plus, Kal Kan, Whiskas, Friskies Alpo and Friskies Special Diet.

The popularity of cats is catching up to dogs, according to Supervalu's Jadrich, because "cats are easier to maintain." In today's world, with people on the go, and seldom home to walk the dog, cats seem like a good alternative. Also, more apartment buildings permit cats than dogs.

Many cat owners can't even be home enough to plan to use canned food. "I believe that's why we're seeing increased movement in dry food," Jadrich said.

Sales of dry and canned cat food are pretty even, according to IRI, which pegs both categories at about $1.2 billion. Canned is actually about $8 million higher, but canned is decreasing, while dry cat food is holding steady.

Although veterinarians recommend low-ash, low-magnesium cat food, Jadrich said supermarkets generally won't carry special remedies or prescribed food. "That's an opportunity for a retailer that has a lot of cat or dog lovers in their marketplace and if that is an area they can expand into, because distribution becomes a real challenge," he said.

High value, highly nutritional food, like Iams, "was not even available in our channel until this spring," he noted. "A lot of vets will recommend that, or Eukanuba or a Science Diet." Some pet doctors recommend cat vitamins, or even adding echinacea to cats' drinking water to build up their immune systems prior to or after surgery or if it's sneezing.

There's an inherent advantage to a pet superstore having veterinarians on-site, Jadrich said. He thinks it would be a good idea for supermarkets to have knowledgeable personnel on hand to answer consumers' questions about their pets.

"We're recommending to a lot of our retailers that if you can create an information center, it can work as a library, or you might create an alliance with a local vet.

The APPMA survey found the most common cat care item purchased was the pooper scooper, followed by a water or food dish, and carpet stain remover, in a tie for second place. Identification tags, carriers, medicated shampoo, other spot removers and deodorants, and automatic feeder or watering devices also are popular.