Premium Brands Remain the Foundation of the Pet Category

Sponsored by Nestlé Purina.

However like a new puppy gobbling up all of the attention from the previously solo four-legged friend, retailers must not allow pet parents seeking the latest in natural and ultra pet food to shift all focus from the majority – the core pet shopper and the premium brands which remain the foundation of the pet care category.

With American consumers spending over $66 billion on their feline and canine family members in 2016, the pet care category continues to provide a huge opportunity for retailers.^[1] An opportunity, which according to recent Nielsen data, ranks US pet care as the #2 category out of 320 food, drug & mass retailers.^[2]   

While the premium pet food segment, which includes familiar and trusted brands like Dog Chow, Cat Chow, Pedigree, Friskies and Beneful, has seen some decline over the past few years, it remains the dominant segment within the pet care category. In fact, it still represents more than 20 percent of the sales within the dry dog segment and over one-third of sales within the dry cat segment.^[3]  Within the pet care category, over forty-six million total households across both the dry cat and dry dog segments buy premium brands.^[4]  With over 45 percent household penetration for dry dog and 63 percent household penetration for dry cat, it is no wonder the premium segment has such a large impact on the total pet food category.^[5]

As the rising tide lifts all boats, the slow decline in sales of the premium segment could eventually drag down the pet care category as a whole if not addressed. Driven by shifts to large and extra-large bags, the price per pound of premium dry dog food has continued to decline over the past several years.^[6] Supporting smaller bag sales and items that drive a higher price per pound within the premium segment could help to stabilize future declines.  As the premium segment expands to include natural and grain free options, such as Cat Chow Natural, Dog Chow Natural and Beneful Grain Free, it will provide opportunities to increase the price per pound among those core customers.

Even with the explosion of new pet food segments now available in grocery, such as natural, the core consumer within the premium segment remains extremely loyal to their brand, with more than 60 percent of pet owners who purchase either premium dry cat and premium dry dog  feeling “completely satisfied” with the brand they are feeding.^[7]

This high degree of loyalty and confidence in these iconic brands means that premium pet food shoppers are not likely to switch to anything outside their comfort zone, but they may be open to trading up to varieties within the segment, which would enable premiumization.

Among premium dry cat and dry dog shoppers, the importance of the food they feed being made with high quality protein, natural ingredients, no artificial colors, flavors or preservatives or free of grains, has increased significantly since 2014.^[8] 

Providing solutions within the premium  pet food segment, such as offering a variety of formulas that meet the pet shopper’s needs (i.e. natural or grain-free) as well as optimizing the bag size assortment could help to increase the premium price per pound and, consequently, total pet care category sales. Seizing the opportunity to increase price per pound in the segment, even by only a small amount, could lead to over $600 million in category growth over the next three years.

Like the loyalty that this core consumer shows to their brands, they expect that same level of loyalty from the retailers that serve them. The premium pet food shopper is still a pillar of the pet care category, and retailers must continue to provide them with premium solutions that fit their needs.

^[1] APPA Public Information – 2016 Total US Pet Market Sales (Food, Supplies, Vet Care, Live Animal, Pet Services)

^[2] Nielsen AOD 2016

^[3] Nielsen Custom Scantrack Analysis, CY2016

^[4] Nielsen Homescan Panel, 52 W/E 06/30/16

^[5] Nielsen Homescan Panel, 52 W/E 12.31.16

^[6] Nielsen Custom Scantrack Analysis, CY2016

^[7] Purina US Segmentation Resizing 2014

^[8] Pet Attitude Tracker, Q1 2016, Top 2 box agreement vs Q3 2014