ROCKVILLE, Md. — Steady growth in US pet food sales in 2018 has continued into 2019, according to Packaged Facts annual report, “Pet Food in the U.S., 14th Edition.” Disruptive consumer trends, however, are changing the retail landscape and forcing pet food brands to adapt or die trying.
One of the main challenges in modern retail is the growing prominence of e-commerce, which offers convenience and often savings as subscription pet food purchases have become more common.
This shift is not unique to pet foods and treats, as consumers have begun to prefer purchasing products for themselves and their pets online rather than through brick-and-mortar retailers. For some brick-and-mortar sellers without an online platform, ignoring this competition is no longer an option.
Brands and retailers alike have begun to blur the lines between pet specialty and mass retail outlets, which previously distinguished high-priced brands from lower-priced ones and created a natural rift in the distribution of sales in the pet food and treat market.
Because those traditional barriers are fading away and premium claims, such as grain-free pet and all-natural diets, continue to drive sales, an increasingly wide variety of premium pet foods have become available through various mass and e-commerce channels, speeding up the “mass premiumization” of the market, Packaged Facts reported.
E-commerce giants such as Amazon, Chewy and Walmart have recognized and capitalized on this trend by expanding their pet food offerings and stocking retailer-owned house brands to compete in the new retail environment. This mass premiumization is effectively driving down the price of pet foods, according to Packaged Facts, although production costs are trending upward.
Food companies who are looking to maximize profits by acquiring pet food businesses are also playing a part in altering the boundaries between retail outlets, often disadvantaging independent pet specialty retailers in the process.
"For pet food, retail, marketing, and new product initiatives are hopping," says David Sprinkle, research director for Packaged Facts. "And from a merger and acquisition perspective, the past couple of years have been nothing short of dynamic."
Additionally, the report points out that the pet population has plateaued and, consequently, so has demand for pet foods in the US from the perspective of volume. This poses a threat for pet food manufacturers and brands, as they will be forced to pioneer product claims and stay ahead of market trends and consumer preferences to deliver sales gains in a vastly proliferated market as it undergoes structural transformations.
Keep up with the latest pet food trends on our Trends page.