CHICAGO — Earlier this month, NielsenIQ released its “2023 Pet Trends for Pet Food and Pet Supply Brands” report, detailing the top trends in the overall pet industry and specific growth drivers for the pet food and treat sector.
Overall, the pet industry has significantly grown over the past few years. In April 2022, the American Pet Products Association (APPA) revealed that the US pet industry achieved its highest level of sales at $123.6 billion in 2021, far above the association’s expectations of $109.6 billion. With this 13.5% year-over-year growth expected to continue for 2022 and beyond, it’s safe to say the pet industry is thriving despite COVID-19, a volatile supply chain environment, labor and transportation and issues, and other challenges.
“The numbers don’t lie: the pet industry has shown itself to be incredibly strong and resilient with a record-breaking two years,” said Anne Ferrante, senior vice president of member relations and business development at APPA, following the release of the association’s 2021 State of the Industry data. “We expect continued growth as we look toward the remainder of 2022, although we anticipate it may be at a more moderate pace given the impact of volatile factors like inflation, supply chain issues and global relations.”
In fact, this growth has not only benefited the industry at large, but has also helped support the US economy. According to Pet Advocacy Network’s “The Economics of the US Pet Food and Pet Supply Industry” study, in partnership with the APPA, Pet Food Institute (PFI), Pet Industry Distributors Association (PIDA) and World Pet Association (WPA), the pet industry contributed $260.5 billion, directly and indirectly, to the US economy in 2021. The industry also contributed about $23.4 billion in local, state and federal taxes, and contributed $174.67 billion in annual GDP to the economy in 2021.
“This industry collaborative study shows the continued growth and importance of the pet sector,” said Vic Mason, president of the WPA.
With a ton of growth behind the industry — and significant growth on the horizon — NielsenIQ shared the top trends emerging pet supply and nutrition brands should keep their eyes on to succeed in the market.
Trends for pet care
Price increases are hitting every aspect of the pet industry, as well as non-pet industries, leaving no one unaffected. According to NielsenIQ, average unit prices for CPG products rose 11% this January. The consumer price index (CPI) also continues to rise, causing further strain on consumers and hinting at a possible consumer recession. According to the market research firm, pet food prices in 2022 increased an average of $0.30, marking the largest increase in the past five years.
Assortment optimization is becoming a concern for many pet care brands. With price increases forcing consumers to reevaluate their pet purchasing habits and spend less on pet products, brands are relying on consumer data and insights to redefine their product mix.
According to NielsenIQ, the number of pet food UPCs sold declined by 2.4% in 2022, representing the first time assortment sales have dropped in more than four years. Because of this, many companies are reexamining their product assortment with a goal to better optimize their product mix.
In fact, The J.M. Smucker Company recently did just this, divesting some of its pet food brands to focus on its most successful brands: Milk-Bone and Meow Mix.
The humanization of pets and increasing pet ownership continues to heavily influence the pet industry. With more and more pet parents treating their companions as part of the family, or even their best friends, demand for high-quality, premium, functional and personalized pet nutrition and other supplies has skyrocketed, contributing to increases in purchasing. According to NielsenIQ, at the end of last year, there were more than 110 million households purchasing pet products with an average value per buyer of $680, an increase of 10.7% compared to 2021.
Lastly, omnichannel shopping methods continue to reign over the industry. Whether consumers are seeking pet supplies, toys or nutrition products, they’re utilizing both brick-and-mortar and e-commerce purchasing methods. According to the market research firm, more than one in five (about 22%) of pet product shoppers utilize online ordering and then make an in-store trip to acquire their pet products.
Aside from their purchasing methods, omnichannel shoppers search for products in different ways compared to their non-omnichannel counterparts. This specific group of pet parents does not search by brand; instead they focus on product attributes, like “gluten-free,” “sustainable,” and “ethically sourced.” With this in mind, pet brands are encouraged to reexamine their products’ attributes to make them more discoverable by consumers.
Trends for pet nutrition
In the United States, pet food and treat sales are witnessing great growth. According to APPA, $50 billion was spent on pet food in 2021, accounting for 40% of all total pet industry sales in the country. Though this industry is ripe for continued growth, four specific trends are making, and breaking, emerging pet food brands.
With marketing increasing behind “biologically-appropriate” pet food diets, carbohydrates — particularly grains — have come under consumer scrutiny. Many consumers have embraced grain-free pet food formulas but, during the past three years, interest in these particular formulas has slowed.
This stagnation in grain-free is partially due to the US Food and Drug Administration’s (FDA) canine dilated cardiomyopathy (DCM) scare brought up in September 2020, possibly linking the heart condition to grain-free diets. Following years of investigation, the administration ultimately declared it “does not know the specific connection between these diets and cases of non-hereditary DCM,” leaving consumers — and the pet food and treat industry — at a loss.
Despite this, consumers are turning away from grain-free formulas, causing rising interest in grain-inclusive diets and those made with “ancient” or “wholesome” grains. According to NielsenIQ, sales of grain-free dry dog food reached $1.4 billion in 2022, a modest 4.5% increase year-over-year. On the other side, grain-inclusive dry dog food sales rose more than 20% in both in-store and online purchasing channels.
Sustainability continues to be a top priority for consumers, who are now beginning to consider the environmental impact of their pets’ food. In turn, this has led to more consumer demand for sustainable and ethical pet foods, like plant-based, vegan formulas, diets made with insects, and the sourcing of more novel proteins. More sustainable packaging, including recyclable, compostable and reusable, has also flooded the pet food market to answer this call for sustainability.
According to NielsenIQ, sales of pet food identified as “certified humane raised and handled” increased 110% during the past two years, accounting for about $11 million. Sales of pet foods promoted as “ethical” grew 48% to $11.7 million, and those with “cruelty-free” claims increased 10% to $18 million in sales.
E-commerce has played a key role in driving many industries, including pet food. According to NielsenIQ, total e-commerce spending is anticipated to reach $36 billion this year, a 20% increase from 2022. Though in-store shopping remains top-dog, e-commerce pet food sales show the largest growth, increasing 16.4% to $11 billion in 2022 compared to 2021, according to Euromonitor. For reference, in-store shopping increased 3.7% during the same period.
More specifically, online sales across wet and dry pet food and treats are growing at a faster rate than those in-store, according to NielsenIQ.
This growing popularity in e-commerce shopping hasn’t gone unnoticed by the pet food market, as many new brands have launched with an online-only focus (or will first launch online, then hit retail shelves after a few years), while more established brands start to increase their digital presence.
The humanization of pets is not just driving the overall pet care industry, but is also driving the biggest trend in pet food: personalization. According to NielsenIQ, personalized nutrition represents one of the biggest trends in online retail. As pet parents come to the realization that pets are as much individuals as humans, and begin feeding them as such, demand will continue to rise for more tailored foods, treats and supplements that target specific health needs.
Grain inclusion, sustainability, e-commerce and personalization are expected to continue to drive the pet food industry forward to its next phase of growth.
Keep up with the latest pet food trends on our Trends page.