The outlook for the US pet food market in 2018 remains solid, with Packaged Facts projecting 4.4 percent growth, such that the market reaches US$27 billion. The key drivers are the obvious ones: millennials and online sales, especially in the context of the human/animal bond phenomenon that defines the contemporary market.
Although the political climate remains a wild card, indicators from the general economy are positive. Economic growth was low at 1.2 percent in the first quarter of 2017, but improved to 3.1 percent in the second quarter. Unemployment rates remain low, the stock markets are hitting record highs and consumer confidence has reached its highest levels since 2000.
Pet owners spending less on pets
For years now, on the other hand, approximately a third of pet owners indicate that they’ve reduced spending on their pets (see Table 1). The number has fluctuated somewhat, but nonetheless shows that a very significant segment of pet product shoppers remain economically constrained. For pet owners, as with US consumers in general, economizing often involves strategic retail behavior including trading down across channels and brands, shopping multiple channels for bargains, and increased usage of coupons and private labels, all of which dampen overall retail dollar performance. Generally speaking, with the ongoing bifurcation of the US economy, established pet parents will have already traded up to higher-priced premium pet foods or, conversely, will stick to lower-priced retailers, brands and products.
TABLE 1: In spite of a relatively stable economy, a significant number of pet owners have been saying for years that they’re spending less on pet products.
A slightly increased percentage of dog and cat owners say that they are spending more on pet products, in keeping with the growing tendency to pamper pets: Packaged Facts survey data show that 79 percent of dog owners and 63 percent of cat owners enjoy purchasing pet products that pamper their dogs/cats, and 71 percent of pet owners agree that they like to splurge on an item for their pets every once in a while.
The influence of pet humanization
Humanization in the pet market has morphed from a trend into a given, with more and more pet owners treating their pets more and more like people. As indicated by dog spas and cat cafés, pets are now often viewed more like companions or children than animals. Beyond pet pampering, pet owners are increasingly demanding products for their pets that are on par with, and sometimes even higher quality than, the products they purchase for themselves. Not coincidentally, many of the pet foods on the market are directly reminiscent of human fare, appealing to the pet owner as much as the pet. For example, the goal for Cesar Home Delights, one of the winners of Nielsen’s 2017 Breakthrough Innovation Awards, was to “create dog food that was worthy of a plate.”
The humanization of pets is especially important to market dynamics in the context of aging pets. As of 2017, 30 percent of dog owners have a dog age seven or older, while 28 percent of cat owners have a cat in that oldest age bracket. A closely associated issue affecting the health of the pet population is that pet owners don’t readily or sufficiently recognize when their pets are overweight (the same factor affect human population health, of course). While about 42 million dogs and 50 million cats in the US are overweight or obese, only about a quarter of dog and cat owners consider their pets to be overweight (see Table 2), according to Packaged Facts survey data, which is half of the actual rate, going by Association for Pet Obesity Prevention (APOP) estimates published in February 2017. As pet insurer Petplan reports, the “most frequently claimed conditions have one thing in common: obesity.”
TABLE 2: Pet obesity is a well-known issue in pet food—however, pet owners don’t seem to recognize the state of their pets’ weight.
Finally, the humanization of pets is critical to market growth dynamics in relation to pet food safety concerns, which has helped drive sales of natural and superpremium pet foods. Natural/alternative and superpremium pet foods can give consumer greater confidence about the quality of ingredients and production processes. Packaged Facts survey data show that, for 69 percent of dog owners and 64 percent of cat owners, “fear of pet food contamination/product safety is a key consideration in the dog foods/cat foods I buy.”
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