The August 2016 issue of Petfood Industrycovers the global players in the pet food industry. The U.S. market continues to dominate, but several other regions are taking an increasing share of the market as they become more developed.
"Natural: present in or produced by nature; of, relating to or concerning nature; not altered, treated or disguised." Those are just some of the definitions for the word that is showing up more and more on all types of consumer products, including petfood.
There are no regulations or standards for using "natural" as a label claim on any product, even food. For petfood, the Association of American Feed Control Officials -- whose definitions are what the US Food and Drug Administration and most state regulators follow in regulating label claims -- defines "natural" to differentiate products and ingredients in terms of their sources and processing methods, according to Dr. David Dzanis, CEO of Regulatory Discretion Inc., and author of the Petfood Insights column for Petfood Industry.
"For example," he writes, "natural products or ingredients must be of animal, plant or mined sources but can be ground, cooked, dried, rendered, purified, extracted, hydrolyzed or even fermented. The key factor in determining applicability of the term is that anything that is manufactured by means of chemical synthesis or contains a chemically synthetic substance is not natural (at least not without further qualification, such as with a petfood containing synthetic vitamins but otherwise meeting the definition.)"
Dzanis points out that not everyone agrees with that definition. But despite the lack of agreement or standards, "natural" as a label claim is not going anywhere (for petfood or any other types of products), because consumers keep buying into the claim. According to Mintel, more than 60% of consumers agree with the statement, "If a product is labeled all natural, it's healthy." Further Mintel research shows more than 35% of all new consumer products introduced in 2010 bore the natural label claim, by far the most popular.
Packaged Facts projects sales of all natural pet products to reach US$4.1 billion by the end of this year, reflecting a compound annual growth rate (CAGR) of 17% from 2008-2012. The bulk of those sales are from natural petfood, which will hit US$3.9 billion this year and has an 18% CAGR since 2008. And, that growth rate is expected to continue, with sales of all natural pet products rising to US$9.4 billion by 2017, Packaged Facts projects.
For petfood, it's all about the ingredients, says David Lummis, senior pet analyst for Packaged Facts and author of the report. He also attributes the continued growth of natural petfood to the fact that distribution, sales and product development are spreading from the traditional base of independent pet retailers to mass merchandisers, including "big box" pet retailers like Petco (which now has natural petfood sections in many of its stores) and PetSmart as well as Walmart (with the launch of its Pure Balance line this year) and even the grocery channel.
So while current market share of natural petfood sales is dominated by familiar names such as Nutro and Blue Buffalo -- which combined capture 40% of the natural petfood market -- as well as WellPet, Natural Balance, Merrick and Natura (each holding 5 to 10% market share), we're also starting to see names like Nestle Purina (with its Beyond One line), Hill's (reformulating its Science Diet line to all natural), Iams (Healthy Naturals) and yes, even Walmart.
"What’s more," says Lummis, "as Science Diet converts to natural and the natural petfood competition heats up even more, it’s increasingly likely that one of the leading natural brands in the pet specialty channel will make the leap into mass, further blurring the already somewhat tenuous distinction between the natural petfood brands sold in the two channels."
All in all, it makes natural petfood an interesting trend to watch and, for petfood companies whose business strategy aligns, a healthy category to continue to develop.