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A new Pet Food Market Assessment 2013 from the Packaging Machinery Manufacturers Institute (PMMI) neatly encapsulates the opportunities and challenges for petfood manufacturers based in or selling to the US. While much of the information in the report is not new to our industry, it gives a fresh perspective on US petfood's short-term future.
The PMMI report says it is "primarily derived from dozens of in-depth interviews with manufacturers and others who work closely with the industry," which makes it somewhat unique from many market reports comprised of mainly sales and other market data. (The PMMI report does include such data, too, from sources such as Euromonitor and the Pet Food Institute.) It leads off with this sentence: "Growth in the petfood and nutrition market has surprised most investors and analysts." That statement itself surprises me, though perhaps it shouldn't considering the report is coming from outside our industry.
We in the petfood industry are not surprised by its continuing growth (maybe relieved, but not surprised) because we know most of the reasons stated in the PMMI report: continuing humanization of pets and, consequently, continued spending on proper feeding of them, even during tough economic times; advances in animal nutrition research, leading to a proliferation of new ingredients, products and even categories; and a growing consumer interest in natural, organic and functional foods and ingredients that extends to what pets eat. That, in turn, has led to 20% growth per year for the last two years for the category in which the PMMI report lumps together natural, organic and premium petfoods. The report adds that some industry experts project this category to reach as high as 32% growth globally, perhaps even this year.
The report's breakdown of the types of petfood packaging used in the US reflects what we know about the product mix of the market. For example, given the proliferation of dry petfood products, it makes sense that bags dominate at 60% usage. Cans are at 12%, yet so are pouches (because they're popular for treats and some semi-moist products), followed by boxes/cartons and trays, each at 5%, jugs/tubs at 3%, other (such as blister packs or shrink-wrapped treats) at 2% and chubbs at 1% (likely from the small but growing number of fresh/raw/frozen products). Further, plastic, laminates and paper are the most popular packaging materials for petfood in the US, with plastic and laminates growing at a double-digit rate, while usage of metal, particularly steel, is falling.
Where the PMMI document gets most interesting, in my view, is its reporting of petfood manufacturers' needs and areas of attention for packaging, all driven by consumer demand and attempts to address specific market segments:
In all of these cases, PMMI says, petfood manufacturers are looking to packaging material and equipment suppliers to offer solutions to these needs.
Another area in which US manufacturers have new and higher expectations of their suppliers is with petfood safety, especially as they strive to comply with new regulations soon to come from the Food Safety Modernization Act (FSMA). In terms of equipment, that means manufacturers expect adherence to certain certifications (such as ISO 22000); the addition of critical control points for monitoring their processes and verifying they're safe; greater sterilization and cleanability (including self-sterilizing/cleaning features); and the enabling of different label sizes to accommodate new labeling regulations (not just from FSMA but also pending new ingredient definition rules from the Food and Drug Administration and Association of American Feed Control Officials).