The August 2017 issue of Petfood Industry explores how the top five pet food companies have faced legal challenges but still increased annual revenues since the last update of the Top Pet Food Companies database.
Online sales of pet food and other pet products increased from about 6 to 14 percent in 2016, depending on the region of the world, with sales of dog and cat food rising at least 15 percent in the US alone. This data, courtesy of Euromonitor International, highlights just how important the online channel is becoming to pet food sales, particularly as the uber-connected and “digital native” millennial and younger generations move up the ranks of pet ownership.
Another source, IBISWorld, corroborates Euromonitor’s data, showing that online sales of pet food and supplies grew at an annualized rate of 8.9 percent from 2011 to 2016, with sales increasing 7 percent in 2016 alone, reaching a total of US$4.9 billion globally.
In the US, dog and cat food online sales totaled about US$1 billion in 2016, or about 3 percent of the US$31 billion market, according to Euromonitor. Jared Koerten, the research firm’s lead analyst for pet care, projects that the US online channel’s share of pet food sales could hit 5 percent this year.
Koerten and his colleague Damian Shore, a contributing analyst at Euromonitor, have both commented on how the growth in online sales is affecting not only brick-and-mortar outlets, particularly pet stores, but is also impacting pet food brands. For example, Blue Buffalo’s sales in pet superstores decreased by “low single digits” during the third quarter of 2016, “while its online sales exhibited strong growth,” Shore wrote.
During the American Feed Industry Association’s Pet Food Conference in Atlanta at the end of January 2017, Koerten presented a chart showing how brands that had originally positioned themselves as pet specialty brands – meaning sold only in pet stores – are now appearing and selling on ecommerce sites, in addition to other channels like home improvement stores. This includes not only Blue Buffalo but also names like Hill’s Science Diet, Nutro and Merrick, among others.
As much as pet food manufacturers may intend to stay loyal to specific retail channels, sometimes changes in the marketplace lead to a different strategy. These changes are likely to continue as millennials’ influence as pet food purchasers strengthens. Not only are they more apt to buy online, they tend not to be brand loyal.
Yet it’s not just millennials who are purchasing their pet food online. I recently joined their ranks. Though I have typically made a point of shopping at local businesses, including pet stores, I am now shopping more and more online, especially after moving to a small town a few months ago. It’s near a large city and metropolitan area, but still enough on the outskirts to not have many shopping choices. With pet food, the only options in town selling it do not carry the brands my cats are accustomed to eating. Pet stores that do carry the brands are only about a 15-minute drive away, but during a very busy week, I found myself getting low on cat food and not envisioning the time to make the trip. Thus, the online order.
Will I continue to order my cat food online and possibly even set it up as a subscription? I’m not sure, but the fact that I can also pay less and get free shipping makes it an even more attractive option. And I imagine I’m not the only non-millennial pet owner who is starting to re-evaluate how and where they buy pet food.
As ecommerce’s impact on nearly all categories of goods grows, it will be a channel worth tracking and learning more about. That is exactly what research firms such as Euromonitor are doing, along with Packaged Facts, who has told me they are really delving into internet pet product purchasing trends this year. I’ll have an update on that after Global Pet Expo in a few weeks.