Online pet food and product retailer Chewy will offer fresh pet food products under its premium proprietary label, Tylee’s. Chewy will also carry new fresh pet food products from Freshpet brand. Chewy executives announced the new products in the company’s first quarter 2021 letter to shareholders.
For the Tylee's brand fresh pet food, Chewy designers developed and patented a packaging method that they claim is both sustainable and preserves product quality during the delivery process.
“We are currently in Beta mode and will soon launch initial distribution in three geographies covering approximately 60% of Chewy’s customer base, and we intend to grow both our fresh catalog and expand geographic distribution as we scale this business,” Chewy executives wrote in a letter to shareholders. “We are enthusiastic about the fresh and prepared foods category and the opportunity to serve new customers and expand assortment choices for our existing ones.”
Entering the fresh pet food market expands Chewy’s total addressable market, they wrote.
Pet foods markets as fresh tend to be cooked without extrusion then refrigerated or frozen for sale.
Pet food sales and new customer acquisition have remained strong for online retailer Chewy in 2021, even as pandemic-related movement restrictions relax in the United States. Chewy’s net sales of pet foods, treats and other products increased 31.7% year-over-year in the first quarter of 2021, ended May 2, to reach US$2.14 billion. The online pet product retailer had net income of US$38.7 million. Net sales per active customer (NSPAC) increased by US$31, or 8.7%, year-over-year to US$388. Out-of-stock problems proved persistent throughout the quarter and reduced first quarter net sales for Chewy by an estimated US$40 million.
In February 2020, pet food market analysts with Nielsen Global Connect observed that mass market wet pet food sales were growing year-over-year at 6% for conventional shelf-stable varieties and 32.9% for refrigerated pet foods. Similarly, premium wet pet food sales in pet specialty sales growth stood at 18.6% for shelf-stable, frozen at 44.3% and refrigerated pet food growing 22%. Then the ongoing COVID-19 pandemic radically altered established pet food customer buying patterns. As of the four weeks ending August 8, 2020 refrigerated wet food had reached a higher sales growth rate than before the pandemic in pet specialty retailer outlets and in food, drug and mass market.
“We can see prior to COVID…both of these segments performing very well, with refrigerated growing quite a bit faster than shelf stable wet food,” Sean Simpson, associate client director for Nielsen, said during his presentation at Petfood Forum CONNECT. “The COVID spike saw a pretty big bump for both of these segments. But post COVID we could see that shelf stable dropped into negative and flat, [then] quickly returned to positive, but refrigerated food held consistent.”
“Within the traditional pet specialty retail side, we again can see premium wet food growing much faster than traditional shelf stable wet, prior to the COVID spike, during the COVID spike and then post COVID spike as well,” Simpson said. “Refrigerated stayed positive throughout the COVID lockdown period. Frozen food stayed positive throughout this period within pet retail. Dropping down from 44% growth to 4% growth, but staying positive and eventually jumping up to about 13% growth year over year. Refrigerated wet food was similar to what we saw on the total channel. It dropped down into the negative, then improved to positive, with refrigerated or fresh food performing better than shelf stable wet. Heading into August, seeing the highest growth year over year for the wet food category within traditional pet retail at 25% growth year over year.”
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