Euromonitor International's latest research, published in June 2010, expects the global petfood industry to see steady retail value growth in 2010 despite continued global economic uncertainty. Major markets maintained more than respectable retail value gains as petfood reinforced itself as an essential item for consumers, according to research from Packaged Facts in their report U.S. Pet Food Market Perspective and Prospects, 2010-2011 (Figure 1).
An area of increasing focus for manufacturers is keeping their fingers on the pulse of developments in emerging markets. Brazil is by far the largest emerging market for petfood, with retail spending virtually unaffected by the global recession. The dog and cat population surpassed 50 million animals in Brazil during 2009.
While Brazil is the largest dog and cat food market behind the US, India and Russia are the fastest growing, according to Euromonitor data (Figure 2). The greatest opportunities for market growth are in Latin America and Eastern Europe. Russia remains the primary engine of growth in Eastern Europe with continued focus from manufacturing giants like NestlÃ© Purina. Prepared dog and cat food is on the rise in Russia, with the majority of consumers feeding table scraps in 1998 to a significant shift to packaged petfoods by 2009. Although Brazil is the most dynamic market in Latin America, Mexico was strongly affected by the economic downturn and is now a relatively stagnant area for market share growth.
Some of the fastest growing segments globally in the petfood market include cat treats and mixers, premium dog and cat food and dietary and health supplements. According to Packaged Facts, the US market for natural petfood has more than doubled since 2005, and was worth US$1.5 billion in 2009, and expected to reach US$2.6 billion in 2014. These past and expected sales despite the recession have natural products manufacturers looking to launch or expand their pet product lines.
“Pet owners are looking for natural ingredients to ensure their pets stay healthy,” said Jim Mann, Kemin Nutrisurance product manager, in a recent article for Natural Products Insider. “Pet owners want to see ingredients they recognize on their petfood label and that look like what they themselves are eating.” He added, “Although the term ‘humanization’ may be overused in some contexts, it is very appropriate where consumer preference for natural pet health and nutritional ingredients are concerned.”
“Just look at what is happening for the human market today, and that is the petfood of tomorrow,” said Bill Hogan, business development manager of Novus Pet Nutrition. Other petfood ingredient trends include an emphasis on digestive health, geriatric health, weight management and natural nutrition. Pet owners are looking for more soft claims, such as “supports a healthy immune system,” “softer coat, and healthier skin” or “supports healthy gut function.”
Ongoing global economic uncertainty is having a significant impact on not only what pet owners purchase but also where they shop. While pet specialist retailers—especially pet superstores—continue to help drive pet humanization, grocery retailers are now receiving a boost as consumers become more price conscious, says Euromonitor. “Shopping smarter” is the name of the game as pet owners strive to maintain pre-downturn product quality standards, particularly in premium petfood. Euromonitor predicts that global pet shops and superstore outlets will grow 13% from 2009-2014.
Non-grocery channels saw their first share loss in nearly a decade in 2009, while grocery retailers held steady at 53.2% of the global retail value. Internet retailing also had a significant impact on the non-store channel as a rapid growing segment because of its convenience, accessibility and reasonable consumer pricing. As we increasingly rely on social networking, online shopping will become a major source of social interaction as well, and important in all marketing channels.
The global petfood market has been riding a strong wave of growth, in both developed and developing markets, which should sustain it through uncertain economic times, predict both Euromonitor and Packaged Facts. Economy petfood consumers of today will still be the premium petfood consumers of tomorrow as long as manufacturers provide consumer education on the benefits of product offerings and make them widely available in order to grow sales. A strong investment in health and wellness petfood is still needed, particularly in markets where there is strong consumer awareness of health and wellness food and beverages for humans. Leverage strong word-of-mouth recommendations through specialist channels, particularly for premium and health and wellness offerings, which have seen the most growth in global markets.