It’s probably no surprise that when Petfood Industry asked experts from throughout the world for their insights on the industry’s key opportunities and challenges, they identified many more challenges. After all, our industry is facing a number of difficult issues now, with more on the horizon. But these experts also listed plenty of opportunities to continue to grow and innovate.
Petfood safety was named most often, especially by experts doing business in the US. The Ferreiras (founders Charles and Vera and account manager Stenio) of treat maker Rush Direct/Ferrera Farms said they consider higher scrutiny on food safety a challenge and an opportunity. “An argument can be made that in the highly competitive petfood business, the last thing needed is the additional burden imposed by increased compliance costs and bureaucracy. Some companies might even already have internal best practices and an excellent safety track record, which would make additional layers of safety unnecessary.”
Yet the Ferreiras said the increased requirements also help assure product safety and create a competitive advantage. “Ever since the company started in 2003, we have had facilities with several quality certifications, besides accountability and tracking in our supply chain. We never select suppliers solely on the basis of cost, preferring to build partnerships and develop trust instead, to guarantee quality ingredients and products. The result is shown on our track record of never having to issue a recall. It is true that quality enforcement generates extra manufacturing costs, but those are offset by our lean structure and client focus.”
Greg Kean of WellPet expressed the challenge as “staying ahead of consumer and regulatory expectations. Petfood is now food for pets.” In that environment, he recommended that manufacturers evolve processes to assure food safety and nutritional efficacy. “Organizations should incorporate processes that begin with product development, such as understanding raw material sourcing and product design, through production where complete traceability and HACCP principles are applied. Consumers and regulatory agencies expect brands to have conducted due diligence during development and production and be in full control of the products we sell,” Kean said, adding that management needs to support activities that enhance food safety and quality.
Henriette Bylling of Aller Petfood also mentioned HACCP, or hazard analysis and critical control points. “As a co-packer/producer of private label petfood in Denmark and Russia, I consider it paramount to be able to offer our partners the highest possible level of peace of mind on quality. I find that our HACCP-based ISO 22000 certification is the perfect tool,” she said. “But here comes the next challenge—how do we establish a general understanding of the numerous quality certifications? And how do we influence purchasers to require certifications from us that are actually relevant to our trade and the food safety within it?”
A testing expert, Tim Hendra of Neogen Corp., echoed the concern over lack of industry standardization. “While most major, global petfood manufacturers have operated under the strictest food safety standards for many years, many smaller manufacturers have continued to operate under standards more akin to animal feed than human food,” he said. “This is of critical importance in the co-manufacturing area, where a particular brand may be at risk due to the lack of food safety standards at a smaller co-packer. Due to the high profile of recent recalls, and the outspoken nature of certain industry advocates, it’s critical that the entire petfood industry adopt the same level of food safety.”
Todd Lachman of Mars Petcare agreed. “Increased food quality standards should be our first priority as an industry. Companies must continue to be committed to working through our trade associations and with governments around the world to consistently evaluate standards and raise quality.”
Hendra specifically mentioned the new requirements in the US from the Food Safety Modernization Act, as did Dr. George Fahey of the University of Illinois—though he emphasized the positive ways he’s seeing the industry respond. “Petfood manufacturers with whom I work are performing yeoman efforts in seeking out and correcting all potential problems associated with food safety.”
Perhaps these efforts need to be better communicated, Bylling suggested. With all the recalls in the industry since 2007, she stressed the importance of having “good stories” to take to the media to counteract negative press coverage stemming from the recalls. “How do we clarify that the increasing visibility of recalls is a result of increased quality focus and not decreasing quality?”
Scarcity of ingredients and energy sources is another common problem, said experts, especially when combined with environmental concerns. “The single biggest challenge—and this to me is a global phenomenon—is to find an answer to what I call the WIE question: water, ingredients, energy,” said Marcel Blok of Change Stranamics. “All are becoming more scarce because of increased global demand. A bit of tweaking isn’t going to help anymore. We need serious breakthroughs if we want to be taken seriously as an industry.”
Similarly, Sander Geelen of Geelen Counterflow cited preparing for the inevitable rise of energy and CO2 emission costs in the next few decades as a major concern. Those costs will eat into profit margins for all producers who are stuck with old, inefficient, horizontal drying technology, he said.
Bylling echoed Blok’s concern with ingredients. “Our ingredient market is increasingly merging with the ingredient markets of the energy and human food industries. This obviously has a negative influence on both the quantities of the ingredients available and their prices,” she said. “Combined with the global financial crisis, which has made it even more difficult to pass on the cost to the next link in the value chain, it is paramount that we are actively searching and researching the possibilities of using alternative ingredients to those traditionally used in our trade.”
However, Bylling emphasized, petfood producers still have to consider their ingredient-related carbon footprint. “We believe in sourcing within a close geographic sphere both in relation to the carbon footprint but also to ensure the quality of the ingredients. This local sourcing approach has helped us in thinking alternative and focusing our mindset on ingredients that are more readily available in our areas.”
Dr. Melissa Brookshire of North River Enterprises stressed consumer perception in relation to petfood ingredients, specifically by-products. “Our industry uses by-products of the human food industry to make quality, nutritious foods for pets. As the global population grows and more stress is placed on food supply, we are going to have to become more creative about the ingredients that we use and how we tell the story of the ingredients.”
Still, opportunities abound, our experts said, many stemming from the “upgrading” effect—a term used by Blok to describe consumers buying higher-priced petfood, including premium products. “Our point of reference is tied more closely to the premium category, and therefore in the North American market, we see the ongoing education of pet owners with regard to nutrition critical to get them to consider more premium diet choices,” said Mark Liberman of Peel Plastics. “We are confident that as more brand owners (big and small) focus their efforts on developing diets/ingredients for these more premium categories, we will continue to see grocery-type consumers shift upstream.”
A key driver for this premiumization has been product development—what Dr. Greg Aldrich of Pet Food and Ingredients Technology referred to as “going beyond brown and round. The pet aisle is expanding beyond extruded kibbles. New formats, packaging types and messages about health and nutrition are beginning to emerge. Uncoupling the ‘convenience food’ mentality behind petfood will likely be the biggest trend going forward,” he said.
Like other experts, Aldrich stressed the integrity of the ingredient supply as crucial to this trend. “More emphasis will be placed on the origin, identity and quality (safety) of the ingredients used or offered in petfoods.”
Fahey keyed on the nutrition science aspect of the trend, citing these significant opportunities for the industry:
- Development of diets that address health and wellness platforms for dogs and cats given the abundance of new functional ingredients that exist today;
- Understanding the role of the gut microbiome on host health and well-being and managing the gut for optimal host animal health;
- Discovery of weight management strategies for small, medium and large canine breeds and for cats;
- Development of treats with functional ingredients that will benefit the animal fed a complete and balanced diet; and
- Inclusion of calorie statements on the package.
Lachman said companies like his are stepping up to fulfill these opportunities. “As an example, our Waltham Centre for Pet Nutrition has made great strides in understanding the ideal macronutrient profile for cats and dietary nutrient selection in dogs, helping us make food that best fulfills their needs. We’re also very concerned about the problem of pet obesity, so we are in the process of reformulating many of our dog and cat food products so pets get the nutrition they need with fewer overall calories.”
Offering a retailer’s perspective, Roman Versch of Pet Depot said the continued development of functional and natural petfoods should be combined with messaging to consumers about petfood value and how these products provide quality at reasonable costs. “Considering a healthy premium diet is still less than US$2 daily,” he explained, “our natural brands have continued to grow companywide annually throughout the recession and recent slow economic growth periods, indicating consumers still want quality natural brands.”
Emerging markets represent another significant opportunity for petfood. “When we look at the global market, we still see a strong appetite for North American brands and quality,” Liberman said. “Although the economic turmoil in Europe has caused consumers to be much more cautious, there are still regions with momentum required to help grow the overall market.”
Brookshire concurred. “Companies that embrace the global marketplace and work with local experts to develop the types of petfoods that appeal locally as well as globally will emerge as winners. Companies that are willing and able to make partnerships with the animal and grain processing industries in emerging markets will be able to find local resources to make foods as cost efficiently as possible.”