In a down year for pet food mergers & acquisitions, as companies and private equity investors remain cautious in a time of higher inflation and rising interest rates, it’s notable that one of the few announced recently was Central Garden & Pet buying a pet treat company, TDBBS.
Treats seem to be the gift that keeps on giving to the pet food industry; the category’s growth rate for the past few years has been robust worldwide. In the U.S. alone, dog treat sales rose about 20% over the 52 weeks ending June 17, 2023, according to NielsenIQ, while cat treats soared a whopping 40% (though from a smaller base).
That’s because more and more pet owners are embracing treats as a way to bond with their pets, especially since the pandemic spurred more pet-owner time together, which has not fully lessened. According to a Packaged Facts May 2023 survey of U.S. dog and cat owners, 73% reported using treats to “bond and spend quality time with their pets, and nearly half (49%) were treating their dog/cat more frequently as a result of spending more time at home,” wrote David Lummis, senior pet market analyst for Packaged Facts, in the September issue of “Pet Product News.”
Function and form matter in pet treats
Besides offering a way to bond with and pamper their pets, treats increasingly are seen by owners as a delivery mechanism for functional ingredients and similar benefits — in fact, supporting pet health. Another Packaged Facts 2023 survey showed 43% of U.S. dog owners and 44% of cat owners consider pet treats among the products most important to their pets’ health. That percentage wasn’t as high as for pet food or certain medications, but it was more than for pet vitamins and supplements and first aid products.
In that May 2023 survey, 70% of pet owners said they’re willing to spend more on treats that address specific health concerns, Lummis said. “Functional treats serve as an integral part of pet owners’ pet health and wellness routines,” he wrote, adding that such treats appeal to value-conscious owners because they get “two for one” (health benefits plus pampering).
Top functional benefits in treats, per Packaged Facts data, include dental care/oral hygiene, purchased by 32% of dog owners and 25% cat owners from May 2022-May 2023, plus ones targeted to address calming or stress (16% and 14%, respectively), allergies (16% and 8%), digestive health/probiotics (15% for both species), joint health (15% and 8%), and skin and coat (13% and 12%).
Functional treats are not the only type that appeal to more and more pet owners. The Packaged Facts data also showed attributes like no artificial ingredients or preservatives, organic, grain free, natural, limited ingredient and vegetarian ranking high, though the top mark went to treats with “made in the USA” claims, purchased by 49% of U.S. dog owners and 40% of cat owners.
Besides treats, the other pet food subcategories growing the fastest include alternative formats; so it’s no surprise that pet owners are starting to seek and buy treats in such formats, too. For example, freeze-dried and dehydrated treats were purchased by 24% of dog owners and 22% of cat owners from May 2022-May 2023, following closely by refrigerated treats (sold that way in stores) at 23% and 19%, respectively, and raw treats at 21% and 15%. Frozen treats also ranked at 14% and 12%, respectively.
Perfect, healthy way to pamper pets
Thanks to the growing popularity of pet treats, Packaged Facts projects the category to reach US$18 billion in the U.S. by 2027, Lummis wrote, representing a compound annual growth rate of more than 9%. Their enduring success, he added, owes to the way they perfectly dovetail pet health and pampering.
Note: Petfood Essentials 2024, an interactive seminar scheduled for April 29, before Petfood Forum 2024 begins, will focus on the rising market of pet treats and the future of the category.