I suppose the headline above is a bit of a misnomer; following are actually my top questions for and about the pet food industry in the coming year, based on my skimming through the news, blog posts and other articles we posted in the past 12 months. Yet I suspect many in the industry have the same questions — and possibly answers to them, in addition to their own questions. If so, please share them in the comments section below.
Here, then, in random order, are the questions that pop into my mind as we welcome in 2024:
Will pet food merger and acquisition activity pick back up in 2024? After a few record years, deals were decidedly down in 2023. Whether the activity accelerates again next year depends on many factors, including the economy and interest rates, which significantly affect the buying mood of investors, including private equity, which in turn affects sellers. (In the current climate, meat giant BRF decided to hang onto its pet food business for now.)
What about the pace of pet food facility openings and expansions? In 2023, activity seemed nearly as robust as in the past couple of years, or maybe it slowed by a tick. In addition, we saw larger and growing companies acquire the plants that other companies no longer wanted or needed (a case of the rich getting richer?).
Will pet food producer prices keep declining, at least enough to meaningfully impact retail prices?
If not, will more pet owners “call uncle” in terms of what they’re willing to pay for pet food? Will that slow market growth?
What does that mean for pet ownership? It has slowed or even become stagnant in many developed markets, meaning market growth is coming nearly entirely from rising prices, rather than more pet food being sold.
How does this scenario affect developing markets (not to mention ones directly impacted by geopolitical events like wars)? Will new markets or regions start moving closer to the top of the pet food leaders list?
What will AI bring to pet food — in fact, what is it bringing so far? (Hint: Watch for announcements of the Petfood Forum 2024 program coming in January; several abstract submissions featured artificial intelligence or similar technologies).
Will other technologies have greater impact in 2024? Automation in pet food processing keeps advancing; the talk now is of Industry 4.0. Then there are innovations like 3D printing, which scientists at the Singapore University of Technology and Design used to experiment with pet treats.
Speaking of novel things, will certain alternative proteins get closer to scale in pet food? (Looking at you, insects, fermented proteins, cell-cultured ingredients, etc.)
What about upcycled pet food ingredients? More and more are joining long-used materials from the human food supply chain (especially rendered meat products) and making their way into pet foods and treats. Will they help meaningfully impact food waste?
Will so-called alternative formats start to approach parity in market share with traditional pet food categories, especially as more consumers opt for less processed foods? Perhaps the better question is, will these formats ever be affordable enough for more pet owners? (See price-related questions above, which also apply to alternative ingredients.)
Will 2024 be the year we achieve a system where pet owners can return their empty plastic pet food bags for reuse or recycling? Is that still far removed?
Will more pet food players (manufacturers and suppliers) dive into the deep end of the sustainability pool? Meaning, undertaking life cycle analyses, spreading carbon emission reduction efforts throughout their supply chains and similar measures — which, let’s face it, require a huge amount of resources, time and commitment.
Seeing opportunities for innovation and growth
While this list of questions might come across as somewhat negative, or at least skeptical, it also represents many opportunities for pet food in the coming year and beyond. None of the questions are easy to answer, nor the challenges easy to tackle, but they hold great potential for innovation, progress and growth. Here’s to a dynamic and successful 2024!