A new report from Cascadia Capital, an independent investment bank that includes petfood and other pet product companies among its investments and transactions, shows the pet industry is "gaining momentum" coming out of the recession, not only in sales but also in merger & acquisition activities and new companies emerging.
While the report, "Pet Industry Overview-Fall 2011," clearly looks at the industry from that M&A perspective and at only certain retail channels* (the 2010 total it cites for US sales of cat and dog food, US$8.3 billion, is less than half of the overall US cat and dog food sales for last year), it does offer some new trends and insights to consider. For example, the report says that with the benefit of hindsight and full data and analysis of 2010 sales, it's clear that the recession took more of a toll on the industry than previously believed (at least by Cascadia): "Notably, a) specialty lost share to discount, b) total food sales produced anemic growth (1.5% for dogs and -0.2% for cats)*, c) superpremium food sales decelerated (growing 2.4% after years of double-digit gain) and d) spending by higher income households contracted."
(*Note: Cascadia is taking those growth rates, plus the US$8.3 billion sales figure, from retail sales tracked by SymphonyIRI, which includes US supermarkets, grocery stores, drugstores and mass merchandisers -- including Target and Kmart, excluding Walmart -- with annual sales of US$2 million or more. So the data does not include pet specialty channel sales or all the sales from smaller outlets.)
Yet, Cascadia sees signs the industry is making up lost ground, including strong second quarter sales for publicly traded pet companies, impressive sales and earnings for PetSmart (it is also publicly traded) and newly accelerating sales for superpremium petfoods. (By the way, Packaged Facts concurs.) The report also states that the "long-term fundamentals" for the pet industry remain solid: With more research under way on the "pet/human wellness connection," humanization will only get stronger, Cascadia believes, while baby boomers continue to pamper their pets.
Specific to petfood, the report noted these trends: