The global pet food market is still growing, yet that good news hides a cautionary tale: In developed markets, ongoing growth has come mainly from rising prices and sales of higher-priced pet foods, not from a larger volume of pet food being sold. (See http://goo.gl/hZtUNw.)
Why the concern? There may be a ceiling to how much pet owners are willing and able to pay for pet food.“We have reached a brick wall in terms of raising pet food prices,” wrote Seth Mendelson, group publisher and editorial director for Pet Business, in January. “The last thing the industry wants to do is make potential pet owners question whether they can afford an animal.” This is especially significant as Baby Boomers, typically among the more affluent pet owners, move into their senior years, when pet ownership traditionally declines.
Other voices have joined the chorus questioning the hyper focus and reliance on premium pet foods. “The strategy of converting pet shoppers to higher-priced fare has paid off handsomely,” wrote David Lummis of Packaged Facts in the May 2015 issue of Pet Product News. “But this tack depends on … higher-income, better-educated consumers able to understand and afford the nuances of themes such as ‘ancestral.’ Only about 10% of pet shoppers fall into a decidedly affluent category, so this strategy is now largely one of robbing Peter to pay Paul rather than creating real market growth.”
Innovation and value are key, as Jeremy Petersen, executive vice president of Wild Calling Pet Foods, emphasized in Pet Nutrition News last year: “To appeal to the broad spectrum of consumers, I predict companies will have to assess their entire business, especially product offerings in lower-priced categories. Companies that are innovative and offer products at a price that consumers can find value in will be able to achieve higher prices.”
How that value is communicated is critical. Pet food companies need to make a strong case, as clearly, honestly and transparently as possible, for why their products cost what they do—not only to pet owners but also to pet retailers who interact directly with consumers and bear a cost for stocking the products.