Will organic pet food sales ever reach their potential?

As with many trends, organic pet food follows human food, with sales held back by insufficient supply that keeps prices too high for most consumers.

Photo by Shawn Himmelberger l FreeImages.com
Photo by Shawn Himmelberger l FreeImages.com

To forecast the fate of organic pet food in the US, it may help to follow the organic industry for human products. And that sector enjoyed its highest sales ever in 2015, reaching a total of US$43.3 billion, with the bulk of that, US$39.7 billion, going to organic food, according to the Organic Trade Association's (OTA) 2016 Organic Industry Survey. Both figures represented an 11% increase over the previous year, far outpacing the 3% growth rate for human food sales overall.

While the OTA survey is not yet available, a graphic on the OTA website listing the category of foods covered does not seem to include pet food. (It’s difficult to tell from the graphic if that list is complete.) Considering that pet food is not officially part of the US Department of Agriculture’s National Organic Program (NOP)—even though pet food companies develop their organic products following the NOP rules and often use the same third-party certification bodies to be able to make organic label claims—my guess is that organic pet food sales do not fall within OTA’s data.

Still, that data can provide a few markers. For example, as reported on FoodIngredientsFirst.com, organic products now account for nearly 5% of all human food sold in the US. That figure likely would be higher, as would sales, OTA said, if organic production was able to keep up with demand.

Comparable data is not currently available for pet food. Packaged Facts’ Pet Food in the US, 12th edition report said only 4% of US pet food shoppers buy organic products, though the figure rises to 7% among pet food shoppers who purchase online and to 9.4% for those who buy in independent pet stores. (These percentages can’t necessarily be applied to overall US pet food sales, because it’s unknown if organic products are the only types of pet foods those shoppers purchase.) With human food, a 2015 report from Mintel showed 33% of US consumers bought a food or beverage labeled as organic within the previous three months.

Neither Packaged Facts nor GfK (which tracks US pet food sales mainly in the pet specialty channel) breaks out organic pet food from natural pet food sales.* The latter reached US$5.5 billion in US pet specialty stores in 2015, accounting for 69% of all pet foods sold in that channel; likely a small percentage of those sales were for organic products.

Where there seems to be a convergence between human and pet food is when you look at interest in label claims—not only organic claims but also closely related ones, such as non-GMO. A report released by Nielsen in 2016, The Humanization of Pet Food, showed that 33% of US pet owners surveyed ranked “non-GMO” among their top three of 10 most important health-related pet food claims. A Packaged Facts National Pet Owner Survey conducted in late 2015 indicated that 13% of US dog owners and 9% of cat owners were drawn to organic claims, while among “free from” claims, non-GMO drew 19% of dog owners and 13% of cat owners (nearly the same as for grain-free claims).

On the human food side, new product launches with organic or non-GMO claims are showing the strongest growth globally, according to Innova Market Research; organic claims now appear on 9% of all new food or beverage products.

Yet with both human and pet food, reluctance to follow interest in organic label claims with actual purchases likely comes down to one main factor: the cost. Mintel reported that 51% of US consumers surveyed believe that an organic label is just an excuse for the manufacturer or marketer to charge more. Related to pet food, in a 2014 Packaged Facts pet owner survey, 47% of dog product purchasers and 48% of cat product buyers said they would buy natural/organic products more often if they were more affordable.

Supply and production lag

Prices of organic foods, whether for humans or pets, are not likely to come down unless the supply and production issues in the US are solved. “There is an industry-wide understanding of the need to build a secure supply chain that can support demand,” reported FoodIngredientsFirst.com. “This goes hand-in-hand with securing more organic acreage, developing programs to help farmers transition to organic and encouraging new farmers to farm organically.” In that vein, several companies have joined to create the US Organic Grain Collaborative, including Annie’s, Stonyfield, Organic Valley, Clif Bar, Nature's Path and Grain Millers.

Some human food companies are also pursuing their own initiatives. For example, Clif Bar has arranged with a fig farm in California to transition 300 additional acres to organic by “agreeing up front to buy the newly certified organic figs for seven years after the switch is complete,” reported Lauren Hepler, senior editor for GreenBiz.com. Similarly, Kashi unveiled a new program to allow consumers to buy foods from farms transitioning to organic, with a label of “Certified Transitional,” starting with a new Kashi cereal coming on the market in June 2016.

Sales may still be too small to support such initiatives with pet food, though as in most areas, if it works with human food, pet food will likely soon follow.

*Update: After this was posted, Maria Lange, business group director of pet care for GfK, contacted me to say that her firm does track organic pet food sales in the US pet specialty channel. In 2015, those sales were US$19.5 million, a tiny 0.2% of the market, and had actually been declining for two years. However, data tracking certified organic brands and products showed a 17% increase in SKUs, though with still very small numbers (277 in 2013 up to 324 in 2015). "For comparison sake, there were 13,282 natural pet food SKUs selling in the US pet retail market in 2015," Lange said.





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