Back in the before times—as in, before COVID-19—I would be catching up right now from a trip to Orlando for Global Pet Expo (GPE): sorting through business cards, notes and materials about new pet food and treat launches, gathering my thoughts about the products and initiatives I saw, and conversations I enjoyed, to distill themes on the state of the pet food market right now.
Instead, like most of you, I am still in my home office where I experienced GPE Digital Access 2021 March 24-26 as a series of virtual presentations and messages. It wasn’t nearly the same, especially the New Products Showcase, but I know first-hand after helping convert Petfood Forum 2020 last fall into an all-digital conference, Petfood Forum CONNECT, that it’s not an easy endeavor. There’s just no way to completely replicate in an online environment the buzz, face-to-face conversations and interactions, and actual sightings of new products at an in-person event.
Yet I think the organizers, American Pet Products Association (APPA), did a stellar job in a short amount of time; and actually, the educational sessions were easier to find and participate in. The best news—besides the fact that Global Pet Expo will very likely happen in person in 2022, and it’s looking positive that SuperZoo 2021 can take place in person in August (as will Petfood Forum 2021 in September)—is that the presentations I watched provided hard data and excellent insights on just how healthy the pet food and pet care industries remain, pandemic aside.
Strong growth fueled by e-commerce boom
For starters, Steve King, president and CEO of APPA, reported that U.S. pet food and treat sales increased 9.7% in 2020, gaining U$3.7 billion and reaching a total of $US42 billion. APPA expects the sector to grow another 5% in 2021, resulting in an estimated US$44.1 billion in sales, despite ongoing issues and challenges like supply chain disruptions and spot shortages.
The strong pet food growth was part of record sales for the overall U.S. pet care industry in 2020, which hit US$103.billion, exceeding US$100 billion for the first time. That represented 6.7% growth; APPA is projecting 5.8% overall growth for 2021, taking the pet care market to US$109.6 billion.
Globally, the pet care market grew 5% in 2020, according to Jared Koerten, head of pet care for Euromonitor, who presented during another GPE Digital Access session. He spent part of his presentation focusing on the robust rise in e-commerce, which shot to about a 25% share of the global pet care market in 2020, up from just over 15% in 2019.
Similarly, in the U.S., online pet product sales jumped to a 30% share in 2020, up from 24% in 2019, and David Sprinkle, publisher and research director for Packaged Facts, projected the share to soar to 53% of the U.S. pet care market by 2025. (He also presented during GPE Digital Access.) That’s likely based on results of a February 2021 survey of U.S. pet owners showing that 42% now use the internet to buy pet food, and 21% use autoship or a home-delivery subscription to receive their pets’ food. In addition, 43% said they compare pet food prices online, 36% research products (aside from price) and 20% get or exchange ideas about pet food on social media.
In a virtual meeting during GPE, Purina’s Joe Toscano, vice president of trade and industry development, and Jeremy Couture, director of business development, told my colleague Lindsay Beaton and me that these e-commerce gains have meant larger package sizes of the company’s products being ordered—not just bigger bags of dry food but also variety packs of wet pet foods. Such packs of Fancy Feast, for example, are “on fire,” Toscano said, resulting in cat owners feeding more cans per month than in the past.
Finally, in case you doubted the true force of e-commerce in pet food, Brad Boldridge, director of neighborhood pet retail for Nielsen, said in yet another GPE presentation that U.S. pet owners spent 46% more on pet food online in 2020 vs. 2019. His colleague, Sam Smith, client director, added that for the first time, online pet food sales exceeded US$2 billion each quarter in 2020, hitting a high of US$2.8 billion in Q4. While data for 2021 is available only through end of February at this point, already pet food e-commerce for Q1 has reached US$1.8 billion, almost as much as Q4 2019 at US$1.9 billion.
Pet food trend to watch in 2021: newer formats
Most of these speakers discussed pet food trends to watch this year and the opportunities they offer to manufacturers and retailers. Smith shared 2020 data showing continued growth in meal toppers as well as formats such as dehydrated, refrigerated/fresh, frozen and freeze-dried. While these sub-categories are still small compared to more traditional formats like dry and canned, they’re growing at higher rates.
Plus, an increasing number of U.S. pet owners are mixing types of pet foods and treats: 30% of dog-owning households and 34% of cat-owning households feed dry, wet and treats; and they “over-index” on spending, meaning 50% of these dog households and a whopping 63% of the cat households account for all pet food dollars spent. This provides significant promotional opportunities for pet retailers and pet food manufacturers, Smith said.
Koerten of Euromonitor also keyed on newer food formats, describing them as the next phase in the progression of premium pet foods. As an example, he said that in the U.S., wet pet food in general outgrew dry by 2 to 1 from 2018 to 2020—yet the growth came from “new wet” products, such as stews, purees, pates and broths, and their accompanying containers; metal can packaging for wet pet food lost 3.5 share points in the U.S. and Western Europe from 2014 to 2019. From 2017 to the first quarter of 2021, the share of online SKUs of soups, purees and pates in U.S. pet food has risen to about 4.8%.
In discussing “fresh cooked” pet food and its growth, Koerten noted the category is another reason that e-commerce, accompanied by the direct-to-consumer model often used by companies offering these foods, has been such a “game-changer” across the globe. Rather than deal with the logistical challenges of providing refrigerators or freezers in pet or grocery stores, companies can make freshly cooked pet food, even customized, and send it right to the pet owner’s door with just a certain type of packaging or protection to ensure freshness, he said.
As for freeze-dried pet food, the U.S. leads in “digital share of shelf,” Koerten showed, along with another, perhaps surprising market: China. Though these shares are still small, they’re rising, reaching about 3.3% in the U.S. as of Q1 2021 and about 2.7% in China. The latter especially made a big leap in freeze-dried pet food offerings from 2019 to 2020.
Health and wellness is still key for pet owners
Finally, but equally important, health and wellness remains a strong focus for pet owners, heightened by concerns from COVID-19. According to a Packaged Facts survey at the end of 2020, 42% of U.S. dog owners and 43% of cat owners said they are paying closer attention to their pets’ health because of the pandemic, Sprinkle reported.
This ongoing attention is holding true for Purina, said Toscano and Couture, including for a product line originally developed to benefit the health and wellness of cat owners: LiveClear, intended to reduce allergens from cats so allergic family members could live more comfortably with them (which, of course, also benefits the cats by being able to stay in their happy homes). Since launching the food at Global Pet Expo 2020, just before pandemic lockdowns, Purina has seen healthy growth after an understandably slow start. Thus, it is extending the line to include weight management, adult indoor cat and Prime Plus (for senior cats) formulations, to be followed in the fall by a kitten formula.