In many respects, 2021 is ending almost where it started. I think many of us believed that by now, we’d have COVID-19 mostly behind us; instead, we’re seeing the surge of another new variant, and disruptions such as supply chain logjams, delays and worker shortages are becoming nearly as commonplace as masks, social distancing, tests and vaccinations.
Still, many of us are lucky and thankful to have our families, including the furry members, to see us through—and all those furry ones continue to eat (as do the feathered and scaled ones). Which means the pet food market had another positive year, despite all the challenges, and is staring down the dawn of 2022 brimming with optimism and opportunity. Here are five reasons why:
1. Pet food and treat sales continue to grow …
In the U.S., dog and cat food sales (complete meals) will finish 2021 at US$37.1 billion, up 6.4% over 2020, according to Packaged Facts projections. In its latest report, “U.S. Pet Market Focus: Pet Food Update,” the market research firm projected sales to hit US$47.9 billion by 2025, reflecting a 6.6% compound annual growth rate (CAGR).
U.S. pet treat sales are growing even faster: a robust 15% in 2021, according to Packaged Facts data, up to US$9.9 billion, with a projected 12% CAGR through 2025. That would put U.S. treat and chew sales that year at US$15 billion.
While not at the same levels, growth also continued in pet food markets in Europe—about 4% for both premium and economy-priced pet food, according to Euromonitor. That’s not quite as high as during 2020, which saw sales spike, but still outpacing 2019 growth rates. Similar patterns emerged in other developed pet food markets, though developing ones like in Latin America have continued to grow, too.
2. As does pet ownership …
Not at all coincidentally, pet ownership has also continued to grow in this second year of COVID, perhaps not as quickly or as high as in 2020, but still notable. This is true in the U.S. as well as in other markets.
3. As do pet food and treat product launches
Following on the increasing number of canine and feline (and other pet) mouths to feed, pet food companies have responded in 2021 with a plethora of new pet food and treat products on the market—not quite at pre-pandemic levels, perhaps, when each year offered several major pet trade shows worldwide to showcase new product launches, but still healthy.
From June 2020 to May 2021, pet food brands launched 569 new products, up nearly 5% from the previous 12-month period, according to Mintel and Tree Top. Supply chain disruptions and worker shortages may dampen pet food product development and delivery in the near future, but I think we can still expect many more new products on the market in 2022, especially if more pet trade shows can take place in person. (Fingers crossed!)
4. Pet food M&A at record pace
As of December 10, 2021, pet food-related mergers and acquisitions (M&A) globally stood at 44 for the year and counting, among not only pet food and treat companies but also industry suppliers. Expect brisk M&A activity to continue in 2022, thanks to business owners’ risk tolerance changing, anticipated changes to tax structures in the U.S. and the strong sales and profitability of many pet businesses during the pandemic causing their private equity owners to cash in.
5. Pet food facility expansions and openings on a tear
If we took a similar tally of pet food facility expansions and openings worldwide in 2021—again, among both pet food companies and suppliers—it would likely be even higher than the M&A number. In some cases, this seemed to be due to increasing investment spurred by the same reasons driving M&A deals; in all cases, the new or expanded facilities are a direct reflection of growing pet food demand, sales and products on the market.
Let’s hope we can expect more of all of the above in 2022!