It’s been a rough year for the $15 billion pet-food industry, with the nationwide recall of 5,300 items and 60 million packages of premium to private label brand pet food.
Not only were there safety concerns, but pet owners learned many premium brands contain some of the same ingredients as private label and that oversight of co-packers in many cases is minimal. There was a consequent drop in dog and cat food sales as consumers fed their pets people food and tried to figure out which pet foods they could trust.
Now the industry is bouncing back but the conversation is different. Major pet food manufacturers and private label suppliers have joined the “safety first” pack, reviewing their manufacturing practices, suppliers and recipes.
Wal-Mart, Bentonville, Ark., is setting up a stringent audit process. Royal Canin USA, St. Charles, Mo., no longer will use vegetable proteins (wheat gluten and rice protein) from China. Iams, Dayton, Ohio, now has a policy forbidding suppliers from switching raw ingredients unless Iams OKs it. And some companies, like San Jose, Calif.-based Natura Pet Products, are planning to buy or build a canning facility to make their own wet pet foods.
Many consumers who saw their favorite national brands and private-label lines pulled from shelves have turned to premium, natural and organic pet foods. Sixty-three percent of all U.S. households – 69.1 million – have at least one pet, according to the American Pet Products Manufacturers Assn. (APPMA). Americans own an estimated 74 million dogs and more than 90 million cats.
Humanization is the No. 1 trend fueling growth in the $43 billion global pet food market, according to Global Pet Food Industry Outlook, a report from New York-based Packaged Facts and survey of 500 subscribers of Petfood Industry magazine. Treating pets like family outranked packaging convenience and special ingredient foods.
Two-thirds of pet manufacturers, suppliers, consultants and marketers in the survey identified new products -- such as functional ingredients, condition-specific ingredients, human-grade ingredients, hyper-premium products and fresh/baked goods -- as the top growth trends.
Convenience also drives pet food
Up until the late 1800s, when the first commercial dog food was invented by British butchers, dogs basically ate whatever their owners ate. Today, the pendulum is swinging back somewhat, with current consumer interest in natural and organic dog food (some 5-7 percent of the market, according to APPMA). Natural and organic sales have been rising for some time – 46 percent in 2005 versus 2004, 36 percent in 2006, and will continue to grow some 25 percent each year until 2010, according to the Organic Trade Assn. (OTA).
Both organic (free of pesticides, hormones, antibiotics or preservatives) and natural products (allows for some artificially processed ingredients) appeal to a price-insensitive segment, who spend some $241 annually to feed their dogs, according to OTA. Purina One Natural Blends are made with natural ingredients that promote improvements in pets’ energy level, skin and coat, teeth, gums and digestion with white meat chicken, oat meal, brown rice and sweet potatoes. No added fillers, artificial colors or flavors are included, and they are available in grocery and mass merchandise outlets.
Pet owners might not be able to get their kids to eat veggies, but they can treat Fido to Pegetables Dog Chew Treats from Kansas City Mo.-based Splintek. They are made from natural ingredients, antioxidants, vitamins A, B, C, D and E, fiber, calcium, essential fatty acids, protein, carrots (to fight macular degeneration), corn (for a shiny coat) and celery (to maintain healthy joints and detoxify the liver). Or they can fill the bowl with Doggie Dance chicken tenders, liver biscotti or barley grass powder.
To alleviate consumer concern, many pet food manufacturers are now using “natural” preservatives such as vitamin C, vitamin E and oils of rosemary, clove or other spices to preserve the fats in foods, even though they have a shorter shelf life of about six months.
To be labeled organic, pet food must contain at least 95 percent of ingredients certified organic for human consumption. Business has been booming for natural and organic pet food companies such as Castor and Pollux Pet Works, Clackamas, Ore.; Natural Pet Nutrition, Boulder, Colo.; Waggintails, Pittsfield, Mass.; Halo Pet Foods, Tampa, Fla.
The market has attracted Newman’s Own Organics, Aptos, Calif. The company makes dry, canned and treats for cats and dogs. All of its pet foods are made in the U.S., are certified organic by Oregon Tilth, and do not contain wheat gluten or rice protein concentrate. What they do have (for example, this is Natural Chicken Meal) is chicken fat (a highly palatable source of essential fatty acids), fish meal with omega-3 essential fatty acids, organic soy meal, organic brown rice, organic barley, organic peas, organic flax seed meal (a good source of lignans, an important phytonutrient with powerful antioxidant properties), organic oats, organic carrots, organic sorghum, kelp, sea salt, probiotics, taurine, and fresh parsley. The parsley serves as an intestinal calmative and aids in nutrient absorption and elimination of gastric odors leading to “doggie breath.”
“Pets have always been a part of our family life,” says Nell Newman, cofounder and president of Newman’s Own Organics. “With the rise in the number of cat and dog problems directly related to poor nutrition, we offer pets the same high-quality food we buy for ourselves.”
In 2001, St. Louis-based Nestle Purina PetCare Co. launched Beneful. With a novel emphasis on vegetables, it continues to experience double-digit growth and is one of the most successful premium dry dog foods on the market. The company recently rolled out Beneful Prepared Meals, eight varieties in clear, ready-to-serve, resealable plastic containers -- a packaging innovation in pet food.
This family-style food for dogs is made with real beef, chicken, turkey, pork and lamb with grains such as wild rice and barley and vegetables. Enticing varieties include: Beef Stew with peas, carrots, rice and barley; Simmered Chicken Medley with green beans, carrots and wild rice; Simmered Beef Entree with carrots, barley, wild rice and spinach; Beef & Turkey Medley with green beans, carrots and wild rice; Roasted Chicken Recipe with pasta, carrots and spinach; Savory Rice & Lamb Stew with peas and carrots; Roasted Turkey Medley with corn, wild rice, peas and barley; and Roasted Pork Entree with green beans, barley, carrots and wild rice.
"One of the biggest trends we are seeing among pet owners is the desire to feed their dogs the way they feed themselves -- choosing food that is made with real, high-quality ingredients that offer the perfect balance of taste and nutrition," says Steve Crimmins, vice president of dog food marketing. "With Beneful Prepared Meals, we've added epicurean polish to pet food to meet the needs of today's devoted pet owners who want food for their dogs, not dog food." And he adds, "With the humanization of pets trend, dog owners have become more interested in the food they feed their dogs, including the ingredients on the label and the way the food is packaged."
Wellness trend here, too
Commercial dog food contains vitamins and minerals, but for the past 15 years, the trend has been to optimize them to improve immunity, extend life and prevent cancer. That’s not a surprise since humans have the same concerns and most pet owners consider their dog a member of the family.
Ideally, balanced nutrition consisting of protein, vitamins and minerals is what is most important. Ingredients on the labels are listed in descending order by weight, and there is a distinct quality difference in the industry definition between what constitutes beef, beef byproducts and beef meal.
Most veterinarians agree that puppies, large breed dogs, pregnant dogs, those with health problems and active dogs need more calories than couch-potato dog varieties. Table scraps lead to chubby dogs and can upset the nutritional balance of their regular food. Milk-Bone’s Senior biscuits for dogs 7 years and older contain calcium for strong teeth and bones, 21 vitamins and minerals and are low fat.
Texas A&M studies find DHA – an omega-3 fatty acid -- may improve Fido’s cognition and vision and lead to a healthy coat. Other studies find added glucosamine and chondroitin may improve joint health and help those old arthritic doggie bones.
Appetite for refrigerated dog food is also growing. Professor Connors Co. Inc., Secaucus, N.J., manufactures Freshpet, made from locally sourced ingredients and natural preservatives in Quakertown, Pa. Packaged in a salami-like roll, it has a refrigerated shelf life of up to 14 weeks.
It’s not just natural and organic on the minds of dog owners. America’s fascination with upscale gourmet is translating to pet food, according to Packaged Facts. Converting consumers -- and their pets -- to higher-priced, premium foods is a major market driver.
Echoing human trends, scaling up pet food will mean healthier, more functional fare with increasingly targeted benefits; more convenient products based on new forms and package types (especially proportioned, single-serve, and resealable); and additional gourmet/luxury products key into pet owners’ growing proclivity to pamper their pets.
The latest trend is to deliver custom nutrition tailored for specific breeds and sizes. Cincinnati-based Procter & Gamble’s (P&G) premium brand Eukanuba is available in formulas for Labrador Retrievers (with added glucosamine and chondroitin sulfate for healthy joints and L-Carnitine to help them burn fat); Yorkshire Terriers (added copper and zinc for skin and coat care); German Shepards (with Frucooligosaccarides for digestion and glucosamine and chondroitin sulfate for joints); Boxers (formulated with Beta Carotene for immunity and L-Carnitine for a healthy heart); and Dachshunds (with glucosamine and chondroitin sulfate). Eukanuba also has a line of products for dogs with special health needs including Weight Loss, Sensitive Skin, Sensitive Stomach and Healthy Joints.
“In the last 10 years, consumer expenditures on their pets have more than doubled, and we believe the pet industry is a ‘lifestyle’ industry, benefiting from important trends that will facilitate above average returns," says Jim D’Aquila, managing director and founding partner of The Mercanti Group, which co-authored a new study on the pet industry. "There are no signs that the pet segment of the consumer industry is going to slow down in the near or distant future.
“There are more dogs and cats in more homes and they are living longer, and the demographic, psychological and socio-economic trends that are fueling this growth are not likely to subside in the foreseeable future,” he continues. “We believe this category is worthy of intense focus for private investors and corporations. The pet industry is one of the healthiest in America, with a compounded growth rate through 2007 that is expected to reach 7 percent. This growth is being driven in part by pet owners within different demographic groups having increasing disposable income and by a very strong attitudinal trend of humanizing pets."