The humanization of pets has played well for brands and retailers that have developed or pivoted their strategies for consumers looking to treat their furry friends to the best that life has to offer. The demand for higher-quality premium food, for example, has boosted retail sales dramatically over the past 10 years, with annual pet food household spend among pet owners increasing 36% between 2007 and 2017.
But with 21% of pet food sales shifting to online, retail is facing some challenges, and the right assortment and experience is key to capturing sales. Just in the last year, share of sales shifted 9 percentage points toward e-commerce, and there are no signs of slowing down. Notably, one in four Americans say that they’re more likely to purchase pet food online than in traditional stores.
The American Pet Products Association (APPA) reports that U.S. consumers continue to amplify their total spend on their pets with each passing year—something they’ve done by at least $2 billion each year since the mid 1990s. For example, the APPA cites that Americans spent $69.5 billion on their pets last year, up from $66.75 billion in 2016. Back in 2007, they spent $41.2 billion.
Despite flat food sales, consumers are eager to keep their pets happy, healthy and pampered. Given consumers’ willingness to put their pets first, what’s the next lever that brands and retailers can pull to tap into a market with plenty of runway out in front of it?
Thankfully, they won’t have to reach too far. That’s because many of the trends we’re seeing in the pet category are one’s we’ve been seeing in consumer categories over the past year or two: health and wellness.
Health and wellness is paramount to success in pet innovation, and pet trends are closely following human ones. In some cases, they’re even getting there first. As we’ve reported, products that make natural claims are driving notable share gains, particularly in the personal care and beauty categories. Looking at recent trends, share gains among pet care products with natural claims are on pace with those in the baby care and personal care categories.
And just like we’re seeing in personal care, beauty and food categories, consumers are seeking pet care products that don’t include certain ingredients. In fact, the “free from” items are redefining categories across the store, including food, personal care and pet food. In dog food, for example, Americans are seeking foods that don’t include ingredients like GMOs (genetically modified organisms), corn, fillers, artificial colors and preservatives. Shoppers are also examining the ingredients and choosing foods where grain is not the primary product ingredient. In the 52 weeks ended Dec. 30, 2017, products with meat listed as the first ingredient accounted for 46% of the category, up 7 percentage points in the previous year.
In the last year, there has been significant growth in pet foods that include produce-derived superfoods like blueberries, cranberries and sweet potatoes.
But desirable ingredients in pet foods aren’t limited to the produce aisle. Since pet parents are focused on the overall wellbeing of their pets, sales of products that boast additional health benefits are on the rise—and shoppers are looking past marketing claims to base their purchase on what they see in the ingredient panel. For example, we see a 6% decline in sales of pet foods that claim to promote joint health. Comparatively, we see an increase in sales of products that include glucosamine and chondroitin sulfate (3% and 6%, respectively, for 52 weeks ended March 3, 2018) in the ingredients. Consumers are more actively engaged in functional ingredients for their furry friends, similar to the growth for medicinal ingredients in food and beverage.
Probiotics are also booming in pet foods, with 139% sales growth in the 52 weeks ended March 3, 2018, for dog food. And the upside for retailers with probiotic dog food shoppers is that they spend an average of 2x more per visit than the average dog food shopper. It’s also worth noting probiotics is no longer a niche purchase. Notably, 16% of U.S. households purchase dog foods with pre/probiotic ingredients.
Protein has always been an integral part of the canine and feline diet, and in light of growing health concerns for our four-legged family members, consumers are newly focused on the variety and amount of protein in their pets’ diets. As the demand for transparency is increasing, meat is more commonly the primary ingredient.
Across the market, the core protein chicken still captures the majority of dollar spend, but pet foods that contain multiple proteins are gaining share and driving sales growth. As of early March 2018, 64% of pet foods contained more than one protein. Novel proteins, often seen in limited ingredient pet foods, are also seeing growth. Though only a small share of sales, products containing ingredients like quail and rabbit are growing in double and triple digits (+361% and +36%, respectively). We’re also seeing, more recently, that the source of the protein is starting to be called out to consumers as well (e.g., grass fed, free range).
For additional insights about what cleaner pet food means for category innovation, download our latest clean pet food infographic.