Pet Food in the U.S. Cat Food Health, Humanization and High Quality Ingredients in an Increasingly Value Driven Global Market

The U.S. pet food market has not just survived the spring 2007 recalls but proven its resiliency, with 2007 sales up over previous years and healthy growth continuing through 2008. Yet heightened safety concerns on the part of pet food makers and consumers continue to shape product development and marketing, as well as the choices of pet owners looking for the safest and healthiest products possible. At the top of the list are kibble, canned and raw/frozen foods made with ingredients that are natural, organic, grain-free/non-allergenic and pure, as well as made in the U.S.A., locally grown, “whole” (fruits, vegetables, grains, etc.) and human-grade. Foods making functional appeals also continue to proliferate, especially those targeting age- and weight-related conditions via the inclusion of novel ingredients like glucosamine, omega fatty acids, antioxidants and probiotics. In other words, premium pet foods remain the primary value growth driver in the U.S. market, with ever higher quality ingredients fueling the premium wave.

At the same time, one thing marketers and retailers at all levels of the market cannot afford given the faltering U.S. and global economies is complacency. More than ever before the ability to convert pet owners to higher priced products—or keep them buying them—will depend on marketers’ success in communicating product benefits and tapping into the ever-potent human/animal bond. Helping to make the case are new celebrity spokespersons like Cesar Millan with his new Dog Whisperer line, and Ellen DeGeneres with her co-ownership in Halo Purely for Pets, with other positive trends including rapid growth in the natural supermarket channel and an increasingly globalized market in which ingredients suppliers like Cargill are looking to stake a deeper claim in pet food (in Cargill’s case by specifically targeting the U.S. agricultural retail channel as well as global markets). At the same time, new products continue to flood the market, which saw more entries in 2008 than in any previous year.

Pegging 2008 U.S. sales at $17 billion and global sales at $49 billion—and projecting steady growth through 2013—the report provides market size estimates for the overall retail universe, while quantifying mass-market sales to the marketer/brand share level using data from Information Resources, Inc., and also providing market size and marketer share figures for the natural supermarket channel. The report thoroughly documents competitive, new product and retail trends, as well as trends in pet food purchaser demographics and lifestyle pursuits (media and marketing psychographics, Internet usage, “green” involvement, etc.), based on data from Simmons Market Research Bureau, BIGresearch, the American Pet Products Association and other sources.

Bringing to bear more than 20 years of experience in analyzing this market and drawing on Packaged Facts’ broad cross-category expertise, Pet Food in the U..S pinpoints strategic directions for current and prospective marketers, with a forward-looking focus on high-growth product segments and market-driving trends. The report provides a comprehensive Market Overview covering cross-market trends. New features of our 2009 edition include focus sections on:

• The global pet food market (sales overall and by world region, marketer shares, new product trends, U.S. export trends, and more);
  
  
• Recall-related product safety initiatives;
  
  
• Cross-channel private-label activity and prospects;
  
  
• Levels of in-store merchandising and price promotions;
  
  
• Pet food purchasers as coupon users.

Also included are dozens of images of pet products and consumer and trade ads.

Chapter 1: Executive Summary

Scope of Report

Report Methodology

Global Market Perspective

Value of Pet Food Retail Sales

Figure 1-1: Global Retail Sales of Pet Food: 2004, 2008 and 2013 (in billions of dollars)

Trends by World Region

Marketer Shares and Shifts

Market Size and Growth

U.S. Pet Food Sales Near $17.0 Billion in 2008

2008 Mass-Market Dollar Sales of Pet Food Up, But Volume Sales Down

Dog Food Three-Fifths of the Market

Market Share by Retail Channel

Market to Approach $19 Billion by 2013

Looking Ahead

Competitive Overview

Top Five Players Control Four-Fifths of the Market

Figure 1-2: Top Five U.S. Marketers of Pet Food: 2006 vs. 2008 (percent)

Four Companies Dominate Mass-Market Sales

Pet Specialty Channel More Fragmented

Mega Marketers Tap In to Natural Segment

Multinational Powerhouse Cargill Taps Into Feed/Seed Channel

Private Label Pet Food Has Room to Grow in the U.S.

Pet Food Producers Position on Safety

Marketing and New Product Trends

Pet Market Advertising at $520 Million in 2007

Marketers Embracing Non-Traditional Media

Advertising Positioned on a Few Major Themes

Celebrities Kick In

2008 a Record Year for New Pet Food Products

Product Premiumization: Natural, Upscale and Functional Appeals

Retail and Consumer Trends

Economic Concerns and Increased Competition

Over 60 Million Households Own Pets

Dog/Cat Ownership Rates Edge Up

Minorities Over-Index for Semi-Moist and Canned Products

Canned Food Is Stronger in Cat Arena

Chapter 2: Cat Food

Introduction

Category Scope: Four Product Segments

Market Size and Growth

Total Cat Food Sales at $5.7 Billion in 2008

Figure 2-1: U.S. Retail Sales of Cat Food: 2005, 2008 and 2013 (in millions of dollars)

2008 IRI-Tracked Dollar Sales of Cat Food Up, But Volume Sales Down

Table 2-1: IRI-Tracked Dollar, Pound and Unit Sales of Cat Food: 2008 vs. 2007 (in millions of dollars, pounds and units)

Meager Dollar Gains from 2001 to 2007

Figure 2-2: IRI-Tracked Sales of Cat Food: 2003-2007 (in millions of dollars)

Dry Food and Snacks Deliver Dollar Gains

Table 2-2: IRI-Tracked Sales of Cat Food: By Segment, 2003- 2007 (in millions of dollars)

Table 2-3: Annual Growth/Decline in IRI-Tracked Sales of Cat Food: By Segment, 2004-2007 (percent)

Table 2-4: Total Growth/Decline in IRI-Tracked Sales of Cat Food: By Segment, 2003-2007 (in millions of dollars)

Dry Food, Snacks Increase Category Share

Table 2-5: Share of IRI-Tracked Sales of Cat Food by Segment: 2003, 2005 and 2007 (percent)

Fortified, Premium and Hairball Formulas Are Most Commonly Purchased Types

Table 2-6: Kind of Cat Food Purchased in Past 12 Months: 2002 vs. 2006 (percent)

Table 2-7: Use of Specially Formulated Cat Food: 2004 vs. 2006 (percent)

Household Purchasing of Pet Supplies by Retail Outlet Type

Supermarkets Jump in Channel Loyalty

Figure 2-3: Cat Owner Shopping for Pet Products by Retail Channel: 2008 (percent of U.S. cat-owning households)

Figure 2-4: Sole Purchaser Share of Total Purchasers of Pet Supplies by Outlet Type: 2006 vs. 2008 (U.S. households with cats)

Cat Food Chain Merchandising Trends

Table 2-8: IRI-Tracked Retailer Merchandising Trends for Cat Food: Overall and by Segment, 4th Quarter 2006 through 3rd Quarter 2008 (percent of sales volume)

Chain Price Discounts Steepest for Wet Cat Food, Cat Snacks

Table 2-9: IRI-Tracked Promotion of Cat Food by Category and Segment: Ratio of Average Promoted Price to Average Overall Price, 2003 - Third Quarter 2008 (percent)

Marketer and Brand Shares

Methodology

Del Monte Jumps to No. 2 in Cat Food Market

Figure 2-5: Top Cat Food Marketers by Share of IRI-Tracked Sales: 2008 (percent)

Del Monte Plus Meow Mix

Del Monte, Mars Recalibrate Wet/Dry/Snack Mix

Del Monte Also Climbs to Second in Dry Cat Food

Figure 2-6: Leading Marketers of Dry Cat Food by Share of IRITracked Sales: 2003 vs. 2008 (percent)

Nestlé Purina Ups Ante in Wet Cat Food

Figure 2-7: Leading Marketers of Wet Cat Food by Share of IRITracked Sales: 2003 vs. 2008 (percent)

Mars Widens Leads in Cat Snacks Segment

Figure 2-8: Leading Marketers of Cat Snacks by Share of IRITracked Sales: 2003 vs. 2008 (percent)

Nestlé Purina Drops Out of Semi-Moist Segment

Leading Pet Specialty Channel Brands

Figure 2-9: Cat Food Brand Leaders in Pet Specialty Stores: 2005-2007 (percent)

Table 2-10: Leading Cat Food Marketers by IRI-Tracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent)

Table 2-11: Leading Cat Food Marketers by Share of IRI-Tracked Sales: 2004, 2006 and 2008 (percent)

Table 2-12a: Leading Cat Food Marketers: Share of IRI-Tracked Sales of Cat Food by Segment: 2007 vs. 2008 (percent)

Table 2-12b: Leading Cat Food Marketers: Share of IRI-Tracked Sales of Cat Food by Segment: 2005 vs. 2006 (percent)

Table 2-13: Marketers and Brands of Dry Cat Food by IRI-Tracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent)

Table 2-14: Brand Shares of IRI-Tracked Sales of Dry Cat Food: 2003-2007 (percent)

Table 2-15: Marketers and Brands of Wet Cat Food by IRITracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent)

Table 2-16: Brand Shares of IRI-Tracked Sales of Wet Cat Food: 2003-2007 (percent)

Table 2-17: Marketers and Brands of Cat Snacks by IRI-Tracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent)

Table 2-18: Brand Shares of IRI-Tracked Sales of Cat Snacks: 2003-2007 (percent)

Table 2-19: Top Cat Food Products by Dollar Gain in IRI-Tracked Sales: 2007 vs. 2008 (in millions of dollars)

Marketing & New Product Trends

Cat Food Advertising SuperBrands

Meow Mix Investing in Branded Content, Event Marketing

Product Introductions Rebound in 2008

Figure 2-10: Number of New Cat Food Product Introductions: 2002-2008

Top Product Themes: Upscale, Functional and Natural

Figure 2-11: Top 10 Cat Food Package Claims: January- December 2008

Healthfulness to the Fore

Natural and Organic Expand Their Reach

Special Diet and Functional Products

Figure 2-12: Share of U.S. Retail Sales of Cat Supplements and Nutraceutical Treats by Function: 2007 (percent)

Healthy Skin/Coat

Senior/Joint

Digestive/Immune System

Grain-Free

Indoor/Hairball Formula

Healthy Weight

Kitten Formulas

Gourmet-Style, Variety Still Key Appeals

Cat Treats Take Health, Indulgence to the Bank

Premium and Convenience Packaging

Table 2-20: Cat Food Product Selling Points by Package Tags: 2006-2008

Examples of Cat Food Advertising

Cat Ownership Trends and Demographics

The Simmons Survey System

29 Million Households Keep Pet Cats

Dog/Cat Ownership Rates Edge Up

Figure 2-13: Cat Ownership in the United States: 2008 (percent and number of U.S. households)

Table 2-21: Dog and Cat Ownership in the United States: 2004, 2006 and 2008 (percent and number of U.S. households)

Cat Household Demographics

Cat vs. Dog Ownership Patterns Diverge by Age Bracket

Figure 2-14: Cat Ownership Rates by Age Bracket: 2003 vs. 2008 (percent of U.S. households)

Patterns by Number of Cats

Table 2-22: Demographics for Keeping Pet Cats, 2008 (percent, number and index among U.S. households)

Table 2-23: Demographic Overview for Selected Cat-Owning Classifications, 2008 (percent and index of U.S. households)

Pet Retailer and Cat Food Preferences

53% of Cat Owners Shop Supermarkets for Pet Products

Table 2-24: Cat Owner Shopping for Pet Products by Retail Channel: Total Purchasers and Sole Purchasers, 2006 vs. 2008 (percent of U.S. cat-owning households)

Demographic Patterns by Retail Channel

Canned Food Is Stronger in Cat Arena

Figure 2-15: Cat Food Purchasing Rates by Type: 2008 (percent of U.S. cat-owing households)

Table 2-25a: Demographic Overview: Pet Product Shopping Rates by Retail Channel, 2008 (percent of U.S. cat-owning households)

Table 2-25b: Demographic Overview: Pet Product Shopping Indexes by Retail Channel, 2008 (indexes for U.S. cat-owning households)

Lower-Income and Hispanic Skews to Semi-Moist Cat Food

Purchasing Rates for Treats Vary by Cat Food Preference

Table 2-26a: Demographic Overview: Cat Food Purchasing Rates by Type, 2008 (percent of U.S. cat-owning households)

Table 2-26b: Demographic Overview: Cat Food Purchasing Indexes by Type, 2008 (indexes for U.S. cat-owning households)

Table 2-27: Cat Food Cross-Purchasing Rates by Type: 2008 (percent of U.S. cat-owning households)

Use of Light/Weight Management Cat Food Jumps to 9%

Table 2-28: Cat Food Purchasing Patterns by Type: 2004 vs. 2008 (percent of U.S. cat-owing households)

Table 2-29: Cat Food Purchasing Patterns by Type: Single vs. Multiple Cat Owners, 2008 (percent and index)

Table 2-30: Cat Food Purchasing Rates by Type: By Retail Channels Shopped, 2008 (percent of U.S. cat-owning households)

Friskies Is Most Widely Used Brand Line

Figure 2-16: Top Cat Food/Treat Brand Lines by Overall Usage Rates: 2008 (percent of U.S. cat-owing households)

Highest Skews Are for Multiple-Cat Fanciers

Table 2-31: Purchasing Patterns for Leading Cat Food/Treat Brand Lines: Single vs. Multiple Cat Owners, 2008 (percent and index)

Table 2-32: Purchasing Patterns for Leading Cat Food/Treat Brand Lines: By Retail Channel Shopped, 2008 (percent)

Demographic Skews: Cats and Crowded Households

Table 2-33: Selected High-Indexing Demographics by Brand Line for Cat Food and Treats, 2008 (U.S. cat-owning households)