Pet Food in the U.S. Dog 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: Dog Food

Introduction

Category Scope: Five Product Segments

Market Size and Growth

Total Dog Food Sales at $10.4 Billion in 2008

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

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

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

Gradual Dollar Gains from 2003 to 2007

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

Frozen Dog Food Out Front in Market Growth

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

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

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

Wet Dog Food Declining in Market Share

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

Premium and Fortified Dog Foods Are Most Commonly Purchased Kinds

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

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

Household Purchasing of Pet Supplies by Retail Outlet Type

Channel Loyalty Increasing Among Online Shoppers

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

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

Dog Food Chain Merchandising Trends

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

Price Promotion Patterns Vary by Segment

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

Marketer and Brand Shares

Methodology

Impact of Acquisitions

Nestlé Purina Dominates Dog Food Category

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

Iams the Most Heavily Leveraged in Dry Dog Food

Nestlé Purina the Top Dog in Dry Food Segment

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

Acquisitions Boost Del Monte and Mars in Dog Biscuits/Treats

Figure 2-7: Leading Marketers of Dog Biscuits/Treats by Share of IRI-Tracked Sales: 2003 vs. 2008 (percent)

Mars Marching Forward in Wet Dog Food

Figure 2-8: Leading Marketers of Wet Dog Food by Share of IRITracked Sales: 2003 vs. 2008 (percent)

Nestlé Purina Controls Semi-Moist Segment

Figure 2-9: Leading Marketers of Semi-Moist Dog Food by Share of IRI-Tracked Sales: 2003 vs. 2008 (percent)

Nestlé Purina Also on Top in Frozen Dog Food

Figure 2-10: Leading Marketers of Frozen Dog Food by Share of IRI-Tracked Sales: 2003 vs. 2008 (percent)

Leading Pet Specialty Channel Brands

Figure 2-11: Dog Food Brand Leaders in Pet Specialty Stores: 2005-2007 (percent)

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

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

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

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

Table 2-14: Brand Shares of IRI-Tracked Sales of Selected Leading Dry Dog Food Products: 2003-2007 (percent)

Table 2-15: Marketers and Brands of Dog Biscuits/Treats 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 Selected Leading Dog Biscuit/Treat Products: 2003-2007 (percent)

Table 2-17: Marketers and Brands of Wet Dog Food by IRITracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent)

Table 2-18: Brand Shares of IRI-Tracked Sales of Selected Leading Wet Dog Food Products: 2003-2007 (percent)

Table 2-19: Marketers and Brands of Semi-Moist Dog Food by IRITracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent)

Table 2-20: Marketers and Brands of Frozen Dog Food by IRITracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent)

Table 2-21: Top Dog Food Products by Dollar Gain in IRI-Tracked Sales: 2007 vs. 2008 (in millions of dollars)

Marketing & New Product Trends

Dog Food Advertising “SuperBrands”

Milk-Bone Celebrates 100th Birthday

Mars Expands Pedigree Adoption Drive

Nestlé Purina Expanding Event Marketing Capacity

2008 a Record Year for New Dog Food Products

Figure 2-12: Number of New Dog Food Product Introductions: 2002-2008

Premium Thrust Still Going Strong: Natural, Functional and Special Diet Foods

Figure 2-13: Top 10 Dog Food Package Claims: January- December 2008

Ingredients in the Spotlight

“People Food”

Gluten- and Wheat-Free Claims Highlight Safety Issue

Natural Products Go Mainstream

Honest Kitchen Makes an Honest Claim Out of “Human Grade”

Natural Plus Gourmet

Freshpet Scores Hit with Refrigerated Dog Food

Ongoing Activity in Organic Niche

Special Diet/Functional Foods

Mars Launches WholeMeals

Healthy Weight and Senior Foods

Breed- and Size-Specific Products

Grain-Free Products Picking Up

Non-allergenic Products

Probiotics and Healthy Digestion

Raw/Frozen Foods

“Real Meat” Products Taking a Swing at Raw

Veterinary Appeal

Taste, Variety Still Key Appeals

Functional/Nutraceutical Treats

Figure 2-14: Share of U.S. Retail Sales of Dog Supplements and Nutraceutical Treats by Function: 2007 (percent)

Trend Profile: Dogswell, LLC

Oral Care Treats

Fortified Dog Water

Human-Style Baked, Gourmet and Holiday Treats

Frozen Novelty Treats

New Spins on Convenience

Table 2-22: Dog Food Product Selling Points by Package Tags: 2006-2008

Examples of Dog Food Advertising

Dog Ownership Trends and Demographics

The Simmons Survey System

40 Million Households Keep Pet Dogs

Dog/Cat Ownership Rates Edge Up

Figure 2-15: Dog Ownership in the United States: 2008 (percent of U.S. households)

Table 2-23: Dog and Cat Ownership in the United States: 2004, 2006 and 2008 (percent and number of U.S. households)

Dog Household Demographics

Promising Patterns by Age Bracket

Figure 2-16: Dog Ownership Rates by Age Bracket: 2003 vs. 2008 (percent of U.S. households)

Keepers of the Pack: Multiple-Dog Demographics

Table 2-24: Demographics for Keeping Pet Dogs, 2008 (percent, number and index among U.S. households)

Table 2-25: Demographic Overview for Selected Dog-Owning Classifications, 2008 (percent and index of U.S. households)

Pet Retailer and Dog Food Preferences

Pet Stores Edge Out Supermarkets in Overall Popularity

Table 2-26: Dog Owner Shopping for Pet Products by Retail Channel: Total Purchasers and Sole Purchasers, 2006 vs. 2008 (percent of U.S. dog-owning households)

94% Buy Dry Dog Foods

Figure 2-17: Dog Food Purchasing Rates by Type: 2008 (percent of U.S. dog-owing households)

Table 2-27a: Demographic Overview: Pet Product Shopping Rates by Retail Channel, 2008 (percent of U.S. dog-owning households)

Table 2-27b: Demographic Overview: Pet Product Shopping Indexes by Retail Channel, 2008 (indexes for U.S. dog-owning households)

Minorities Over-Index for Semi-Moist and Canned Products

Treat Purchasing Rates Are Steady at 83% Across Preferences by Dog Food Type

Table 2-28a: Demographic Overview: Dog Food Purchasing Rates by Type, 2008 (percent of U.S. dog-owning households)

Table 2-28b: Demographic Overview: Dog Food Purchasing Indexes by Type, 2008 (indexes for U.S. dog-owning households)

Table 2-29: Dog Food Cross-Purchasing Rates by Type: 2008 (percent of U.S. dog-owning households)

Light, Senior and Puppy Formulations Gain in Usage

Table 2-30: Dog Food Purchasing Patterns by Type: 2004 vs. 2008 (percent of U.S. dog-owing households)

Table 2-31: Dog Food Purchasing Patterns by Type: Single vs. Multiple Dog Owners, 2008 (percent and index)

Table 2-32: Dog Food Purchasing Rates by Type: By Retail Channels Shopped, 2008 (percent of U.S. dog-owning households)

Milk-Bone Is Most Widely Used Brand Line

Figure 2-18: Top Dog Food/Treat Brand Lines by Overall Usage Rates: 2008 (percent of U.S. dog-owing households)

Value Brand Skew Among Multiple-Dog Owners

Table 2-33: Purchasing Patterns for Leading Dog Food/Treat Brand Lines: Single vs. Multiple Dog Owners, 2008 (percent and index)

Table 2-34: Purchasing Patterns for Leading Dog Food/Treat Brand Lines: By Retail Channel Shopped, 2008 (percent)

Demographic Skews: Value Brands vs. Superpremiums

Table 2-35: Selected High-Indexing Demographics by Brand Line for Dog Food and Treats: 2008 (U.S. dog-owning households)