March 9, 2011
The U.S. pet food market continued to grow in 2010, although at a much slower rate than in the past several years, according to a report released last week by market researcher Packaged Facts.
The report, Pet Food in the U.S., 9th Edition, analyzes trends in dog food, cat food and other pet food (birds, small animals, fish and reptiles, collectively) in mass-market outlets, pet specialty stores and other channels, such as veterinary offices and the Internet.
It found that U.S. retail sales of pet food reached $18.4 billion in 2010, up 2.8 percent over 2009 sales. Although pet food sales were up, Packaged Facts reported that the 2.8 percent growth rate was the slowest the market has seen since the turn of the millennium.
Still, despite the sluggish growth, the pet food category saw a number of significant investment deals in 2010: Procter & Gamble acquired Natura Pet Products, Nestlé Purina bought Waggin’ Train, and Del Monte, the maker of Meow Mix, Kibbles ‘n Bits and a number of other pet food brands, received a buyout offer by an investor group lead by Kohlberg Kravis Roberts & Co. L.P. The Del Monte deal is expected to close at the end of this month. Packaged Facts anticipates additional acquisitions of natural pet companies by mainstream market leaders during 2011 and 2012.
Also noteworthy, introductions of new pet food products, including complete diets and treats, reached an all-time high in 2010, with 291 reports representing 1,310 SKUs, according to the report.
Mass-market outlets led in pet food sales, with supercenters/mass merchandisers and supermarkets collectively claiming 43 percent of the market in 2010. Leading mass-market sales are Nestlé Purina, followed by Mars, Del Monte, Iams (P&G). Dad’s, Central Garden & Pet and Hartz Mountain each garnered about 1 percent of sales, according to the report.
Household Purchasing of Pet Products (food and non-food) by Retail Channel, 2010
(percent of U.S. households with pets)
Discount Stores 25%
Independent Pet Stores 11%
Warehouse Clubs 9%
Note: Percentages are based on a total of 60.8 million pet-owning households in 2010.
Source: Packaged Facts
Mass-market sales of dog food, the largest pet food category, grew 1.5 percent in 2010 to reach $3.7 billion, according to the report. However, pound volume was down 1 percent at 3.7 billion pounds. Biscuits and treats performed well, growing nearly 8 percent over 2009. The smallest segment, frozen/refrigerated dog food, jumped 10 percent, driven almost exclusively by the efforts of Freshpet, according to Packaged Facts.
Mass-market sales of cat food declined 0.2 percent in 2010 to $2.4 billion. Like its dog counterpart, cat treats also performed well, and the frozen/refrigerated segment rose from virtually nothing in 2009 to $600,000 in 2010, according to the report.
Other pet food sales in mass-market outlets decreased 7 percent to $240 million in 2010. Packaged Facts attributed the decline in sales to the decline in ownership of animals other than dogs or cats.
The pet specialty channel, which comprises chains and independents, accounts for most of the balance of overall pet food sales at 35 percent, with the large majority of this share going to the chains. Leaders in this channel include Breeder’s Choice Pet Foods, Dick Van Patten’s Natural Balance Pet Food, Hill’s Pet Nutrition (Colgate-Palmolive), Midwestern Pet Foods Inc., Natura Pet Products (P&G), Nutro Products (Mars), Precise Pet Products, Wellpet and Wysong Corp. The top mass-market players also compete in pet specialty.
Other channels share the remaining 12 percent of sales, of which veterinarians and warehouse clubs are the most important.
Looking ahead to the next five years, Packaged Facts does not expect to see pet food sales returning to their pre-recession annual growth rate of 5 percent to 6 percent, but it does predict a gradual improvement. For 2011 to 2015, Packaged Facts expects a compound annul growth rate of 3.5 percent, with U.S. retail pet food sales reaching $21.8 billion in 2015.
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