Pet ownership has boomed during Covid, but retail volumes of food are in the red. What’s going on?
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A dog in a face mask? It may seem unlikely, but it’s now a viable business venture. At least it is in the US, where New York petcare brand Pet Masks saw revenues rocket last year. Sales of the $25 (£18) snout coverings – originally created to protect dogs and cats from air pollution – grew “by about 500%” as Covid spread across the States, according to founder Salitia Henwick.
While clearly a niche product, the dog mask nevertheless illustrates a mainstream trend in petcare. Pet owners have been having the same pandemic-led health concerns for their pets as they do for themselves. It’s further highlighted by a recent snap poll of dog owners by the Vet’s Kitchen brand, which also operates its own chain of veterinary clinics.
The survey found immunity was among respondents’ chief concerns for their pooches – mirroring the fears that have driven shopper decisions since the virus took hold.
So, what does this mean for the future of the petfood category? Can it help brands and retailers jump-start flat value sales of £2.57bn [Kantar 52 w/e 11 July 2021]? And given the recent explosion in pet ownership, how come volume sales are in the red?
In theory, the pandemic offered the category huge opportunity for value growth. That was down to two major factors. First, after several static years, pet ownership surged as locked-down Brits sought companionship.
“Pet owners are taking more of an interest in their pets’ nutrition, health and wellbeing”
In fact, 3.2 million households acquired a pet in the year after the first lockdown was announced, according to the Pet Food Manufacturers Association. “There are now 34 million pets in the UK, including 12 million cats and 12 million dogs,” it said in March.
The findings are supported by Ben Duncan, Purina’s market development organisation director. “We estimate that, comparing Q3 2021 to Q1 2020, the absolute increase of both cats and dogs has been about the same – circa 1.5 million more of each.”
That means there are more four-legged friends eating treats and snacks – which is the segment in strongest value growth while commanding the highest pack prices. Cat treats, for instance, are up by 13.4% on volumes up by 13.8% [Kantar]. Average price per kilo is £15.24. That’s significantly higher than the £3.40 per average kilo for single-serve wet catfood, the category’s largest sector.
Growth in petfood has been minimal in the past year. Overall value is up just 0.5% to £2.57bn, while dogfood is flat at £1.29bn. Catfood has added just 0.9% and is now worth £1.28bn on the high street.
Category performance, not including online, “is at odds compared with the wider grocery market, which greatly benefited over the pandemic” notes Kantar analyst James Rhodes.
Dry dogfood has seen the harshest declines. Both nutritionally complete lines and mixer products are down 13.6% in value, having sold 56.3 million fewer kilos between them.
The decline in dry dogfood can in part “be attributed in part to excessive bulk buying we saw this time last year” Rhodes says.
Some sectors have achieved strong growth, however, with cat treats and dog treats up 13.4% and 7.8% respectively in value. “This mirrors growth in human snacking products, suggesting a link between treating ourselves and treating our pets,” Rhodes says.
Health kick
The second major opportunity for the category is the aforementioned focus on wellbeing and providing tailored health products that carry a premium price tag.
“It’s a really positive thing that pet owners are taking more of an interest in their pets’ nutrition, health and wellbeing,” says Sean McCormack, head vet at Tails.com.
Laura Shears, MD of Vet’s Kitchen, also acknowledges a “shift towards more health-conscious purchasing” – and suggests it is the latest stage of an enduring behaviour.
“In recent years, humanisation has been one of the key trends driving premiumisation in petcare. That is now moving more into people taking an interest in their pet’s health – and that is part of humanisation, of course,” she says.
Lily’s Kitchen marketing director Samantha Crossley agrees that “humanisation of petfood continues to be a strong trend”. And that is increasingly informing pet owners’ food choices for their cats and dogs.
“Humanisation has been one of the key trends driving premiumisation across petcare”
“Consumer knowledge about nutrition has built a greater understanding of and interest in pet nutrition, and this filtration means pet owners opt for petfood made with proper meat and healthy ingredients,” she adds. “People are willing to spend more on quality and we’ve seen that the biggest driver of purchase, after taste, is health.”
Key to keeping Fido and Mittens in fine fettle is age-appropriate nutrition –another factor that has influenced buying habits.
Owners with older pets are driving a growing market for supplements, suggests Jack Walker, co-founder of Scrumbles. “Like us, pets are leading longer lives and later in life are more vulnerable to many health conditions. This has fuelled the rise of life stage products,” he says.
But the younger end of the market is where the real growth lies. “The recent rise in pet ownership has caused an increase in younger pets as a percentage of the total pet population in a very short period of time,” says Duncan at Purina. “This has delivered a push effect as responsible manufacturers recognise there is an increased demand for life stage/lifestyle-specific foods.”
“Pets are leading longer lives and later are more vulnerable to many health conditions”
Crossley stresses the importance of life-stage products to promote health. “Puppies more protein and calcium than adult dogs, for example. Until they reach 50% of their adult weight, a puppy will have around double the daily energy requirement of an adult.
“Senior dogs and cats, on the other hand, don’t need as much protein in their diet and benefit from joint supplements such as glucosamine and chondroitin,” she adds.
Owners’ understanding of life stage needs is only set to grow, Duncan believes. “The demand for products tailored to bespoke conditions such as age, conditions, lifestyle [and so on] will continue to gain momentum as increasingly savvy owners recognise the bespoke nutritional needs of their pet.”
In fact, many pet parents are already savvy, shopping for a “more premium offering in order to feed the best food they can – seeking out ingredient transparency, nutritional benefits and natural goodness”, says Inspired Pet Nutrition MD Chris Wragg. “We’ve seen a real-time increase in pet parents investing in better nutrition.”
How brands are looking out for pets’ emotional wellbeing
A pet’s wellbeing goes beyond a glossy coat, wet nose and sharp teeth. There’s also its mental health to consider – especially now as the return to regular working patterns threatens to spark a separation anxiety epidemic among the UK’s four-legged companions.
“Separation anxiety is a real concern for many pet parents when returning to the office,” says Scrumbles co-founder Jack Walker.
It’s especially the case for dog owners. But there are ways to limit Fido’s stress during work days.
“It’s a good idea to start preparing your dog for being on its own ahead of returning to the office,” advises Ben Duncan, Purina market development organisation director. “There are simple things you can do, like leave your dog on its own in a safe home environment for short periods of time, so the dog gets used to being away from the owner and on its own during the day.”
Working in an animal-friendly environment is another solution, suggests Sam Crossley, marketing director at Lily’s Kitchen, which has always allowed dogs in its offices. “We would wholeheartedly recommend other companies do the same,” she says. “Dogs are known to boost morale, and the sight of a wagging tail and a furry face have been proven to release dopamine, the feel-good hormone.”
For pet owners who have to leave their dog at home, help is available in grocery.
Scrumbles, for instance, has Nibbles, a treat made with lemon balm and chamomile to promote calm. Sales are currently “up 747% on Amazon alone”, Walker says.
Specialist brands such as Itch and Beaphar offer similar products for cats.
Vet’s Kitchen, on the other hand, sends out a regular advice newsletter, which recently addressed the subject of pet anxiety.
“One thing that brands should be doing – and a lot of us are doing – is helping educate,” says MD Laura Shears. That’s one less thing for pet owners to worry about.
Natural diets
Wragg’s observation is salient. It underlines that natural petfood lines have an increasingly powerful appeal – mirroring the clean-eating trend among people.
“As a result, natural petfood is growing ahead of the overall market and helping to drive category growth,” notes Crossley. “Lily’s Kitchen carved out the premium natural petfood space, helping to make pets feel part of the family by enjoying the same food ‘moments’.”
The definition of ‘natural’ is admittedly “pretty broad”, says Mars Petcare head of marketing Arthur Renault. “But you could simplify it as the least process possible, with clean ingredients – and what people expect is that if you say there are kibbles with chicken, the first ingredient is chicken.”
Or wild boar – which is what sustainable dogfood brand Beco started using in its meals in 2019, in a move away from beef and lamb. “It has flown off shelves,” says co-founder George Bramble. “Wild boar is such a fantastic meat as they eat an all-natural, foraged diet, meaning the meat is free from the types of additives often seen in many farm-raised animals, as well as being super healthy for dogs and hypoallergenic.”
“Pushing grain-free as biologically appropriate and natural for domestic dogs is nonsense”
Startup Noochy Poochy is taking a different approach to natural. The plant-based brand is itself direct contradiction of the common view that it is a synonym for ‘grain-free’. “Domesticated dogs have been sharing the human table for 14,000 years and as such have been eating our farmed cereals, grains and vegetables for all of this time,” says the brand’s founder, vet Lucy McKinna.
“It’s been proven over time they have evolved. So, to continue to push grain-free as ‘biologically appropriate’ and ‘natural’ for domesticated dogs is nonsense.”
Of course, its recipes also play into the vegan petfood trend. Like plant-based food and drink among humans, it is attracting a growing following.
“The vegan dogfood market is expected to grow at a rate of 12% in the forecast period 2021 to 2028,” says Jo Amit, co-founder of vegan dog food brand Hownd. “vegetarian and vegan dogfood has been on the market for some years now, albeit a niche sector, but the increasing popularity of vegetarian and vegan lifestyles among humans has seen increased demand and interest.”
Nutrient sources
This depends on the animal, though. While suppliers may disagree on what constitutes a healthy diet for omnivorous dogs, most agree that carnivorous cats need certain amino acids and compounds found only in meat.
“Commercial vegan cat diets add synthetic forms of these nutrients to make up for the deficiency but there are concerns around long-term availability and absorption and certain cases of so-called vegan cats becoming ill over time,” says McCormack at Tails.com.
Still, while cats need meat, it doesn’t have to come from traditional sources. Hence the launch this year of Lovebug, Catit and Aardvark – three brands offering sustainable catfood made from black soldier fly larvae. Lovebug promises it’s “healthy for cats as well as the planet”.
“The industry has a responsibility to make sure the best info is available for pets”
All of which adds up to a dizzying myriad of choice. So, grocers must carefully curate their petfood aisles, suggests Peter Lancaster, head of marketing at Burgess Pet Care.
While humanisation is driving sales of premium nutrition, “retailers need to keep in mind the true requirements of animals” he says. “With so many new entrants to pet ownership, the whole industry has a responsibility to make sure the best information is available, so that pets are cared for correctly and all of their welfare needs are met.”
Similarly, Mars’ Renault warns that retailers “just rationalising ranges mechanically could eventually go against the needs of the new generation” of pet owners.
Eco-packaging and lower carbon pawprints: how petfood is going green
Mars Petcare this month revealed its plan to axe plastic shrink film from all mixed multipacks of Pedigree, Whiskas, Chappie and Kitekat cans.
The move to fully recyclable cardboard packaging will see 180 tonnes of plastic removed from the waste stream every year, according to the supplier.
The petcare giant is “on a mission to futureproof the growing pet population and industry” according to interim general manager Kim Smet.
“Over the past year alone, the UK’s pet population has skyrocketed to an all-time high. So, as an industry, our sustainability efforts must reflect this and improve, at speed, to create the world we want tomorrow.”
Mars’ plastic reduction comes after it launched recycling points for petfood packaging in 40 Pets at Home stores across the UK.
It’s not the only petcare business working to be more sustainable. Field & Trial, for instance, recently added a range of working dog treats in plastic-free paper packs with a water-coating – making them “100% eco-friendly”.
Vet’s Kitchen and Aardvark are among other brands to have rolled out greener packs in the past few months. Others have gone beyond packaging in their eco-efforts.
Take Beco, which “is designed to have as low an impact on the environment as possible, whether that’s our carbon footprint, how we package products, and making sure we’re sourcing close to home” says co-founder George Bramble.
Then there’s Inspired Pet Nutrition, which in December claimed to have become the UK’s first carbon negative petfood maker. It worked with Carbon Footprint to calculate its production emissions and then invested more than that amount in projects such as tree planting in the UK and wind farms and solar panels overseas.
The company hopes to become the UK’s most environmentally friendly petfood supplier, under a plan called – you guessed it – A Positive Pawprint.
DTC competition
This is especially important given that shifts in pet ownership and pandemic shopping have proven tricky for retailers. Value has edged up by just 0.5% in the past year, and volumes have slumped by 4.1% [Kantar].
In part, this is due to a shortage of pouched food. In March, Sainsbury’s warned shoppers of a “national shortage” of dog and cat pouches, predicting that the issue would be “ongoing throughout the year”. At the same time, Morrisons and Tesco both blamed shortages on the unprecedented rise in pet ownership.
Volumes have also been hit by growing preference among younger adults in urban areas for smaller dogs, which eat less. However, a more significant reason for declines is shoppers switching channels during the height of the pandemic.
“The preferred route for purchase depends on the type of pet, but last year we saw a sharp rise in shoppers going online and to local shops, avoiding big grocery stores,” says Crossley. “As Covid restrictions have since lifted, people have been returning to stores, but we expect the shift to online shopping to stay and for it to become an increasingly important channel.”
For good reason, says Amit. After all, direct to consumer is “convenient for consumers, offers quick access to broad product ranges, gives personalised customer care and content, and most importantly, it offers a direct relationship between brand and customer”.
It’s here to stay, predicts Duncan. “While online and specialist will continue to grow, the dramatic variances we have seen in growth/decline rates across different channels will flatten. The notable exception here will be DTC. Due to the loyalty of the channel, once shoppers start using it, they tend to keep doing so.”
It makes sense. The pandemic has seen Brits embrace online shopping for themselves. So why not for their pets too?
Innovations in petcare 2021
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Focus On Petcare 2021
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