The next frontier: petfood category report 2020

Space dogs never had it easy. Their missions into outer space in the 1950s were mostly one-way. Laika, who in 1957 became the first living thing (we know of) to orbit the Earth, died of stress and heat exposure within hours of blast-off. She didn’t even get a decent last meal. The nutrient gels she was packed off with caused constipation and gallstones. 

Poor Laika’s mission was a significant step towards the 1961 arrival of the first man in space and paved the way for the giant leaps in technology and scientific understanding that space exploration has brought us. It also inspired countless sci-fi paperbacks and fuelled speculation that life, human or otherwise, could be sustained by gels and pills.

Gels aren’t yet a significant part of our pets’ diets, of course. But petcare is getting futuristic. In the US, for example, Mars Petcare says it is using data amassed from thousands of Whistle devices – in essence, doggy FitBits that can monitor animals’ vital statistics up to 50 times a second – to develop the next generation of dogfood.

Petfood is moving fast here, too. June saw the UK launch of Purina Pro Plan Live Clear, which claims to reduce the amount of the human allergen Fel-d1 cats produce in their saliva. Players like this, along with insect-based dogfood brand Yora and ethical doggy spa and hemp treat brand Hownd, seem light years away from standard tins of Winalot.

But will any of it stick? Or is all this just evidence that the pet world is as prone to food fads as our own? And with the world now mired in recession brought about by Covid-19, are premium petfood brands about to come crashing back down to earth?

Petcare retail: Who’s top dog?

• Pet shops, garden centres and national specialists such as Pets at Home have taken a battering this year, with combined category sales falling 15.7%.
• Covid, of course, has played a role in this, with shoppers minimising shopping trips to physical stores. That’s in spite of pet shops being classified as ‘essential retailers’ at the start of lockdown.
• Proving price still plays a pivotal role for pet owners, discount variety stores have delivered the strongest growth, up by 9.5%. This, in part, is due to the growing space players such as B&M are giving petfood lines.
• Of the multiple grocers, the Co-op saw the biggest gain, with value sales rising by 8.3%. Further analysis by Nielsen reveals the Co-op was a major beneficiary oflockdown, with sales rising by 16.3% in the 12 weeks to 16 May as shoppers sought convenience.
• With pet shops hit so hard, many brands have been developing direct-to-consumer solutions. For example, James Wellbeloved, the specialist nutrition pet brand from Mars Petcare, launched a DTC e-commerce offering in the spring.

It’s fair to say that vegan dog treats and insect-based petfood currently have rather limited appeal. That doesn’t mean products like these are unable to crack the mainstream, though. Because petfood choices are increasingly motivated by the same factors as human food choices.

“The market has seen a proliferation of niche innovations in recent years, from insect protein to products formulated to reduce allergies in owners,” says Mars Petcare category & marketing director Nick Foster. “Whilst some of these innovations may be hyper-targeted to small consumer bases, they represent the ongoing need for brands to address the needs and motivations of both pet and pet parent.” So if that parent chooses a vegan lifestyle for themselves, they are likely to also be interested in plant-based options for their pooch, too.

“Premiumisation and humanisation continue to drive growth across petfood”

The use of the term ‘pet parents’, as opposed to mere ‘owners’, is telling in itself. It reflects a number of wider demographic factors that are influencing the market. People in Britain are getting married later in life, while more people aged over 65 are divorced or separated than they were in the past. So more of us are living alone and without children, which has seen pets claim an increasingly elevated position in our households.

That means their food is also becoming more of a priority. “Premiumisation and humanisation continue to drive growth across petfood,” explains Victoria Larsen, senior category manager at Inspired Pet Nutrition, owner of the Harringtons and Wagg brands. “Whether it’s enabling pets to join in with human activities, mimicking human food or a way of understanding pet nutritional trends and needs, the humanisation of petfood continues to drive NPD and added-value propositions.”

Indeed, well over half of pet owners view their animals as part of the family, according to a Mars Petcare study. Nearly three quarters refer to themselves as their pet’s ‘mummy’ or ‘daddy’. In many households, pets have become surrogate children. And people only want the best their budgets can afford for their kids (human or otherwise).

Best in show: how petcare categories have fared this year

• Petfood mustered growth of just £4.9m (0.2%) in the year to 12 July. The number of packs sold fell by 18.3 million (1.8%).
• Shoppers spent £17.7m more on feeding their dogs, despite packs falling 1.7%, while catfood shed £12.8m, as pack sales fell 2%.
• Petfood spiked in March as shoppers stockpiled, but sales then dipped. “The reason is that there’s a limit to what shoppers need to buy,” says Kantar analyst Josh Montague-Fuller.
• The exception is cat treats, which have seen sustained growth as owners have spent more time at home, treating their pets more. Sales are up 6.4% with a 7.3% rise in packs sold
• Retailers have been running bulk deals on mainstream lines to drive volumes as brands develop more premium offerings. “Felix launched Tasty Shreds and Whiskas launched Pure Delight to up-trade shoppers,” says Montague-Fuller.
• “Luxury brands are also premiumising. Gourmet’s new Nature’s Creations emphasises natural ingredients. Sheba has launched Perfect Portions.”

Premiumisation

Hence the rising value of the petfood market. “Despite the challenges of 2020, British supermarkets have seen a 2.2% year-on-year increase in value sales of petfood and litter,” says Foster, quoting Nielsen figures for the year ending 11 July. “What’s more, the number of units sold has fallen by 2.3%, indicating that shoppers are now trading up.”

There’s no shortage of examples of premiumisation. For example, Nestlé Purina has launched Felix Tasty Shreds while Mars Petcare has unveiled Whiskas Pure Delight. Both can be seen as attempts to meet growing demand for more accessible indulgent offerings by highlighting qualities such as texture and premium ingredients. 

“Of course, mainstream shoppers still want access to the latest trends,” says Foster. “They just need to be able to do so within a limited budget. That’s why it’s crucial that brands continue to innovate and renovate their mainstream product offerings. Equally so, retailers need to keep their ranges fluid in order to accommodate new arrivals and offer that all important variety.” 

“Pets are becoming an ever-more central part of family dynamics – especially amongst millennials”

As you travel further up the price spectrum, offerings seem further removed from the petfood of old and more akin to the dishes we eat ourselves. Examples abound: there are Sheba Soups, Gourmet Gold Double Delicacies and Crave Paté for cats, while our dogs can chow down on Wagg BBQ Bangers and Steaklets, Cesar Country Garden, which contains vegetables, or Lily’s Kitchen’s limited edition Beef Ghooolash for Halloween. 

“Pets are becoming an ever-more central part of family dynamics – especially amongst millennials,” says Lily’s Kitchen marketing director Samantha Crossley. “Young pet parents are increasingly sharing the lives of their pets on social media, buying them gifts, and more and more, are including them in every aspect of their lives. This brings huge opportunities for petfood brands when it comes to engagement and new product development.”

Crossley points to products such as Lily’s Kitchen’s Great British Breakfast, Sunday Lunch and Birthday Surprise for Dogs. “Pets have their own personalities – and being a pet parent is all about celebrating the joy of having a cat or dog in your family,” she adds. “Alongside that, we want to inspire pet parents to feed a proper, nutritious meal that will keep your pet happy and healthy, just like any other member of the family.”

This is a crucial point. Health-orientated petfood that takes cues from rising trends in the world of human nutrition are some of the market’s fastest growing. IPN credits the 2019 launch of Harringtons’ Just 6 – so called because it contains ‘just six simple ingredients that you know and recognise’ – for making the brand the bestselling dry dogfood in the supermarkets, overtaking Bakers [IRI 52 w/e 11 July 2020].

Natural

“To reach the number one spot having only been launched in 2008 is a tremendous achievement,” says marketing director Chris Wragg. He believes the ‘Natural for All’ proposition of Harringtons has “de-positioned” brands that have been slower to adapt to changing consumer needs. “There’s also huge potential for growth in the fast-growing wet tray market, where the brand already has a significant presence and number two market share position,” Wragg adds.

Harringtons isn’t alone in looking to translate the ‘clean label’ trend for the pet world with products marketed on natural, no nonsense credentials. “Our Naturally 5 complete dogfood recipes are made with just five simple and nourishing ingredients,” says Rachel Grant, sales rep at Laughing Dog, which also produces a range of canine treats. “This clean labelling stance is reflective of human food trends: transparency, limited ingredients, natural.”

“Half of mainstream petfood shoppers are looking to move to natural petfood”

If less really is more when it comes to petfood ingredients, you could argue that Naturally 5 trumps Harringtons Just 6 by one. Others are taking a slightly different tack in trying to appeal to shoppers who want more ‘natural’ offerings. Rather than highlighting the scarcity of ingredients, Crave, for example, is marketed on the slogan ‘Satisfy Their Nature’. Mars Petcare claims the range is high in protein, contains ingredients from ‘60% animal sources’ and includes no grains.

Devon-based petfood manufacturer Forthglade says there is a reason why natural has emerged as a key selling point. “Half of mainstream petfood shoppers are looking to move to natural petfood because they believe it is better for their dogs,” says sales director James Kennedy, quoting a poll carried out by the company in March of more than 3,000 dog owners.

He points out that Forthglade fits that brief with a 75% meat or fish content, as well as added vegetables, oils, minerals and vitamins. “Our recipes still stand out within the dogfood category as one of the very best in terms of nutritional content but are priced at a level that people can afford for everyday feeding,” adds Kennedy.

Gut health

In another example of pets aping human wellness trends, gut health has emerged as another area of activity. See Scrumbles, which produces a range of ‘real food for happy dogs and cats’. The brand says it packs “one billion live bacteria in the form of probiotics” into each kilo of dry food to tap this demand.

“Gut health is the future of petfood, with 76% [of petfood shoppers] agreeing that actively looking after pets’ digestive health is essential for their overall health,” says assistant brand manager Natasha Crawford, quoting Mintel research. 

The human cues don’t stop there, either. Crawford also tips plant-based petfood products as an area to watch. “These have already taken off in the human world with the likes of Beyond Burger,” she says. “It’s not seen yet in the pet world due to the cost, but once this drops it could be a very attractive ingredient for dogfood.”

Crossley of Lily’s Kitchen similarly spots potential. “In line with the shift toward humanisation, and as vegan eating habits become more popular, some pet parents want to feed their pets diets like their own,” she says, pointing to Lily’s Kitchen’s Wholesome Veggie Feast dogfood. “Any such petfood, however, needs to be informed by veterinary advice. As omnivores, dogs can enjoy vegetable-based dishes as part of a balanced diet. On the other hand, with cats being obligate carnivores, we wouldn’t advise removing meat from feline diets.”

Insects

So, the plant-based trend rules out Britain’s 10.9 million cats. You might ask where all this leaves insect-based foods, which are being marketed as a sustainable option. After all, insect and sustainable petfood company Yora says conventional petfood accounts for 20% of all meat and fish produced.

Crawford is dubious. “It’s unlikely insects will go mainstream as customers will struggle with the ‘yuck factor,’” she says. “Most market growth is driven by humanisation. Until we accept insects into our own diet in some more meaningful way they’ll be little more than a novelty. Since much of the meat consumed in petfood is the offcuts of human consumption there is little benefit to creating an entire new protein supply chain.”

“Customers will struggle with the ‘yuck factor’”

Particularly at a time when there is growing pressure on shoppers’ budgets, which could trump sustainability as a concern. Larsen points to Kantar data that suggests 52% of shoppers are paying more attention to price as the economy dwindles. “The recession will undoubtedly drive more change in dry dogfood,” she says. “Great value brands such a Wagg will play an important role at this time, offering affordable, good nutrition.”

That doesn’t mean the whole market will tilt towards cheaper lines, though. “51% of UK shoppers who own pets say they’d sooner reduce their spend on themselves than their pets,” says Foster. “After the 2008 financial crash sales of many categories experienced a ‘lipstick effect’ – growing demand for affordable luxuries that help raise the spirits.”

Indeed, we’ll all need a treat once 2020 is behind us. Our pets included.

Pet parents plan: how do pet owners shop the category?

• Strange but true: shoppers are more worried about running out of food for their four-legged friends than they are about going hungry themselves.
• “The petcare category is the number one category shoppers ‘don’t want to run out of’,” says Chris Adkins, MD of Shopper Intelligence.
• That means petfood is largely a planned purchase, and there is little room for impulse. “Once the shopper gets to store there’s a strong level of ‘autopilot’ behaviour,” he continues.
• So, encouraging shoppers to trade up, increase their basket size or buy a new treat for Tiddles can be problematic. The right merchandising, availability and ranging are crucial.

Innovations in petfood 2020