Even a recession cannot stop the British spending big sums on their pets. The total petfood category has shot up 7.9% in value in the past year - but is devotion to animals the only factor driving up sales? Beth Phillips investigates

You only have to witness the current craze for micro pigs to appreciate how animal-mad the Brits really are. The little porkers, which grow to roughly the size of a spaniel, cost a whopping £650, yet demand is outstripping supply. Even in a recession, pet lovers are prepared to shell out, it seems and not just on the animals themselves.

Although there have been plenty of tales of rescue centres overflowing with cats and dogs their owners can no longer afford to keep, the bond between people and their pets is proving surprisingly durable as demonstrated by the latest petfood sales figures. Sales were up 7.9% to £1.8bn in the year to 9 August, according to TNS, with catfood up 10.1% and dogfood up 5.5%.

Some of this growth can be attributed to commodity driven price rises and rising aluminium costs, however and volume sales were actually down 0.5%. So is it the category that’s got the cream or is petfood in the dog house?

Last year, the category enjoyed both value and volume growth, so on the face of it, this year’s slide in volume marks an ominous u-turn. However, few categories have been immune to the recession and most senior industry figures take the view that the fall could have been worse.

That it wasn’t is partly down to people’s enduring affection for their pets, says Martin Porter, sales director for Mars Petcare. “Pets play a central role in our lives, which means petfood is often one of the last areas where consumers trade down,” he says, a point echoed by Adam Jaggar, fmcg and group marketing manager for Armitage Petcare: “Our pets are treated as part of the family and, like our children, are less likely to suffer as we tighten our belts.”

That doesn’t mean they’re buying the same food for their pets, though, or as much of it, which has prompted a savvy change in NPD tactics from suppliers. Where pre-recession the story was about premium NPD at premium prices, over the past year or so the focus has shifted to ‘premiumising’ traditionally mid-priced brands or even value brands by introducing new gourmet recipes, pouch variants or simply refreshing the recipes and packaging of existing variants.

The category’s big success story has been single-serve wet catfood. Mars Petcare relaunched its premium Whiskas range Oh So earlier this year following a redesign and recipe revamp, supported by a £7m campaign. And Nestlé Purina has worked on improving the ‘shopability’ of its Felix pouches by redesigning the packaging to feature ‘easy-to-read’ graphics and reducing outer packaging sizes, allowing more varieties to be stocked within the same shelf space.

Pets Choice, the company behind dog food brand Webbox, is also set to take advantage of the growth in single-serve pouches and is planning to launch a range for cats in the near future following success with cat treats this year.

Pouches not only give ranges a more premium feel, they also tick the convenience box and Andrew Harding, customer development director at Nestlé Purina, believes they will continue to steal ground from multi-serve cans. “Pouches are highly profitable and provide a real sales opportunity for retailers, who should prioritise single serve over traditional cans to meet the needs of their customers and maximise their sales values,” he says.

The format has also helped drive sales of traditional premium brands such as Mars’ Sheba, which comes in pouch and tray formats. Indeed, the company reports that its luxury catfood sales have grown more than 12% over the past year and that its luxury wet catfood sales are up nearly 25%, driven by its Sheba range, which continues to go from strength to strength in the UK despite the delisting of Sheba Premium Cuts in the US this month.

And it is not just catfood that is getting the premium treatment. Butcher’s Choice and Mars’ Pedigree brands have both revamped their packaging in the past six months to give the brands a more premium feel.

Butcher’s claims that its super premium brand, Superior, has enjoyed a 30.5% uplift in sales. “Superior’s number one position in the super premium category demonstrates consumer understanding of the added value positioning of the brand with its real meat pieces and gourmet recipes,” says Butcher’s Choice brand manager, Alison Cockroft, who claims that Butcher’s Choice pouches have already grabbed 5% of the pouch market since launch in March.

Mars, meanwhile, also relaunched premium dogfood brand Cesar this year with new packaging to highlight that it now contains more meat. A further innovation, launched in February, was new packaging to highlight the ‘Steam Cooked’ preparation of the range’s most premium lines.

Growth in the premium sector doesn’t mean demand for value lines has dried up, however, insists dry dogfood supplier Wagg Foods. The company, which produces value petfood ranges, has enjoyed 40% sales growth in the past 18 months, claims sales and marketing director Tom Page.

“Within the complete dry dogfood sector all the producers in growth are selling value products,” he says. “Premium products in dry dogfood are in decline. Pet owners shopping within the grocery channel have always placed convenience and value for money above functionality and premiumisation.”

Page’s assertion is backed up by the TNS data, which shows a 7.2% volume rise in branded sales outstripped by 10.1% growth in own label. Branded manufacturers are consequently pulling out all the stops to drive stronger growth. And with shoppers looking for the same qualities in their petfood as in their own, it is to health they are turning their attentions.

“Many owners view their pets as having the same emotional and physical needs as humans,” says Porter. “As the human population becomes increasingly urbanised, pets are more often kept indoors. This invariably leads to stronger bonds between pet and owner, pet pampering, and the desire in pet owners to treat their pets to the very best nutritionally.”

Dried catfood sales have shown strong growth as big suppliers take a leaf out of niche suppliers’ books to develop specialist ranges. Nestlé Purina, for example, claims its boxed and bagged Go-Cat for Indoor Cats dry range, which was developed for less active cats that mostly stay indoors, has gained an extra 284,000 shoppers over the past year following its first TV push since its 2002 launch.

Pets, like people, are living longer, so a number of ‘lifestage’ ranges have been launched to meet the dietary needs of ageing pets. Nestlé has launched Bakers Gravy Bites Senior, Bakers Gravy Bites Puppy, Bakers Meaty Meals Puppy and Felix Kitten and Senior ranges, for instance.

“Dogs and cats have different nutritional needs depending on how old they are,” explains Harding. “Senior is the biggest opportunity for retailers. On average, cats need senior nutrition products from the age of seven, while for dogs it is between the ages of four to seven depending on the breed there are more senior cats and dogs alive today than adult cats and dogs.”

Traceability has become another key marketing message. Mars splashed out £7m this year on its Good Honest Food campaign to highlight that the meat used in Pedigree can be traced back to the farm it came from. In March, Delamere Dairy, under the Top Life Formula brand, launched the UK’s first cat milk to carry the Red Tractor logo. “As a whole, the range has seen volume growth of 84% from January to September compared with the same period last year,” says commercial director Ed Salt.

And in November, Lily’s Kitchen entered the sector to offer pets a 13-strong range of products made from organic, holistic and human-grade ingredients (see box p48).

Another dietary trend to have migrated from people to pets is indulgence. Cat treat sales have soared 28.5% by value [TNS]. Pets Choice claims it has seen “phenomenal” growth in both dog and cat treats in the past year. “While the range sits in the pet treat fixture, its popularity and palatability is such that most owners feed their cats the cat sticks on a daily basis,” says CEO Tony Raeburn. “The range is one of those few cat treats that performs well all year round without relying on a surge in demand at Christmas, which is a key sales period for the category as a whole.”

Given petfood’s subdued volume sales, this year’s festive season will be more critical than most. As for whether we will we one day see truffle-flavoured piggie treats grace the petfood aisle, who knows. Micro pigs really might fly.

Focus On Petcare