Premium, high-protein and functional petfoods will be the driving force behind a predicted $79bn (£59bn) expansion in the global petfood market over the next 10 years.
Industry analysts from Bloomberg Intelligence predicted the market would grow 70% to $192bn by 2035, as suppliers take advantage of the increasing ‘humanisation’ of pets and a higher spend per animal.
Premium petfood sales are set to lead the category, with 73% growth over the decade, compared with just 49% growth for economy products. By 2035, premium sales will make up 45% of the global market.
The shift to premium products will not be a “straight line”, however, according to Bloomberg Intelligence analyst Diana Rosero-Pena.
She told The Grocer there would be a short-term trade-down to economy products, smaller packs or cheaper channels as consumers struggled with immediate economic pressures.
The squeeze on consumers meant it was unlikely sector M&A would return to the “boom” of the past few years, she added.
“The market is more measured,” she said. “Buyers are prioritising strategic fit, premium positioning, regional expansion and margin resilience rather than chasing every growth asset.”
And while demand for premium products is high, the market will be limited by their high protein content – and thus higher pricing and exposure to commodity volatility.
“Protein costs are another limiter because premium formulas push the category toward meat, fish and other higher-cost inputs,” said Rosero-Pena.
“Dry food gives companies more flexibility to adjust recipes and pack sizes, while wet, fresh and functional products have more exposure to protein costs, processing and spoilage.”
Fresh-frozen petfood, the category’s fastest-growing format, is set to double in sales. Yet while Rosero-Pena called the opportunity “meaningful”, margin pressures “could challenge the economics” for smaller businesses – and help giants such as Mars and Nestlé retain their lead in the market.
“Scale helps large producers manage sourcing, hedging and reformulation, while smaller brands have less room to protect gross margin without raising prices or slowing growth.”
Mars and Nestlé will likewise both benefit from faster growth in catfood. Nestlé controls 39% of the US catfood market, and 26% globally, with Mars holding 17% in the US and 21% globally, according to Euromonitor.
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