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Approximately 63 percent of U.S. households (79.2 million homes) own a pet. U.S. pet owners spent $48.35 billion on pet supplies in 2010, and are predicted to spend an estimated $51 billion in 2011, according to The American Pet Products Association’s 2011-2012 APPA National Pet Owners Survey.
Though sales of pet supplies have steadily risen between 2005 and 2010, data from Chicago-based SymphonyIRI Group, Chicago, actually indicate some segments of the category eked out only marginal gains, or even slipped for the 52 weeks ending May 15, 2011 (for supermarkets, drugstores, and mass merchandise outlets, excluding Walmart).
The good news for private label is that while overall sales of pet supplies were down 2.5 percent, private label sales rose by 5.8 percent. Private label dollar sales in the dog/cat needs sector were up 6.1 percent, and sales of private label rawhide dog chews jumped 13.3 percent, again outpacing the national market.
The data reflects the findings of a Mintel International report, Pet Supplies – U.S. – August 2010 that reports some 71 percent of pet owners say that “price/value matter more than other considerations when buying pet supplies.” The report goes on to note that, “moreover, sales of private label products have outpaced national brands in some segments, indicating that pet owners are looking for value as household budgets tighten.”
John Manolas, co-owner of Grayslake, Ill.-based Whyte Gate Farms, agrees that, “consumers are more cost-conscious than they were in the past, and this is slowly trickling into the pet category. I have seen some major brands keep their costs the same on the shelf, but make their packages smaller.”
ALL IN THE FAMILY
Though value is a top priority for consumers when shopping the pet aisles, it doesn’t necessarily mean pet owners are willing to forgo quality ingredients in their pet’s food, or settle for less-than-the-latest technology.
“Pets are ‘part of the family’ more now than ever before,” says Bryce Esplin, national sales account manager for Healthy Partner Pet Snacks, Idaho Falls, Idaho. “The mentality that ‘my pet is another one of my children’ influences consumers to buy treats and toys for their pets, similar to their children.”
Doak Porter, president of Mitchell, S.D.-based Performance Pet Products agrees that, “In a recessionary time, when fuel is a cost-driver, people are staying home and spending more time with their animals and thus spending more on treats as an inexpensive way to connect.”
And what are pet parents purchasing for their furry children? Toys and pet furniture are the most purchased types of supplies among dog and cat owners, according to Mintel. In addition, manufacturers of products designed for home grooming or dental care, such as dog or cat treats designed to remove tartar and plaque, are well-positioned for strong sales.
When it comes to food and treats, manufacturers agree, shoppers are reading labels and are looking for products with safe, high-quality ingredients made from trusted, traceable sources. For some consumers, the “Made in the USA” label is key.
“USA-made treats are becoming more and more popular,” says Esplin. “Health concerns for what is being made or sold off shore have made USA-made treats more attractive to consumers. It gives us a warm and fuzzy feeling knowing the treats we’re giving our pets are made domestically, and we have more confidence in our FDA- and USDA-inspected facilities to provide a safer product for our four-legged friends than what might come overseas.”
Increasingly, formulations are leaning towards all-natural, grain-free food and treats with added health and wellness benefits.
Carey Carter, vice president of manufacturing & sales for HBH Pet Products, Springville, Utah, observes, “The trend is solely based on formulation; consumers pick up a package they want to see real chicken, fresh vegetables, and ingredients they’d recognize if they were purchasing food for themselves.” Private labels are becoming plus-one products, providing value over national brands with things like functional benefits, additives that benefit an animal’s bone, joint, dental, skin and coat health, he says.
And it’s no longer just chicken, lamb and beef on the menu. Protein sources are broadening to include venison, bison and other exotic meats, Porter says. Any protein source that makes a product stand out on the shelves challenges the status quo. Porter says.
Terry Hannaford, CEO of St. Mary’s, Ontario-based Omega Paw, says the trend of super-food treats is one of the fastest growing in the category. The company offers bones, biscuits and training treats that are not only wheat-, gluten-, and filler-free but also come in super-food flavors like Pumpkin & Carrot and Mixed Berry.
Carter agrees the popularity of all-natural, grain-free food and treats will continue to grow. “The holistic and organic trend is going to be as relevant to the pet industry as it becomes more relevant to the human food industry. There are a lot of restrictions on a menu when it comes to sourcing and certifying ingredients. It’s expensive, but as we become healthier as a society, those items will become more affordable and more widely available. Most consumers are buying from the middle price point up, not the middle of the price point down.”
With all this potential private label growth, retailers must market those products accordingly. Chris Ruben, CMO for Eurocan Pet Products, New Hamburg, Ont., outlines several marketing must-dos, including pet-themed end caps and placing high-margin and impulse items at the beginning of the aisle. “Pet treats seem to sell well on j-pegs and clip strips. Organize the category to streamline the shopping experience,” Ruben says. Promotionally, he encourages retailers to host pet adoption events, make pet products a regular part of the shopper loyalty reward program, and utilize store Web sites and circulars to reinforce the retailer’s commitment to proper care of pets.
Carter emphasizes the importance of consumer education, noting that savvy consumers are “coming into the store with more education, and they’re looking for multiple sources to expand that knowledge. Good information from the retailer is critical: good information on the package, good information from a well-trained store associate, good information online, good information all around. That’s what everybody’s trying to do: whatever it takes to keep them coming back.”
Eye On National Brands
In market developments, Nestle Purina in June voluntarily recalled 870 bags of dry cat food brands including Friskies and Cat Chow Naturals shipped to Oregon, Idaho and Colorado due to potential Salmonella contamination.
Church & Dwight, maker of Arm & Hammer brand cat litter, this year announced its second “Tag a Cat, Save a Life” program to increase awareness about the importance of tagging cats. The program encourages cat owners to tag their cats-even indoor cats-to prevent their pets from ending up in an animal shelter should they become lost.
To help ensure lost cats return home safely, Church & Dwight is offering cat owners a free, personalized pet ID tag with the purchase of any two Arm & Hammer cat litters. The offer runs through the end of the year.