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Natural, Organic and Eco-Friendly Pet Products in the U.S., 3rd Edition


Attention: There is an updated edition available for this report.

  • Executive Summary
    • Introduction
      • Scope of Report: Pet Food and Pet Care
      • Report Methodology
    • Market Trends
      • U.S. Retail Sales, 2005-2014
        • Table U.S. Retail Sales of Natural Pet Products, 2005-2014 (in millions of dollars)
      • Pet Food vs. Pet Care
      • Organic Pet Food Sales
      • Litter Dominates Pet Care Classification
      • Mass-Market Sales Trends
      • Natural Supermarket Sales Trends
      • Market Share by Retail Channel
    • Competitive Trends
      • Natural Pet Market Tracking Human Path
      • Procter & Gamble Plus Natura
      • New Brands and Line Extensions
      • Raw Pet Food Market Leaders
      • Freshpet and Tyson Join Forces in Refrigerated Pet Food
      • Natural Product Leaders in the Pet Specialty Channel
      • Natural Product Leaders in Tracked Mass-Market Channels
      • Top Ten Brands in the Natural Supermarket Channel
    • New Product Trends
      • "Natural" Leads New Product Surge
      • "Natural-Related" Claims
      • "Green" Claims
    • Consumer Trends
      • Purchasing Patterns for Natural/Organic Dog Products
      • Purchasing Patterns for Natural/Organic Cat Products
      • Independent Pet Stores Are Highest-Indexing Channel for Natural Product Purchasers
      • Availability and Affordability as Impediment to Natural Product Purchasing
  • Introduction
    • Scope & Methodology
      • Scope of Report: Pet Food and Pet Care
      • Report Methodology
    • Market Definitions and Terminology
      • Natural Pet Food
      • Defining Natural
      • What "Natural" Isn't
      • Defining Organic
      • April 2010 NOP Recommendation Muddies Organic Pet Food Waters
      • Organic Standards as of May 2010
      • Sustainability and Other Ethical Issues
      • Third-Party Accreditation
      • Natural vs. Organic
      • Raw Pet Food Product Definition
      • Dr. Billinghurst's BARF Diet
      • The Raw Meaty Bones (Prey Model) Approach
      • Raw Food Processing
      • Freeze-Drying
      • Pasteurization
      • Raw Food Regulation
      • Terms Often Associated with Natural and Organic
      • "Healthy" Ingredients
      • "Unhealthy" Ingredients
      • Natural Pet Care Products
      • Natural and Alternative Litter
      • Natural Pet Health Products
      • Natural Pet Grooming Products
      • Natural Pest-Control Products
      • Natural Pet Supplements
      • Other Natural Pet Care Products
    • "Ethical" and Environmental Issues
      • Key Ethical Issues
      • Eco-Friendly ("Green")
      • Locally Grown and "Food Miles"
      • Humane Treatment of Animals
      • No Animal Testing/Cruelty-Free
      • No Genetic Modification or Cloned Animals
      • Fair Trade/Ethically Sourced
      • Sustainable Agriculture and Development
      • Corporate Responsibility
      • The Global Reporting Initiative
      • Governmental and Non-Governmental Criteria and Certification
      • Consumers Union Lists 150 Different "Eco-Labels"
  • Market Trends
    • Market Size & Growth
      • U.S. Retail Sales, 2005-2014
        • Table U.S. Retail Sales of Natural Pet Products, 2005-2014 (in millions of dollars)
      • Pet Food vs. Pet Care
        • Table U.S. Retail Sales of Natural Pet Products by Classification and Category: 2005, 2009 and 2014 (in millions of dollars)
        • Table Share of U.S. Retail Sales of Natural Pet Products: 2005, 2009 and 2014 (percent)
      • Food Sales by Type
        • Table Share of U.S. Retail Dollar Sales of Natural Dog and Cat Food by Form, 2009 (in millions of dollars)
      • Organic Pet Food Sales
        • Table U.S. Retail Sales of Organic Pet Food, 2003-2009 (in millions of dollars)
      • Raw Pet Food Sales
      • Litter Dominates Pet Care Classification
      • Mass-Market Sales Trends
        • Table U.S. SymphonyIRI-Tracked Retail Dollar Sales of Natural Pet Food, Litter, and Dog/Cat Needs vs. Total Pet Food, Litter, and Dog/Cat Needs: 52 Weeks Ending April 18, 2010 vs. Year-Ago Period (in millions of dollars)
      • Dog and Cat Food
        • Table Share of U.S. SymphonyIRI-Tracked Retail Dollar Sales of Total Pet Food and Natural Pet Food by Animal Type: 52 Weeks Ending April 18, 2010 vs. Year-Ago Period (percent)
        • Table Share of U.S. SymphonyIRI-Tracked Retail Dollar Sales of Natural Dog Food and Total Dog Food by Product Type: 52 Weeks Ending April 18, 2010 vs. Year-Ago Period (percent)
        • Table U.S. SymphonyIRI-Tracked Retail Dollar Sales of Natural Dog and Cat Food vs. Total Dog Food by Category: 52 Weeks Ending April 18, 2010 vs. Year-Ago Period (in millions of dollars)
        • Table Share of U.S. SymphonyIRI-Tracked Retail Dollar Sales of Natural Cat Food and Total Cat Food by Product Type: 52 Weeks Ending April 18, 2010 vs. Year-Ago Period (percent)
      • Cat Litter
        • Table U.S. SymphonyIRI-Tracked Dollar, Unit, and, Volume Sales of Natural Cat Litter vs. Total Cat Litter: 52 Weeks Ending April 18, 2010 vs. Year-Ago Period (in millions of dollars, units and pounds)
      • Natural Supermarket Sales Trends
        • Table Dollar Sales of Pet Products in the Natural Supermarket Channel by Category, 52 Weeks Ending May 15, 2010 vs. Year-Ago Period (in millions of dollars)
      • Market Share by Retail Channel
    • Market Outlook
      • Recession Takes a Toll
        • Table Symphony/IRI-Tracked Sales of Pet Products: Total and by Food and Non-Food Category and Segment, 2009 vs. 2008 (in millions of dollars, units and pounds)
      • Slow But (Apparently) Steady Recovery Underway
      • Pet Market Consumers a Bullish Bunch
        • Table Level of Agreement with Statement "I Am Spending Less on Pet Products These Days Because of the Economy": Dog Owners and Cat Owners Overall vs. Natural Dog Food/Supply Purchasers and Natural Cat Food/Supply Purchasers, 2010 (percent of U.S. pet owners)
        • Table Level of Agreement with Statement "I Am Spending Less These Days Because of the Economy": Dog Owners and Cat Owners Overall vs. Natural Dog Food/Supply Purchasers and Natural Cat Food/Supply Purchasers, 2010 (percent of U.S. pet owners)
        • Table Level of Agreement with Statement "I Anticipate Spending More on Pet Products Over The Next 12 Months": Dog Owners and Cat Owners Overall vs. Natural Dog Food/Supply Purchasers and Natural Cat Food/Supply Purchasers, 2010 (percent of U.S. pet owners)
      • Heightened Consumer and Governmental Focus on Product Safety
      • New Regulations for Flea/Tick "Spot-ons"
      • Heightened Focus on the Environment
      • Focus on Organic and Sustainable
      • New NOP Recommendation Threatens Organic Pet Food
      • Recession Takes a Toll
      • Organic Ingredient Surplus and Higher Costs to Producers
      • Is Organic Really Better?
      • Confusion over Natural vs. Organic, "Green"
      • A "Greenwashing" Backlash?
      • OTA Bullish on Organic Growth
      • Government Steps Up Support of Organic Industry
      • Strong Consumer Interest
      • Favorable Trends in Multiple Retail Channels
        • Table Level of Change in Sales Volume Among Independent Pet Specialty Retailers, 2007-2010 (percent)
        • Table Natural Product Share of Independent Pet Specialty Store Sales by Animal Category, 2009 (percent)
        • Table Share of Independent Pet Specialty Store Sales Derived from Natural Products: By Animal Category and Percentage Level, 2009 (percent)
        • Table Change in Amount of Natural/Holistic Products Sold: "Has the Amount of Natural/Holistic Products Your Store Sells Increased, Remained the Same, or Decreased In the Last 12 Months?" (percent)
      • Petco Programs
      • PetSmart and Martha Stewart
      • Room to Grow at Whole Foods
      • A Boom in Mass Channels?
      • Internet a Big Plus for Natural Pet Products
        • Table Level of Pet Owner Agreement with Statement: "I Use the Internet to Help Find and Choose Pet Products," February 2010 (percent)
        • Table Level of Pet Owner Agreement with Statement: "I Buy Pet Products Online," February 2010 (percent)
        • Table Selected Internet-Related Psychographics: Adults Overall vs. Pet Owners by Type of Pet, 2009 (percent and index)
      • The Human/Animal Bond
      • Premium Demographics
        • Table Change in Pet Market Consumer Base: Household Income $60K or More vs. Household Income Under $60K, 2005 vs. 2009 (U.S. dog- or cat-owning households)
      • Impact of Aging Pet Population
      • Impact of Pet Overweight, Obesity
  • Competitive Trends
    • Introduction
      • Natural Pet Market Tracking Human Path
      • Key Acquisitions
      • Procter & Gamble Plus Natura
      • Possible Future Acquisitions Targets
      • New Brands and Line Extensions
      • No Guarantee of Success
      • Mainstreaming Backlash
      • Organic vs. Natural
      • HSUS Debuts Humane Choice Organic Pet Food
      • Focus on Raw Pet Food
      • Focus on Product Safety
      • Paw Naturaw Committed to "Wholesale Direct"
      • The Freezer Case Hurdle
      • Raw Foods Mainstreaming
      • Freshpet and Tyson Join Forces in Refrigerated Pet Food
      • The Next Big Thing: Jarred Pet Food?
    • Marketer and Brand Rankings
      • Pet Specialty Still the Locus
      • Natural Pet Food Leaders in the Pet Specialty Channel
        • Table Pet Specialty Channel Marketer and Brand Leaders in Dog Food and Cat Food: 2004-2008 (percent)
      • Natural Pet Care Leaders in the Pet Specialty Channel
      • Natural Cat Litter Marketers
      • Multi-Category Natural Pet Care Marketers
      • Category Specialists
      • Mass-Market Marketer and Brand Rankings
      • Dog Food
      • Cat Food
      • Cat Litter
      • Dog/Cat Needs
      • Top Ten Brands in the Natural Supermarket Channel
        • Table U.S. SymphonyIRI-Tracked Retail Dollar Sales of Natural Dog Food by Marketer, Brand, and Category: 52 Weeks Ending April 18, 2010 vs. Year-Ago Period (in millions of dollars)
        • Table U.S. SymphonyIRI-Tracked Retail Dollar Sales of Natural Cat Food by Marketer, Brand, and Category: 52 Weeks Ending April 18, 2010 vs. Year-Ago Period (in millions of dollars)
        • Table Share of U.S. SymphonyIRI-Tracked Dollar Sales of Natural Cat Litter by Marketer and Brand: 52 Weeks Ending April 18, 2010 vs. Year-Ago Period (percent)
        • Table U.S. SymphonyIRI-Tracked Dollar Sales of Natural Cat Litter by Marketer and Brand: 52 Weeks Ending April 2010 vs. Year-Ago Period (in millions of dollars)
        • Table U.S. SymphonyIRI-Tracked Dollar Sales of Natural Dog/Cat Needs by Marketer and Brand: 52 Weeks Ending April 18, 2010 vs. Year-Ago Period (in millions of dollars)
        • Table Top Brands of Pet Products in the Natural Supermarket Channel: Dollar Sales - 52 Weeks Ending May 15, 2010 vs. Year-Ago Period (in millions of dollars)
    • Marketing Trends
      • Celebrity Kick
      • Cause-Related Marketing
      • Pet Food Producers Position on Safety
      • Direct Selling via Internet
      • Advertising and Promotion
    • Focus on Sustainability
      • Pet Industry Embracing Sustainable Initiatives
        • Table What Are The Reasons Your Operation Is Adopting Green and Sustainable Practices? (percent)
        • Table Sustainability Practice Areas That Have Already Delivered or Have Significant Potential to Deliver a Strong Return on Investment (ROI) for Your Operation (percent)
      • Sustainable Initiatives in Factory Conversion and Construction
      • Sustainability and Ethical as Company Positioning
      • Sustainability in Product Design
      • Eco-Friendly Cat Litter at the Fore
      • Sustainability in Packaging
      • Retailers Also Going Green
        • Table Marketers and Brands of Natural, Organic and Eco-friendly Pet Food, 2010
        • Table Marketers and Brands of Natural, Organic and Eco-friendly Pet Care Products, 2010
    • New Product Trends
      • "Natural" Leads New Product Surge
        • Table Number of New Natural and Organic Dog Food, Cat Food, and Pet Healthcare Products and Share of Total Category Launches, 2005-2010 (number and percent)
      • "Natural-Related" Claims
      • "Green" Claims
      • Smaller Marketers Continue to Lead Natural Charge
        • Table Number of Natural and Organic Pet Food Launches by Company, 2007-2009
      • Natural/Upscale Overlap
      • Natural Plus Gourmet
      • Merrick Pet Care a Gourmet/Natural Pioneer
      • Natural/Gourmet Treat Combos
      • Three Dog Bakery Introduces Bake to Nature Packaged Line
      • Rachael Ray Extends Nutrish Line with Just 6 Treats
      • Senior, Weight Management, and "Special Needs" Products
      • The Holistic Buzz
        • Table Number of Dog Food and Treat Launches and Percentage Share of All Dog Food and Treat Launches by Marketing Claim/Package Tag, 2006-2009
        • Table Number of Cat Food and Treat Launches and Percentage Share of All Cat Food and Treat Launches by Marketing Claim/Package Tag, 2006-2009
        • Table Number of Pet Healthcare Product Launches and Percentage Share of All Pet Healthcare Launches by Marketing Claim/Package Tag, 2006-2009
    • Pet Food
      • All About Ingredients
      • Petco Launches Nutrition Education Campaign
      • Human-Grade Ingredients
      • Honest Kitchen Makes Honest Claim Out of "Human Grade"
      • Country-Coded and U.S.-Sourced Ingredients
      • Locally Sourced Ingredients
      • Functional Ingredients and Condition-Specific Claims
      • Trend Profile: Dogswell, LLC
      • Grain-Free Foods and Treats
      • Ancestral Diets
      • Hypoallergenic
      • No Wheat Gluten
    • Focus on Raw and Refrigerated Foods
      • Going Organic and Playing Up "Natural"
      • Raw and Human-Grade
      • Raw and Hypoallergenic/Grain-Free
      • New Zealand Appeal
      • Freeze-Dried and Dehydrated
      • Focus on Convenience
      • Focus on Felines
      • Pet Food Mixes and Homemade Foods
      • Company Snapshot: Honest Kitchen
      • Company Snapshot: Nature's Variety
    • Pet Care Products
      • Cat Litter
      • Scoopable and Multi-Cat Formulations
      • New Clay Litters Co-Opting "Natural"
      • Eco-Friendliness
      • Product Safety
      • Litter Boxes and Accessories
      • Pest Controls
      • Grooming Products
      • Spa/Gift/Travel Appeals
      • Clean-Up Products
      • Supplements and Health Remedies
      • Pet Beds
      • Toys
      • Collars and Leads
      • Carriers, Housing, and Bowls
      • Non-Dog/Cat Supplies
  • Consumer Trends
    • Note on Data Sources
    • Cat-Owning Households Have Slightly Higher Propensity to Buy General-Market "Green" Products
      • Table Purchasing of General-Market Natural, Organic, or Eco-Friendly Products, July 2009-March 2010 (percent of U.S. households)
    • Overall Purchasing Patterns for Natural/Organic Dog Products
      • Table Overview of Dog-Owner Purchasing Patterns for Natural/Organic Pet Supplies: Any, 2009/2010 (percent and number among U.S. dog-owning households)
      • Table Overview of Dog-Owner Purchasing Patterns for Natural/Organic Pet Supplies: Natural Dog Food Brand and Organic Pet Food, 2009/2010 (percent and number among U.S. dog-owning households)
    • Urban, Upper-Middle Class, and Gen Y Base for Natural Dog Products
    • Older Boomers Twice as Likely to Buy Natural Dog Foods
    • Spanish TV Is Prime Time for Natural Dog Food Brands
      • Table Key Demographic Indicators for Purchasing Natural Products for Dogs: Overall, Pet Food/Treats, and Non-Food Supplies, May/June 2010 (index among U.S. dog owners)
      • Table Selected Demographics for Purchasing Natural Brand Dog Foods, July 2009-March 2010 (percent and index among U.S. dog-owning households)
      • Table Selected Lifestyle Indicators for Purchasing Natural Brand Dog Foods, July 2009-March 2010 (index among U.S. dog-owning households)
      • Table Selected Psychographic Indicators for Purchasing Natural Brand Dog Foods, July 2009 March 2010 (index among U.S. dog-owning households)
    • Demographics for Organic vs. Natural Dog Food Brands
      • Table Selected Demographics for Purchasing Organic Dog Food, July 2009-March 2010 (percent and index among U.S. dog-owning households)
    • The Consumer Mindset for Organic Dog Food
      • Table Selected Psychographic Indicators for Purchasing Organic Dog Food, July 2009-March 2010 (index among U.S. dog-owning households)
    • Overall Purchasing Patterns for Natural/Organic Cat Products
      • Table Overview of Cat-Owner Purchasing Patterns for Natural/Organic Pet Supplies: Any Natural/Organic Pet Food or Supplies, Natural/Organic Pet Food/Treats, Natural/Organic Pet Supplies Other Than Pet Food/Treats, Natural/Organic Cat Litter and Natural/Organic Flea & Tick Care 2009/2010 (percent and index among U.S. cat-owning households)
      • Table Overview of Cat-Owner Purchasing Patterns for Natural/Organic Pet Supplies: Organic Pet Food, Natural/Alternative Brand Cat Litter, 2009/2010 (percent and index among U.S. cat owning households)
    • Hispanics Index at 158 for Purchasing Natural Cat Products
    • Metropolitan Skew for Organic Cat Food
    • Psychographic Indicators for Purchasing Organic Cat Food
      • Table Key Demographic Indicators for Purchasing Natural Products for Cats: Overall, Pet Food/Treats, and Non-Food Supplies, May/June 2010 (index among U.S. cat owners)
      • Table Selected Psychographic Indicators for Purchasing Organic Cat Food, July 2009-March 2010 (index among U.S. cat-owning households)
    • The Natural/Alternative Cat Litter Consumer
    • Independent Pet Stores Are Highest-Indexing Channel for Natural Product Purchasers
      • Table Retail Channel Patterns: Purchasers vs. Non-Purchasers of Natural/Organic Pet Products, July 2009-March 2010 (percent and index among U.S. pet-owning households)
    • Retail Draws: PetSmart vs. Petco
      • Table Patterns for Shopping at PetSmart vs. Petco: Purchasers vs. Non-Purchasers of Natural/Organic Pet Products, July 2009-March 2010 (percent and index among U.S. pet owning households)
    • Availability as Impediment to Natural Product Purchasing
      • Table Level of Agreement with Statement, "If Natural/Organic Pet Products Were More Available Where I Shop, I Would Buy Them More Often," 2010 (percent of U.S. pet owners)
      • Table Level of Agreement with Statement Among Dog Owners Who Purchase Natural/Organic Pet Products, "If Natural/Organic Pet Products Were More Available Where I Shop, I Would Buy Them More Often," 2010 (percent of U.S. dog owners)
      • Table Level of Agreement with Statement Among Cat Owners Who Purchase Natural/Organic Pet Products, "If Natural/Organic Pet Products Were More Available Where I Shop, I Would Buy Them More Often," 2010 (percent of U.S. dog owners)
    • Affordability as Impediment to Natural Product Purchasing
      • Table Level of Agreement with Statement, "If Natural/Organic Pet Products Were More Affordable Where I Shop, I Would Buy Them More Often," 2010 (percent of U.S. pet owners)
      • Table Level of Agreement with Statement Among Dog Owners Who Purchase Natural/Organic Pet Products, "If Natural/Organic Pet Products Were More Affordable Where I Shop, I Would Buy Them More Often," 2010 (percent of U.S. cat owners)
      • Table Level of Agreement with Statement Among Cat Owners Who Purchase Natural/Organic Pet Products, "If Natural/Organic Pet Products Were More Affordable Where I Shop, I Would Buy Them More Often," 2010 (percent of U.S. cat owners)
      • Table Percent Who Strongly Consider Availability or Affordability as Impediments to Further Purchasing of Natural/Organic Pet Products: By Pet Owner Classification, 2010 (percent)

Although the 2008-2009 recession took a notable toll, natural and organic pet products continue as a top-growth market segment on their way to becoming the standard for premium pet products in the pet specialty channel and other upscale venues. Doing their part, all of the major mass-market and cross-channel marketers are tapping into the trend as well, keeping pressure on smaller marketers to scale up their product offerings even further. Most recently, in mid 2010 Procter & Gamble rocked the pet food industry by acquiring Natura Pet Products, whose natural and organic pet food brands include Innova, Evo, California Natural and Karma—a move that suggests that the natural pet food party is just getting started on the mass-market side.

Also underpinning steady market advancement is consumer demand for products perceived to be safer, an appeal that got a big boost from the Spring 2007 recalls and one that continues to define the way marketers formulate and position products. According to pet owner surveys conducted by Packaged Facts, 40% of dog owners and 38% of cat owners purchase natural/organic pet products; nearly half of pet owners would buy more natural/organic pet products if they were more affordable; and almost two-fifths would do so if they were more available. Featuring exclusive consumer data such as these, the report homes in on food and nonfood purchasing trends across multiple categories, as well as attitudes and demographic characteristics of natural and organic pet product purchasers.

Building on the analysis presented in the previous two editions of this report, Natural, Organic and Eco-Friendly Pet Products in the U.S., 3rd Edition divides the market into two classifications—pet food and pet care—with the latter defined as encompassing all nonfood pet supplies (cat litter, grooming products, flea/tick care products, supplements, clean-up products, etc.). For each classification, coverage includes historical and projected retail sales estimates from 2005 through 2014, competitive strategies of key players, and trends in new product development such as human-grade pet food, raw/frozen pet food, fresh (refrigerated) pet food, eco-friendly nonfood pet products, corporate sustainability initiatives, and cause marketing. Additional data sources include SymphonyIRI marketer/brand sales data for mass-market channels, SPINSscan data for the natural supermarket channel, Datamonitor Product Launch Analytics data tracking new product introductions, and Experian Simmons data profiling trends in pet ownership and product purchasing.

About the Author

David Lummis is the senior pet market analyst for Packaged Facts. He is also author of the monthly "Market Outlook" column in Pet Product News International, and a regular contributor of articles and market insight to other pet industry magazines as well as major business media including The New York Times and CNNMoney. Mr. Lummis also is President of New Orleans-based Marigny Research Group, Inc., a producer of custom market research reports for Packaged Facts. Since 1986, MRG has prepared more than 175 studies on consumer packaged goods markets and developed full report lines covering pet, demographic, retail and financial markets. Mr. Lummis, who graduated from Yale University, has also written approximately 75 other published B2B reports and is the author of the book, "Value Retailing in the 1990s."


Market Insights: A Selection From The Report


Availability and Affordability as Impediment to Natural Product Purchasing

According to Packaged Facts survey data, 39% of pet owners agree that they would buy natural/organic pet products more often if these products were more available where they shop, compared with 29% who disagree.  Among those agreeing with this statement, the larger share “somewhat agree” rather than “strongly agree” (at 26% vs. 12%, respectively).  Not surprisingly, particularly in a price-conscious era of economic doldrums, affordability is an even bigger issue than availability.  Among pet owners overall, half (52%) agree that they would buy natural/organic pet products more often if these products were more affordable, compared with only 22% who disagree.  Moreover, 19% strongly agree that they would do so, compared with only 10% who strongly disagree.

Locally Sourced Ingredients

The 2007 recalls also spurred interest in products made from ingredients that are locally grown, a trend that dovetails with such “green” initiatives as fostering smaller carbon footprints and reducing “food miles” (the distance a food must travel from point of origin to end user).  Following the recalls, human-grade organic pet food producer Evanger’s trumpeted that it buys all of its ingredients locally, purchasing most of them within 40 miles of its plant.  Similarly, Freshpet told the press that all of the ingredients in its refrigerated pet foods “are fresh, never frozen or preprocessed prior to cooking and all are locally sourced from the United States using stringent quality standards.”

Packaged Facts believes “locally grown” retains strong potential as a pet food sales proposition during 2010 and beyond.  Trends in the pet food market don’t just follow human trends, they often do so at accelerated rates, and the trend toward locally grown is already in full swing on the human side.  In our May 2007 report, Fresh and Local Foods in the U.S., Packaged Facts conservatively estimates that locally grown food could be a $7 billion business by 2011, almost double the 2002 level.  This forecast is based on trends including the rapid growth of farmers’ markets, consumer perceptions that locally grown products are tastier and healthier, consumers’ growing desire to support their local economy, and corporate support for sustainable agriculture.  [Figure 5-2] In the News

Procter & Gamble Acquisition of Natura Suggests Galvanization of Natural Pet Food Sales in Mass Channels

New York, June 16, 2010 Procter & Gamble has already rocked the pet food industry in May 2010 by announcing plans to buy Natura Pet Products, a privately held producer of natural and organic pet food under brands including Innova, Evo, California Natural, Healthwise, Mother Nature, and Karma.  But David Lummis, senior pet market analyst for Packaged Facts and author of the all-new market study Natural, Organic and Eco-Friendly Pet Products in the U.S., 3rd Edition believes the big news may be yet to break.  “Based on Procter & Gamble’s core distribution strengths and past history with Iams, I suspect that 2010 will see a key Natura brand cross over into mass channels, which would be a very big deal.”

During 1999, Procter & Gamble purchased Iams.  And shortly thereafter P&G expanded the brand from pet specialty to mass with tremendous success.  According to Lummis’ market analysis, the timing is right for a similar move with a Natura brand, for a number of reasons.  Among these, some pet food consumers traded down during the recession and are now ripe for more affordable options in premium pet food, including organic and natural.

Bearing out this assessment is a survey of 1,881 consumers conducted by Packaged Facts in May/June 2010.  According to the survey:

  • Approximately one-third (34%) of pet owners agree (strongly or somewhat) that they are “spending less on pet products these days because of the economy.”  However, the same percentage also agree with the statement “I anticipate spending more on pet products over the next 12 months.”
  • Natural dog and cat food purchasers are even more likely than dog or cat owners overall to plan to spend more—perhaps partially a function of the natural segment’s often upscale demographics bouncing back more quickly.
  • A little price adjustment may be just what the doctor ordered for bringing more consumers into (or back into) the natural camp.  “If natural/organic pet products were more affordable where I shop, I would buy them more often,” agree over half of pet owners (51%), with only 23% disagreeing with this statement.
  • 39% of pet owners agree that they would buy natural/organic pet products more often if these products were more available where they shop, compared with 29% who disagree.

“What these figures tell me is that the time is ripe for a ‘true’ natural brand to enter the mass channel,” Lummis says.  “And now that Natura is, pending regulatory approval, under Procter & Gamble’s wing, P&G is the perfect company to make that happen.  If P&G does take a Natura brand mass, it would broaden the consumer base for natural pet food virtually overnight.  It could also spur Mars to follow a similar path with its Nutro brand, and Nestlé Purina to consider acquiring a ‘true’ natural band of its own.”

The complete findings of this survey—which also details usage and consumer demographics of natural pet products across categories including dog food, cat food, natural/alternative litter, and natural flea and tick care products—are presented in Natural, Organic and Eco-Friendly Pet Products in the U.S., 3rd Edition.

Natural, Organic and Eco-Friendly Pet Products in the U.S., 3rd Edition divides the market into two classifications—pet food and pet care—with the latter defined as encompassing all nonfood pet supplies (cat litter, grooming products, pet supplements, clean-up products, etc.). For each classification, coverage includes historical and projected retail sales estimates from 2005 through 2014, competitive strategies and trends among key players, and trends in new product development including organic, human-grade, U.S. sourced, raw/frozen, and sustainable.

About Packaged Facts - Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a wide range of consumer market topics, including consumer goods and retailing, foods and beverages, demographics, pet products and services, and financial products. Packaged Facts also offers a full range of custom research services.

Pet Market Insights From Analyst David Lummis


Packaged Facts Column for Petfood Industry/1st Quarter 2010

State of the Industry
True to the pet industry’s recession-resistant claim to fame, sales of pet products and services rose 4.8% in 2009 to reach $53 billion, meaning that the market added two and a half billion dollars in the midst of the biggest economic crisis since the Great Depression.  That said, pet market growth has not been uniform across areas of the market, with the less discretionary categories of food and veterinary services faring the best, and non-essential products and services faring the worst.  Sales of veterinary services rose nearly 10% in 2009, followed by petfood at 5%, non-food supplies at 3%, and other pet services at 4%, according to Packaged Facts’ March 2010 Pet Market Outlook 2010-2011 report.

Moreover, while the recession is officially over, no one expects consumer confidence and spending to rebound overnight, with most economists predicting a slow recovery.  And no marketer or retailer can afford to ignore recessionary effects on consumer shopping patterns that could linger for years.  To weather the economic storm, many Americans reprioritized shopping lists along essential vs. discretionary lines, reevaluated channel loyalties based on factors including convenience and discounts, and traded across categories and brands.  For example, although dog and cat food sales rose 7% in 2009 according to Information Resources, Inc. data for supermarkets, drugstores and mass merchandisers except Walmart, this high rate of growth derives in part from slower going in the pet specialty channel.

In short, the word “restraint” will continue to characterize how Americans shop and what they buy in the years ahead, making petfood appeals based on health, safety, convenience, comfort, practicality and professionalism more important than ever in wooing the nation’s 61 million pet-owning households and meeting the needs of their nearly 400 million pets.  At the same time, there’s still plenty of room for pet pampering and indulgence positioned squarely on the human/animal bond, as reflected in dog biscuits/treats and cat snacks 2009 sales gains of 8% and 15%, respectively, per IRI.

Value, Value and Value
During 2010, the most effective strategy for all pet market players can be summed in a word:  Value.  Because this common denominator takes on different meanings for different consumer groups, Packaged Facts segments pet owners into three fairly evenly sized cohorts, each of which defines and responds to the notion of value in its own way.

  • Value-Critical Pet Owners tend to not view high prices as a primary petfood purchasing criterion, spending 25%-50% more than pet owners on average.  However, they do expect the products they buy to deliver tangible health benefits and emotional rewards, and will be the first to say so if they don’t.  Not surprisingly, this group comprises higher-income households as well as those who view their pets as full-fledged members of the family.  Because these dog and cat owners associate petfood and treats closely with pet health, they are the most ingredient-aware group and the least likely to switch brands absent a good reason.
  • Value-Influenced Pet Owners view pricing as a top petfood purchasing criterion.  Unlike value-driven consumers (see below), price is not, however, their foremost shopping draw, and they may be swayed in either premium or value directions.  This is the group Walmart is going after with its “exact same brands as those found in the pet specialty channel at unbeatable prices” campaign (which features the mass/specialty bridge brand Iams).  It’s also the target for PetSmart’s new TV commercials offering up to 20% savings on hundreds of items.  As this price-centered duel suggests, a fierce tug of war for value-influenced pet owners is underway, with a growing proportion of the group shopping both mass and pet specialty, and with the weak economy giving the latter a leg up.
  • Value-Driven Pet Owners base their petfood purchase primarily on price.  Although this does not preclude seeking out higher quality foods, this is the group most likely to hold the opinion that there’s little if any difference between national and store brands.  With the winds of the recession beneath its wings, private label increased its share of petfood sales to 11% ($622 million) in 2009, up from 10% ($543 million) in 2008, according to IRI, with value-driven pet owners likely representing the bulk of that 15% increase.

By focusing heavily on any one of these value groups, petfood marketers increase their chances of success during these still iffy economic times.  Even better, many companies and brands are well positioned to attract value-influenced pet owners in addition to one of the other groups, and during the coming year and beyond those “middle of the road” consumers will determine the fortunes of many pet market players.


Pets International, Issue 3/2010

U.S. Pet Supplies Market Expecting Pent-Up Demand
Retail Sales Near $11 Billion in 2009

Packaged Facts estimates that U.S. retail sales of non-food pet supplies totaled approximately $10.7 billion in 2009, up 2.5% over 2008.  During the five-year 2005-2009 period, the market increased by a total of 17.6% and posted a compound annual growth rate (CAGR) of 4.1%.  As a result of the economic recession, growth slowed in 2008 and 2009 as consumers reduced spending in non-essential categories and traded over to lower-priced products and value-oriented channels.

U.S. Retail Sales of Pet Supplies:  2005 vs. 2009
(in millions of dollars) Source:  Packaged Facts, The U.S. Market for Pet Supplies and Pet Care Products, 7th Edition report (January 2010)

PetSuppliesChart

Dogs account for the lion’s share of sales of pet supplies, at 61% in 2009, followed by cats at 33%.  The balance of sales goes to other animal types, with fish and reptiles slightly edging out birds and small animals, at 55% to 45%, respectively.  Flea/tick products are the top-selling dog category by a significant margin, accounting for almost one-quarter (23%) of dog supply sales during 2009 (inclusive of products restricted to the veterinary channel).  The cat side of the aisle is dominated by the staple litter, which accounted for 43% of cat supply sales during 2009.

Duo the Leading Retail Force
In the U.S. market, pet stores are the top channel for non-food pet supplies by a considerable margin, representing nearly half (46%) of sales in 2009.  Most of these pet specialty sales trace back to PetSmart and Petco, which together accounted for almost a third (31%) of the market in 2009, with independents pulling in less than half that amount (15%).  Supermarkets continue to slide, to 10% in 2009, while mass merchandisers continue to rise.  From 2005 to 2009, the mass sector’s market share went from 22% to 23%, no doubt benefiting from the recession as consumers traded down across brands and consolidated shopping trips. Another retailing bright spot is online, and with pet products showing up in a wider-than-ever array of channels, “other” channels’ collective share is also on the ups.

Mergers & Acquisitions Ongoing
Despite the global economic meltdown and uncertainties surrounding major financial and lending institutions, the pet market saw several mergers and acquisitions in 2008 and 2009.  On the non-food side, these included Bramton’s purchase of Veterinarian’s Best, Radio Systems’ purchase of MultiVet International, and Sergeant’s purchase of Chomp and of Virbac’s Consumer Brands division.  Activity has been slower on the pet food side, with no major shifts occurring either year, although Old Mother Hubbard/Wellness (a top brand in the pet specialty channel) went from one venture capitalist to another.  While still quite respectable, this level of activity pales in comparison to that seen earlier in the decade, with such dramatic shifts as Rayovac’s 2005 market entry and subsequent creation of Spectrum Brands, and Hartz’s summer 2004 acquisition by Japan’s Sumitomo.

2009 a Record Year for New Product Entries
The U.S. pet supplies market relies on new products as a principal sales driver, with upgrades and innovations constantly appearing to pique consumer interest and open retail doors, and marketers were apparently relying on new products more than ever during the economic downturn.  According to Product Launch Analytics, a Datamonitor service, the numbers of new product lines and stock-keeping units (SKUs) jumped sharply in 2009, with the number of reports increasing 57% to 213, and the number of SKUs increasing 84% to 735.  Considering the previous four-year period, this is the highest level of new product activity by far, with just 148 reports and 402 SKUs appearing in 2005.  Despite the weak U.S. economy, the top package tags and marketing claims make it clear that the pet market continues to shift in premium directions.  At the top of the list is natural, which appeared in 102 new product reports, up from 65 in 2008.

Economic Concerns Intensify Cross-Channel Competition
As of spring 2010, cross-channel competition is at an all-time high in the U.S. market as consumer trends adopted during the recession persist, from spending cutbacks to consolidated shopping trips.  Signs of the challenges retailers face include fierce competition between big-box pet specialty and mass, private-label incursions into non-food pet products, declining sales among independent pet specialty retailers, and price promotions across all retail sectors.  In such an environment, value-oriented retailers stand to cash in, as Walmart has been aggressively working to do.  According to Packaged Facts’ February 2010 pet owner poll, 52% of pet owners agree with the statement “I shop for pet products at a variety of stores to find the best prices, special offers, and sales,” with 16% strongly agreeing and 34% somewhat agreeing.  On the other hand, only 30% of survey respondents report that they do not engage in deal-seeking behavior of this sort.

With these same trends continuing into 2010, retailers are employing a variety of strategies to draw shoppers into the store, and cooperative promotional programs with vendors are going strong.  For retailers, one of the biggest advantages of co-op promotions is that the big consumer packaged goods outfits typically foot much of the bill, allowing retailers to impact trip decisions without compromising their own margins too drastically.  Coupon offers also can be highly effective in supporting store loyalty programs such as Petco’s PA.L.S. and PetSmart’s PetPerks, while forming the core of collaborative special events programs between retailers and manufacturers, à la PetSmart’s President’s Day sale featuring Hill’s Science Diet and its new lower pricing.

Looking Ahead
As a result, with the economy on a slow but apparently steady recovery path, Packaged Facts is predicting a better showing for pet supplies in 2010 as pent-up demand begins to kick in.  By our forecast, annual sales growth will rebound from 2.5% in 2009 to 4.0% during 2010, then climb back up to 5% in 2013 and 2014—an assessment that presumes much market dynamism moving forward.

Additional Materials


Is Now A Good Time To Sell Pet Products Online?

by genesower on Wednesday, November 3rd, 2010

Natural Pets World asked David his thoughts about starting an ecommerce pet business in a down economy and he offered these insightful thoughts in this 90-second excerpt:

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