Superpremium Pet Food’s Future Is Fresh
Since it launched in 2016, Ollie, a subscription-based seller of human-grade pet foods, has raised $17 million from venture capitalists.
Remember when “superpremium”—that nebulous term applied to much-higher-than-average-priced pet food—was largely a channel distinction? Along with marketing claims and formulations such as natural, real meat and grain free, being available exclusively through pet specialty retailers was once a non-negotiable earmark of any true superpremium brand.
Through the years, however, pet specialty brand marketers, unable to resist the temptation of high-volume mass channel sales, have muddied those waters, as have big-box pet specialty chains unable to pass on pet shoppers devoted to lower-priced mass-market fare. The biggest blow to the longstanding pet specialty and mass divide, which feels far more sudden, is the lightning-speed advancement of e-commerce over the past couple of years.
Today, pet shoppers can pick up (“click up?”) and have home-delivered just about any formerly pet-specialty-exclusive pet food brand on Chewy.com, Amazon.com or Walmart.com, with pages and pages devoted to natural and grain-free options. Don’t expect that trend to peter out anytime soon, either. Within the next four years, e-commerce will account for 25 percent of U.S. pet product sales, conservatively estimating, up from 14 percent in 2017.
Meanwhile, kibble is beginning to look like a next-generation superpremium pet food nonstarter. Kibble producers have scaled up mightily in the past 10 or so years, and many of the products are top-notch ingredient-wise. But when it comes to what they put in their own mouths, U.S. food shoppers want it fresh. In Packaged Facts’ January/February 2018 survey of U.S. food shoppers, “fresh” came out on top as an “especially appealing” food characteristic overall (74 percent) as well among dog and cat owners (75 percent). Nothing else comes close, next in line being “quick to cook/prepare,” “comfort food,” and “low price,” each at around half of U.S. shoppers. It’s no wonder, then, that pet food makers and retailers looking for the next big superpremium thing are now taking fresh to the limit while increasingly boasting ingredients that are human grade.
To give credit where credit is due, one company that saw the fresh trend coming is Freshpet, whose refrigerated pet food hit the market in 2006 and is now available in more than 19,000 fridges nationwide. When it comes to human grade, a hat tip goes to the pioneering Honest Kitchen, which, way back in 2007, went to court and won the right to make the claim “human food grade” on the labeling of its freeze-dried pet food mixes.
The emerging generation of fresh pet food is, however, something else altogether, and it isn’t just hype:
- In May 2016, The Farmer’s Dog, a subscription-based seller of human-grade pet food, raised $2 million in seed funding, and in May 2017, the company closed an $8.1 million series A financing round led by Shasta Ventures.
- In August 2017, Ollie, an online seller of human-grade, customized pet food diets, raised $12.6 million in series A funding led by Canaan Partners, bringing its funding to $17 million.
- In May 2018, PetPlate, a direct-to-consumer subscription service that delivers preportioned, human-grade dog meals that are ready to eat from the refrigerator or microwavable, closed a $4 million seed round led by Dane Creek Capital.
But wait. In mid-June 2018, Ollie announced an omnichannel venture with Walmart’s Jet.com. “We’re excited to expand Ollie’s reach with the Jet.com partnership, while simultaneously introducing freshly cooked, human-grade pet food to Jet.com’s audience of pet parents,” said Gabby Slome, co-founder and chief experience officer of New York-based Ollie, in a company press release.
“Investing in new distribution channels—particularly within the family of brands of the world’s largest retailer, Walmart Inc.—allows us to bring further awareness to the health benefits of all-natural pet food and helps us in our mission to put pets first.”
Teaming up with JustFoodForDogs, Petco is taking the fresh pet food experience even further. In May 2018, Petco announced that it would begin offering JustFoodForDogs’ complete range of fresh, small-batch, human-grade food for dogs via store-within-store pantries or full exhibition kitchens, with the first pantries opening right away and the first full kitchens by the end of 2018. “The customer has complete visibility into the process,” Rebecca Frechette, Petco’s executive vice president and chief merchandising officer, told the Los Angeles Times (May 19). “They can see the raw ingredients, see the chef cooking the ingredients, and buy the food that has just been made fresh in that store. ”
More than a decade ago, I speculated that, absent significantly faster growth in the dog and cat population, the U.S. pet food market could not be expected to sustain healthy sales growth without expanding beyond shelf-stable products, and I stand by that. From kibble and wet pet food featuring images of fresh ingredients on the packaging to chub packs of pet food sold in refrigerator cases to the complete and balanced diets prepared in-store in front of the shopper, “fresh” as it applies to pet food has reached its human-style apex. This isn’t to say that fresh-prepared pet food, which is way more expensive than even the highest-priced kibble, is or ever will be for every dog or cat owner. But it’s upper-income pet households that have been doing much of the superpremium heavy lifting, and plenty of others are willing to splurge if it means a healthier, happier pet. Factor in the commitment of heavy hitters like Walmart and Petco, and it’s hard not to conclude that, superpremium-pet-food-wise, the future is fresh.
David Lummis is the lead pet-market analyst for Packaged Facts, a division of MarketResearch.com, and author of Packaged Facts’ U.S. Pet Market Outlook, 2018-2019—August 2018 Update (packagedfacts.com).