Edit ModuleShow Tags
Edit ModuleShow Tags

Pet Food Market Faces ‘Headwinds’ from E-Commerce


Published:

Crepessuzette from Pixabay

While the $27 billion U.S. pet food market is continuing an upward momentum, it still faces “major headwinds” as e-commerce upends traditional retail, according to officials at market research firm Packaged Facts. As such, pet food marketers and retailers will have to come up with innovative drivers in order to maintain dollar sales gains, officials said.

“For pet food, retail, marketing and new product initiatives are hopping,” said David Sprinkle, research director for Packaged Facts. “And from a merger and acquisition perspective, the past couple of years have been nothing short of dynamic.”

However, as in almost every consumer product category, e-commerce continues to upend traditional retail as more pet owners opt to buy their pet food online instead of, or in addition to, from brick-and-mortar sellers, officials said.

“For pet food, a side effect has been to speed up the dissolution of the pet specialty/mass channel divide that has long helped to justify the ‘superpremium’ prices of brands sold only by pet specialty retailers, which have for years bolstered dollar sales absent volume growth by converting pet owners to higher-priced fare,” officials said. “At the core of this premiumization trend have been natural products including grain-free formulas, which have driven pet food sales growth for over a decade.”

Now, however, virtually all pet food brands are available online, officials said. This accelerates the “mass premiumization” trend whereby pet-specialty-type products are now widely available in the grocery and mass channels, officials added.

“As online sellers including Amazon, Chewy and Walmart battle it out, including via private labels, the upshot is downward pricing pressure market-wide even as the costs of producing pet food continue to rise,” officials said. “Since the dog and cat population is not growing enough to provide much of a volume lift, pet food marketers and retailers will have to come up with new and compelling premiumization drivers in order to maintain dollar sales gains.”

Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags