What Experts Say About the Growing Complexities of the Pet Food Market
Feeding a pet seems simple enough, yet there’s a complexity about it that has arisen over the years. Recent movements include going grain free, incorporating raw food and looking to alternative protein sources—and that’s just the food itself. Pet food recalls, the need for manufacturer transparency and price points are also shaping the market’s backstory. Pet Product News spoke with pet food industry insiders to get their take on the current market and where they see it heading.
- Dana Brooks, president and CEO of the Pet Food Institute (PFI)
- Paul Allen, president and CEO of Woof Gang Bakery, which has more than 110 locations across the United States
- Donna Raditic, DVM, Dipl. ACVN, CVA, who works with Nutrition and Integrative Medicine Consultants in Athens, Ga.
- Samantha Henson, clinical pet nutritionist at Premier Pet Supply, which has locations in Michigan
- Richard Thompson, founder and partner of Factory, a venture capital and private equity company based in Bethlehem,
- Pa., and former CEO of pet food company Freshpet
Pet Product News: What is your perspective on the current pet food market? Any interesting trends that you’re keeping an eye on?
Dana Brooks: The U.S. pet food market has shown incredible resilience and steady growth over the past decade, fueled to a degree by our evolving relationship with our pets and pet food makers innovating to meet consumer expectations. As the trade association for pet food and treat makers, [Pet Food Institute (PFI) is] excited to be the voice for this industry, but [we] recognize that regulatory comments or messaging can impact consumer trust and the entire marketplace, whether or not that loss in trust is warranted.
Paul Allen: I think the current pet food market is in disarray. Those in the industry are trying to damage one another from within. All of the outcry over DCM [dilated cardiomyopathy] was purely industry driven. That said, if the overall industry would respect change, I think the future is very bright with small-batch foods, fresh pet foods and quality kibble. At the moment, we have to be looking at fresh pet food and personalized meal plans, even though these are cost-prohibitive for many pet owners. These types of foods are certainly a part of the future for pet owners that can afford to feed this way.
Samantha Henson: My perspective of the current pet food market is that pet owners are very concerned about what their pets eat, as they should be. Gone are the days of the modern pet owner grabbing a bag of who knows what at the grocery store and throwing it in their pet’s bowl. People read ingredients, ask professionals for advice, keep track of their pet’s health, etc. As a nutritionist, I love to see this. Always encourage pet owners to ask questions and make sure you have someone on standby who can answer those questions for them.
Trends that interest me currently are baked kibbles and their benefits versus extruded kibbles. Even though I am a raw-feeding advocate, I think it’s worth [it for] all kibble feeders to at least look into a baked kibble for their dog.
Dr. Donna Raditic: I think we are going to see the pet food industry making some changes going forward in response to consumer demands. We are seeing more and more millennials become pet parents, and they are more aware and concerned about the relationship between diet and health. We are seeing the grocery store cereal aisles shrinking, while the demand for food from sustainable farms is growing. This generation grew up on the concepts of exercise, meditation and eating healthy diets. They are going to be looking at and purchasing pet foods that represent better nutrition. From this change in consumers, we are seeing unconventional pet diets, i.e., the “homemade like and less processed,” entering the pet food market. It will be interesting to see what other shifts will occur in the pet food market to meet consumer demands for pet food industry transparency, clearer labeling and sustainability of ingredients. I don’t think any of these issues are going away, and for companies to continue to grow and profit, they will need to be addressed.
Richard Thompson: I’ve been keeping an eye on the pet food market since I’ve left Freshpet. To be honest, I haven’t seen anything as cool as fresh food for dogs and cats, which Freshpet executed and continues to execute. I keep looking for the next trend like Freshpet but haven’t really seen it. I see more types of kibble and CBD [cannabidiol] added to treats, but I’m reluctant on [CBD] simply because there isn’t any real proven science that it does anything for humans let alone pets.
Insect proteins are interesting, but someone has to develop a supply chain that’s efficient, economic and that can provide a big scale-up opportunity. Can you make a $1 million, $2 million or $3 million business? Sure, but the big operators, whether it’s people like myself or the big guys, we want to see a supply chain where we can do $100 million. You start doing the math and you see $100 million, $200 million, $300 million worth of insect proteins. That’s a lot of insects.
There is also the Beyond Meat of pet food opportunities, whether it’s plant based or cell based.
There are some interesting things, but it’s all about technology, and can you scale it up? It’s about economics, and can you really make a margin doing it? And lastly, will the consumer accept it in a meaningful way that you can build a business around it?
PPN: The pet industry as a whole has been fueled by the humanization of pets, especially in the pet food category with trends such as vegan diets. How far can this go while still keeping the health of pets at the forefront?
Brooks: One of the most intriguing parts about the pet food industry is that we have some of the brightest minds in animal nutrition and product safety. It is absolutely critical that as we, the pet food industry, continue to meet that ever-evolving consumer demand that we still meet a pet’s nutritional needs. This means that consumer education is going to play an increasingly vital role in the years to come. For example, much of PFI’s messaging is focused on communicating about the nutrients that a pet needs and how those can be delivered by their diet. Our goal is to help consumers understand the precise formulations and considerations that need to go into a dog or cat’s food, such as through our Nose to Tail and Whisker to Paw web resources.
Henson: I think there is a very fine line between humanizing our pets through diet and feeding them something that is detrimental to their long-term health. It is important to note that I absolutely do not support vegan or vegetarian diets for dogs or cats, and I have far too many patients from well-meaning pet owners who have come to me with diet-injured, vegan-fed pets.
Many pet owners are untrusting of the pet food industry due to recalls, quality concerns, FDA [U.S. Food & Drug Administration] reports, etc. This can lead to pet owners attempting to make their own food, which in theory would be great ... if they made a balanced diet. I would say 95 percent of recipes I review are unbalanced. Some are so far from that I wouldn’t recommend feeding the diet for more than three days. Always consult a pet nutritionist if you want to attempt making your pets’ food, and I always urge pet stores to do a better job of carrying supplements for home feeders.
Raditic: I, personally, do not believe the “humanization of pets” concept means we are forgoing the health of pets. I embrace it and perceive it as not only a move that can improve pet health and wellness, but a forum where we learn to care for our environment, clean air/water, sustainability of food sources and other important issues we are facing. This passion for our pets as family members, I believe, improves our humanity and brings awareness of all life and the world around us.
This is the big picture I am talking about, but with this concept, we need the nuts and bolts of education for pet parents to understand the concepts of nutrient requirements, not particular ingredients or diet type. This is what is known as “nutritional literacy.” The pet vested community needs to help pet parents to become nutritionally literate and to understand what dogs and cats need and don’t need in that food bowl. We need to help them sort out the difference between pet food industry marketing and science. This is challenging because the vast amount of marketing, in my opinion, has blurred the lines between science and sales. Discussing pet food diets becomes a bit like talking about politics and religion with clients. What needs to be understood is the pet food industry is in the business of making and selling safe pet food; we are in the business of ensuring pet health.
PPN: As a veterinarian, what do you look for in the diets that are available in the pet specialty market?
Raditic: As a board certified veterinary nutritionist, I look at nutrients, not ingredients, and that means getting complete nutrient profiles on a specific pet food. I then determine if that nutrient profile is optimal for my patient, i.e., appropriate kilocalories per cup or gram, etc. It is very frustrating to me when these full nutrient profiles are not readily available and accessible.
I am also looking for published clinical research that supports the diet, its ingredient and/or functional foods for its intended purpose. It is unfortunate that we don’t have pet food companies supporting and publishing more studies on ingredients, diet trials, etc., that would help us to learn more about how to optimize pet diets and use them to improve the health and longevity of dogs and cats.
PPN: As a clinical pet nutritionist, what do you think are the most important qualities in a pet food?
Henson: I am admittedly overcritical of pet foods on the market, but, simply put, the things I look for are: the order of ingredients (meat focused is a must), where the ingredients are sourced, the amount of plant matter and the amount of preservatives, dyes, etc. I also closely look at the guaranteed analysis to see the balance of fat/protein/calcium/phosphorus, etc.
PPN: Factory recently hosted the Pet Innovation Challenge at Natural Products Expo East in Bethlehem, Pa., as a way to highlight innovative and emerging pet health brands. Several of the 10 pre-selected pet health companies competing were pet food related. Tell us about that.
Thompson: It’s always good to be around the enthusiastic entrepreneurs, to hear them, to understand what their visions are and to see if we can support them and figure out the single point that they need help with. Is it the supply chain? Is it finance? Is it consumer insights? Whatever the point they are really struggling with, that’s what we do here at the Factory.
PPN: What seems to be a common struggle among pet food companies?
Thompson: There’s not any one common problem; I think there are multiple common problems. First of all, everyone needs financing. I think they spend more than 50 percent of their waking hours trying to figure out where they are going to get their next dollar.
After that, it becomes consumer insights, how they present [the brand] to the consumer, whether it’s through social media or packaging.
It’s all about distribution, which channel do I try first, who’s going to be my partner.
It’s also about how to make a margin. A lot of these younger companies don’t understand the margin opportunities. You need to have a margin to build a business.
They all have the same common problems, but sometimes in different orders.
PPN: Grain free has sparked a debate with its possible linkage to DCM. How do you suggest retailers best educate themselves on the topic so they, in turn, can help educate their customers?
Brooks: Retailers are often among the first people that pet owners will talk to with questions, and they play a critical role in helping communicate the latest issues with pet owners. Particularly, regarding the question of diet and DCM, industry trade associations are some of the best sources for the latest information and understanding of the science. For example, the Pet Food Institute recently released a Q&A document addressing DCM from a retailer’s perspective, and shared it with our sister trade associations across the pet care sector.
Raditic: Independent pet retailers should search out unbiased information on this hot topic. There is a summary [“Grain-free Diets and Heart Disease in Dogs”] that I and other nutritionists were involved in writing that can be found on PetDiets.com, a private group of consulting veterinary nutritionists.
PPN: What are pet owners looking for in a pet food when they come into your stores?
Allen: When pet owners come to a Woof Gang Bakery store, they are looking for our help with switching to a better food, and their motivation is typically wellness driven. Pet owners are seeking foods that can improve the health and well-being of their pets through optimal nutrition.
PPN: How do you select what pet foods to carry?
Allen: We do not make a lot of changes to the core foods that are stocked in our stores, but we do follow trends and research. If we feel a food is good for our customers, then we will make a change or addition to our product mix.
PPN: There are many pet food options on the market today. Do you think the variety is more manufacturer or consumer driven? How does this play into marketing and the ability of retailers to discern truth from hype?
Brooks: As pet parents, there’s no denying that we can project our nutrition and lifestyle philosophies onto expectations for our pet’s food. While pet food makers work to remain competitive, they must navigate the needs of both pet owners and the dog or cat. We understand this can leave retailers feeling almost overwhelmed with more choices than we ever thought possible before. Retailers have more opportunity than ever to consider the factors that will matter most to their customers, such as economic price points, convenience needs and niche market demands.
PPN: Pet owners are increasingly seeking transparency from pet food companies. Can you tell us about ingredient sourcing and ingredient claims and why this might be important?
Brooks: Transparency is the “new normal” for pet food, especially in the era of digital communications, where consumers can find all sorts of information online, and pet food makers have a powerful story that we can tell. Whether it’s talking about our connection to American agriculture, the level of regulation and safety that goes into both the ingredients and the finished product, or the different functions of each ingredient—there’s already a positive story at hand. In addition, we also recognize that pet food labeling requirements in the U.S. do not fully reflect consumer needs. For example, ingredients are still required to be listed with their technical terms that can confuse consumers. PFI is supportive of efforts to develop a more modern pet food label and consumer-friendly ingredient nomenclature.
PPN: What do you hope to see from pet food manufacturers in the future?
Raditic: I would really love to see pet food manufacturers [incorporate] the following: More unbiased science/research and less marketing, unbiased support of nutrition literacy for pet parents, easy-to-read labels that align with what is on human food products, standardized bag and can sizes so consumers can compare pricing, and address sustainability and their contribution to improving the environment.
I would also like to see them be more transparent. We need to see transparency about ingredients, marketing, the entire pet food manufacturing process. We need the labels to state who “owns” a pet food brand, not just who manufactures it and distributes it.
The DCM issue highlights a transparency problem [of] knowing the difference between pet food “company versus brand” and who is ultimately responsible for pet food safety. The name of the pet foods named in research publications and the latest FDA report are “brands.” A pet food company can own many brands, either by expanding their own lines or by purchasing another pet food company.
For instance, one of the diets that was shown to be problematic early on was the “brand,” California Natural. This brand used to be owned by Natura Pet, which was bought by Procter & Gamble in 2010, and then sold to Mars in 2014.
Mars Petcare is the company that is ultimately responsible for the California Natural diets and discontinued them and the Evo brand, also named on these reports. As Mars Petcare is the top pet food company in the world, responsible for many, many brands, it is misleading, in my opinion, to state the DCM issue is this brand, this diet type, this manufacturer or a small pet food company problem.
Furthermore, this is a pet food-related problem that can cause a disease that is not easily detected and can result in sudden death, such that many pet parents are unsure they can trust what they are putting in the bowl.
The DCM issue should be a notice to all players in the pet food industry, small or large, to collaboratively fund the best scientists to do unbiased research, share all the science and solve this problem.
PPN: How do you see the pet food market moving forward in the years to come?
Brooks: U.S. pet ownership has held fairly steady in recent years, and, while premiumization has been a consistent driver of growth at the same time, one area that PFI has held focus is supporting market access in different countries around the world. The U.S. pet food exports market is still fairly young, with lots of room for growth. However, for example, China has essentially blocked American pet food imports since 2004, and Chinese pet owners are without access to safe American pet food.
Beyond China, there is a range of countries around the world with a growing middle class and a shifting relationship with their pets.
These markets present great opportunities for U.S. pet food makers in the years to come, and PFI is thankful of efforts at the U.S. Department of Agriculture and U.S. Trade Representative to help promote market access and growth for American goods.
Allen: I do not see major changes in terms of moving away from kibble and canned. I think the raw and niche fresh food market will continue to grow. But, for many pet owners, they will be priced out of trying these more expensive food options.
Henson: I think the pet food market is on hold until the FDA-grain-free report is completed or resolved. Companies need to be held to higher standards for the sake of our pets and not for the sake of their profits. Quality matters, and I believe that moving forward, the raw food industry will continue to grow until it is the norm.