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Natural/Organic to Account for Quarter of $31B Pet Food Sales in 2016


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Much has been written about the pet market forces of premiumization and humanization; the former referring to the product development emphasis on and conversion of pet owners to higher-priced (and presumably better quality) fare, the latter encompassing both the anthropomorphizing of pets and the tremendous cross-over appeal of trends in human consumer packaged goods. No product type epitomizes the juncture of premiumization and humanization like natural, and, past and present, none is more essential to the health of the U.S. market.

Natural as a foremost pet market driver is in its second decade of potency. The U.S. Market for Natural Pet Products, one of my first reports as a pet market analyst, has a cover date of February 2005. In it, I conservatively estimated U.S. retail sales of natural pet products at $375 million as of 2004, up from $247 million in 2000 based on an 11 percent compound annual growth rate (CAGR), and I predicted 2009 sales of $754 million based on a 15 percent CAGR.

Going on 12 years later, the natural report is in its sixth edition, and to say that I understated the clout of the trend is, well, an understatement. Today’s U.S. pet food market is expected to ring up natural sales of more than $8 billion in 2016, reflecting a 12 percent CAGR over 2012 sales, with a forecasted 11 percent CAGR expected to bring the market to nearly $14 billion in 2021.

For a majority of pet owners, product safety remains top of mind to this day. In the same survey, 64 percent of dog owners and 56 percent of cat owners agree that “Fear of pet food contamination/product safety is a key consideration in the dog foods/cat foods I buy,” and 65 percent of pet owners and 80 percent of natural/organic pet food purchasers agree that “I am concerned about the safety of the pet foods I buy.”

In the context of an ostensibly mature market like pet, these figures are astonishing, though perhaps a smidgeon less so when weighted against their human equivalent. Another new sixth edition report from Packaged Facts, Natural and Organic Foods & Beverages in the U.S., places sales of natural and organic foods for people at $69 billion, with sales expected to hit $118 billion by 2021. As with pet, that’s a double-digit (11 percent) CAGR, which is all the more astonishing given that natural has been a major force in human foods since at least the 1980s.

According to Packaged Facts’ July/August 2016 National Pet Owner Survey, the main reason for buying natural/organic pet food is nutritional quality (72 percent of pet owners), followed by product safety (59 percent). When evaluating natural/organic pet food, the No. 1 factor, cited by 79 percent of pet owners, is ingredients. To millennials, the widespread pet food recalls of 2007 might be wholly unfamiliar, but those of us with longer legs are likely to remember them as a turning point. It was then that, with big-bang reverberations, the question of pet food safety entered the public consciousness, fast tracking pet owners’ embrace of natural (and causing me to sharply upgrade my forecasts).

For a majority of pet owners, product safety remains top of mind to this day. In the same survey, 64 percent of dog owners and 56 percent of cat owners agree that “Fear of pet food contamination/product safety is a key consideration in the dog foods/cat foods I buy,” and 65 percent of pet owners and 80 percent of natural/organic pet food purchasers agree that “I am concerned about the safety of the pet foods I buy.”

During 2016, pet food will ring up total U.S. retail sales of approximately $31 billion, giving natural foods roughly one-quarter of the market. With one-half to two-thirds of pet owners still placing a premium on pet food safety, seeing natural foods climb to more than one-third of the market during the next few years seems like a very safe bet.

 

David Lummis is the lead pet-market analyst for Packaged Facts, a division of MarketResearch.com. He edited the Packaged Facts pet reports referenced here, Natural, Organic, and Eco-Friendly Pet Products in the U.S., 6th Edition, and Natural and Organic Foods & Beverages in the U.S., 6th Edition. Visit packagedfacts.com.

 

This article originally appeared in the November 2016 issue of Pet Product News.

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