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9:42 AM   September 01, 2014
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Nature Grows

The market for natural dog food is increasingly profitable

By Kerri Danskin

The market for natural dog food is increasingly profitable

Today’s natural pet food buyers are more educated than ever before, causing retailers to stay even further ahead of the curve by ensuring their staffs are very knowledgeable on a variety of nutrition topics.
Photo by Rosemary Shelton/Click the Connection 

In our society of widely available excess, many people have a difficult time exercising self-control when it comes to their own food choices, but it is becoming more and more common for dog owners to take what they have learned about healthy food and apply that knowledge to the more easily controllable diets of their animals.
 
A number of factors have aligned to create this trend, and retailers, distributors, manufacturers and other participants in the dog product industry are watching it closely. One thing is certain: Consumers are more educated than ever.

“Today’s customers are very knowledgeable about the quality of the foods they are feeding,” said Linda Rapson, vice president and owner of Canine Commissary in Dallas. “They know how to read a label and understand the differences in ingredients.”

Before the Internet became a central part of society, dog owners did not have as much access to information about animal nutrition as they do today. The cultural shift has resulted in a whole new world for both retailers and manufacturers.
“We have many people who research dog food and its ingredients on the Internet and then call us,” said Marilyn Keevin, owner of Canine Cookies N Cream Dog Bakery in St. Charles, Mo.

Joey Herrick, owner and president of Natural Balance Dog Foods Inc., agreed, saying, “The Internet has changed the way people receive information. The blogs, the chat rooms and educational websites are making people more aware of what good things you can really feed your dogs.

Barbara Slovan, a sales manager with Frontier Distributing said this influence has had both positive and negative effects, as some customers and retailers take their Internet research and apply what they find as absolute truth.
“A little bit of information goes a long way,” she said. “In today’s Internet world, it’s unfortunate that a little bit of misinformation can be devastating for some of these [food manufacturing] companies.”

Retailers should temper their customer education with the knowledge that research on what is best for dogs is still taking place, she said, and there may be changes later to what we think we know now, just as human dietary guidelines have changed.

“At this point [some retailers] have preached no corn, no wheat, no soy for so long that they can’t go back,” she said. “If [researchers] were to publish a study showing that grain is a necessary component of a healthy diet for dogs, some retailers would have a very tough time with their customers.”

Where It Started

Keevin said the dog food safety scare of 2007 was a major impetus for the natural dog food movement, and it seems many other industry members agree.
“This undermined consumer confidence in mass produced, middle-market brands,” said Bryan Jaffe, senior vice president at an investment firm called Cascadia Capital, where he focuses specifically on the pet food market. “As a result, consumers reconsidered the source of their diet.”

Bill Trufant, owner of B&B Dog Stop in Mobile Ala., said interest in natural foods was already on the rise when the food scare happened, but the situation “jump-started” that interest. “I think it made people become more aware,” he said.
 
Increased awareness of dog allergies has also had an effect on the industry, with more customers looking for diets free of certain ingredients, or based in new protein sources such as duck, venison and even kangaroo. For dogs with allergies and without, the menu has expanded considerably.

“Years ago, it was recommended that a dog stay on one formula so as not to disturb the digestive track,” said Rapson. “Today’s advice is to stay within the same basic formula but to rotate the diet’s meat source in order to avoid developing an allergy to any one particular meat source.”
Keevin confirmed that many customers come to her store looking for a diet-based solution to their dogs’ medical problems.
 
“We try to direct them in the right direction,” she said. “But we always, always tell them to call and ask their vet before trying something new because their vet knows the dog better than anyone.”

Changes in the Industry

As the business of natural dog food has grown, more companies are trying to get in on the action. Jaffe noted that the interest of larger multi-national companies is a strong indicator of things to come for the business.

“We have seen increasing level of transaction activity, culminating in Procter & Gamble’s acquisition of Natura Pet Products,” he said. “Historically, large pet food companies have grown their brands in-house. P&G recognized that it could not grow its organic and premium offering based on the very traditional formula. We think this is a very significant acquisition as it will likely result in the very popular Natura brand portfolio being available in the mass channel in 2011. Having access to a premium product at an attractive price will drive consumers to switch foods.”

Jim Glassford of Fromm Family Foods, a manufacturer of natural diets for pets, agreed that these corporate moves are significant.

“The large pet food companies need to gain access to the growing natural market segment, and it makes better economic sense to acquire an existing specialty brand and expand retail distribution into the big box channels,” he said.

Independents Going Strong

The good news for independent retailers, Jaffe said, is that although large corporations are getting in on the natural dog food business, many consumers still prefer the smaller, independent shops for making their purchases.

“Traditional pet retailers have lost market share to the independent pet specialty and natural grocery channels,” he said. “Premium consumers have turned to these outlets…due to their ability to screen brands on behalf of the customer and their willingness to provide value-added advice.”

Anita Nair, operations manager for the natural food manufacturer Addiction, agreed that small retailers are providing a good education to their customers.
“Most of my customers are the little stores and they’re educated about animal nutrition,” she said.

Monica Barrett, communications manager for Nature Company, another natural food manufacturer, said this will be an important service to continue providing. “The clearer retailers can make it—the easier they can make it for the consumer—the better,” she said.

What Lies Ahead

The future of natural dog food will certainly bring with it some changes and some challenges.
 
“I anticipate we will see significant improvement in supply chain controls and product input verification, as well as a shift in the orientation of the solution set towards functional foods,” Jaffe said. He also said he expects a shift toward increased focus on dogs’ life stages and stricter regulatory guidelines. “Product attribute claims will require scientific substantiation,” he said.

Industry participants interviewed for this article offered varying opinions about what the future holds for the natural dog food business, but all agreed that the market will continue to grow.

 


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