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Dog Marketplace: Who Wants a Treat?

Posted: February 26, 2014, 1:45 p.m. EDT


Manufacturers have taken treating to a whole new level, with something for just about every dog owner, from grain free to exotic protein to low calorie and beyond.

By Kathleen M. Mangan

The popularity of dog treats continues to grow, according to research, and so do specialty segments in this product category.

The American Pet Products Association’s 2013-2014 National Pet Owners Survey shows that 93 percent of dog owners bought treats in 2012, up from 81 percent a decade before. The average number of treats fed per day is 2.6.

What’s most popular? The survey winner is meat treats by a wide margin (52 percent of owners bought them in 2012), although sales dropped off from 67 percent of owners two years before. The surging segments from 2010 to 2012 are natural (increasing from 23 to 30 percent of owners) and supplement-fortified treats (rising from 11 to 15 percent of owners).

Trends in the industry carve out further niches for dog treats: USA made, novel ingredients, dental, grain free, exotic protein, limited ingredients and more.

"The segmentation in this product category is being driven by consumers’ needs for options that are tailor-made for their pets,” said Heather Govea, general manager of Natural Balance Pet Foods Inc. in Pacoima, Calif.

Product Innovation
Trends continue to inspire product innovation. Rick Geller launched a new company, Pack ’N Pride, to provide a different kind of meat jerky treat to the market. The New York-based company started selling its 20 treat products in September. Geller said the problem with most chicken jerky is the way it’s processed, with hot air blowing over the meat for more than 10 hours, making it brittle, hard and barely digestible. So he developed a patented process of partially freeze-drying the meat and then baking it so it comes out chewy, he said.

Dog Treats
Brand blocking and full shelves make treats more appealing to dog owners. Sherri L. Collins/i-5 Publishing at Kriser’s

"The industry needed something new in the meat segment,” said Geller. "Our products look and smell differently than our competitors’.”

Radio Systems Corp.’s PetSafe brand in Knoxville, Tenn., started shipping its new treat line, Indigo, in August. The line was developed from consumer research revealing that dog owners want long-lasting, solutions-oriented, human-grade quality treat options, said Tracey Quillin, category manager. Many of the Indigo chew/oral care products contain blueberries as an antioxidant source, plus an active ingredient found in toothpaste that reduces plaque, he said. Triple Chews have a creamy middle with probiotics to enhance the digestive process, he added.

Made in the USA
Many retailers reported a strong demand for USA-made treats.

"It’s our number-one request,” reported Kendra Benson, manager of RiverTown Feed & Pet Country Store in Petaluma, Calif.

As a result, they added a U.S.-made treat section to the store last fall that she said consumers appreciate.

"Our customers are concerned about safety and feel more confident buying American products,” she said.

Buyer Jenny Frey added that U.S.-made products are often more expensive, so they like to provide a selection for customers. About 60 percent of the store’s treat offerings are U.S. made, she added.

TailsSpin, with three stores in Georgia’s Savannah/Macon area, went a step further about a year ago by featuring only USA-made treats, said Jusak Bernhard, co-owner.

"Safety is an issue, and we certainly feel better about what we’re selling,” Bernhard said. He added that it provides a differentiating point over the big-box stores: "It’s all about niche.”

Manufacturers are responding to this trend. PetSafe’s new treats are all U.S. made, and the ingredients are sourced in the U.S., Quillin said, adding that its meat is human grade and comes from USDA-inspected facilities. Zuke’s treats, too, are all made and sourced in the U.S., except the rabbit and venison, which come from New Zealand, according to the Durango, Colo., company.

Pack ‘N Pride’s Geller said that product problems and recalls don’t necessarily occur due to the location of the manufacturing; rather, they result from the way the food or treat is cooked, plus inadequate quality controls and testing. Pack ‘N Pride products are made in China, but the company owns and manages the plant in China; controls the entire production chain; and tests the ingredients, the finished batches and the products once they hit American shores, Geller said. Lab results correlated to batch numbers on the packaging are posted on the website for consumer verification, he added.

INDUSTRY VOICES

How can retailers increase dog treat sales?

"Cross-sell treats in the pet food aisle or themed product displays with a clip-strip or auto-vend featuring trial-size packages. Hand out coupons to customers, and take advantage of free manufacturer displays, signage and point-of-purchase items. About 80 percent of treat sales are impulse buys.” —Tracey Quillin, category manager at PetSafe, a brand of Radio Systems Corp. in Knoxville, Tenn.

"Ask manufacturers and distributors for product samples, and give them out in the store and at events. If the supplier doesn’t have trial sizes, ask them to send a few extra bags to open in the store, or to credit you for these. You’ll see a difference in sales when you hand out samples—customers will come back for more.” —Jenny Frey, buyer at RiverTown Feed & Pet Country Store in Petaluma, Calif.

"Feature treat specials and discounts on bag stuffers. Reinforce the benefits of the treats customers choose. Keep open bags of treats at the counter and offer them to dogs in the store—half the time customers buy it if the dog likes it. This works for customer development as well as treat sales.” —Mike Hoffer, owner of Hoffer’s Tropic Life Pets in Milwaukee

Natural Balance also does robust testing to generate consumer confidence—buyers can enter the product date code on the company website for lab test results on nine known contaminants, Govea said.

Ingredient Trends
Meat treats are in the spotlight thanks to previous product recalls, and many producers are responding with high-quality offerings. Indigo Smokehouse Strips by PetSafe are 95 percent meat that has not been irradiated, thus protecting the integrity of the nutrients, and they do not contain fillers, artificial flavors, colors or preservatives, Quillin said.

Pack ‘N Pride uses antibiotic-free, byproduct-free chicken, duck and pork, Geller said.

Zuke’s plans to launch Genuine Jerky at Global Pet Expo in tart shipping in June, said Chris Meiering, director of marketing. The human-style beef jerky will be available in three flavors: original, barbecue and teriyaki. It will be naturally preserved with brown sugar and apple cider vinegar, contain no nitrates or nitrites, and be made in a New Zealand facility that produces human-grade jerky products, Meiering added.

Fruits and vegetables with beneficial properties are popular in dog treats at TailsSpin, Bernhard said.

He pointed to products from Vetscience’s Fruitables brand, and green bean and carrot chips from K9 Granola Factory.

"We host a pet cancer run and walk each year to support research, so we push antioxidant ingredients like blueberries in treats for cancer prevention,” he said.

Quillin pointed out that the blue color of Indigo Dental Sticks, Floss Bones and Triple Chews is due to the amount of blueberries in the formula.

A variety of supplements are included in recipes for functional and solutions-oriented treats, formulated to support healthy skin/coat, digestion, joints and more. Mike Hoffer, owner of Hoffer’s Tropic Life Pets in Milwaukee, said sales of tablet-form supplements are down in his store because the effective ingredients are often in treats now, an easier form to give to dogs.

Value-added functional treats will continue to grow in importance as dogs live longer, Bernhard said.
 
Govea sees solutions-oriented treats as the number-one trend in the product category. Natural Balance’s new Dental Chews, which come in five formulas, started shipping in December, and include vitamin C to boost immunity, she noted.

Dog food intolerances and allergies have become such a problem that TailsSpin stores converted to hypoallergenic-only three years ago—in other words, no products with wheat, corn or soy, and that includes treats, Bernhard said.

Many Natural Balance products are limited-ingredient formulas to address food allergies; all treats avoid corn, wheat and soy, Govea said. The new Belly Bites line, launched last fall, is a soft-baked offering of chicken, duck or salmon mixed with legumes for dogs on a grain-free diet, Govea added.

A low calorie count is also on consumers’ wish list, as so many dogs in America are overweight. Some new products from Zuke’s for owners watching their dogs’ weight hit the shelves in November, said Meiering.

The Skinny Bakes line of 10-calorie, crunchy biscuits comes in three flavors that are free of meat, wheat, corn and soy, and its Mini Naturals line of 3.5-calorie, semimoist training treats now come in two new flavors—duck and pork, Meiering said.

Educating consumers on the benefits and features of stocked products and brands is a challenge, retailers and manufacturers reported. Zuke’s launched a new retailer online training program last summer to provide retail staff with the insider knowledge needed to best advise customers.

Bernhard requires that all of his staff members complete manufacturer training programs, including PetStorePro from the Pet Industry Distributors Association. He also ensures there is plenty of staff on the floor to answer customer questions, he said.

"It all comes down to personal customer service,” he added.

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