After 20 years of tame food inflation, prices for staples like bread, milk, eggs and flour have surged at double-digit rates over the last year, according to the U.S. Department of Labor. But those increases don’t stop with groceries. Since many of the higher-priced commodities that go into human foods also go into pet foods, pet food prices are rising, too.

“[Vendors] have seen at least one price increase so far in 2008 and expect that there will be at least one more,” said Steven King, executive vice president of the Pet Industry Distributors Association (Bel Air, Md.).

Food costs have risen “quite a bit for us in the last few months,” said Rob Aeschlimann, food buyer for Barker & Meowsky, an 11-year-old pet boutique in Chicago. “We’ve probably seen at least 15 percent or more increases on everything.”

Similarly, Gerri Laverie, a principal in Soft Paws Pet Boutique Inc. in Staten Island, N.Y., figures her pet food costs have increased by about 10 percent. And Aubrey Martin, co-owner of The Animal House in Damariscotta, Maine, has seen vendor prices rise 7 percent to 25 percent.

Many pet retailers are passing these increases on to customers—but are minimizing the impact through education and staged increases.

Laverie had “no choice” but to pass increases along to customers. “They are not happy about it, but they are accepting it,” she said. What’s more, they are still buying their favorite high-quality pet foods, like Solid Gold, Merrick and Nature’s Variety.

She looks for pricing pressures to ease “hopefully as soon as Bush gets out of office.”

Barker & Meowsky, which also is passing along some of its increased costs to consumers, isn’t seeing shoppers trade down to lower-priced brands—partly because employees are taking time to explain the price increases, said Alice Lerman, the shop’s owner. “We explain the reasons—that the reasons they are seeing increases at the grocery store are the same reasons we’re seeing increases in pet foods.”

The Animal House, which was already charging $30 to $50 for big bags of top-of-the-line dog foods, is raising prices incrementally as a way to ease sticker shock. “As long as you don’t raise them a huge amount all at once, people seem to take it in stride. They know that fuel is $4 a gallon,” Martin said. “Since the big increases, if we’ve had five comments on them I think I would be surprised.”
However, Martin concedes that some of her customers have traded down to less-expensive foods. “Timberwolf Dog Food [by Timberwolf Organics Inc.] is a good example. We probably have one of the best prices on it in the state. However, they had a huge increase pretty much within a few months after the recall, and we have found that because of other things being more expensive—not necessarily because they went up so much—[shoppers] are going to something like Canidae, which is a lot more cost-effective.”

Other pet retailers have been less fortunate. “All I know is that, at the moment, food sales are down almost 50 percent. It’s been sliding for a year; right now it’s pretty sad,” said Richard Hahn, owner of Animal Kingdom in Santa Monica, Calif. “I would imagine [inflated commodity prices are] a good part of it, but together with everything else that is involved. You’ve got gasoline prices. You’ve got people who are scared to death of the economy. There are people out of work, there’s housing. It’s all part of it.”

He noted that sales of wheat-based cat litters are also flagging.

Kenn Bearman, owner of The Animal Store in Lincolnwood, Ill., for 18 years, has seen “just a general cutback” in business because of the economy. His customers are not trading down to lower-cost fish foods or wandering off the reservation to mass merchandisers or supermarkets. However, he said, some fish owners are reducing the number of foods they buy.

“The thing that the distributors point out is, and what you’re likely to see, is that the additional purchases—the impulse purchases, those little extras that people pick out while they are in buying staples of food—[will] begin to slip,” said PIDA’s King.

Is there yet an end in sight for this food inflation?

“That’s the big question,” King conceded. “I don’t know that my people have that answer. Frankly, our distributors’ biggest concern right now is fuel cost. They all have trucks on the road, they are all delivering product to the stores. They have had fuel surcharges on for some time now. Generally speaking, you are not able to recoup the entire cost of their added fuel costs with the stores, so they are feeling the squeeze more, too.”

“All [pet retailers] can do,” Hahn said, “is just hang on and try and maintain your customer base to the best of your ability.” [July 2008 PET AGE]