Rocked by a deluge of recalls related to contaminants found in traditional mass-produced pet foods, many consumers are assuaging their food-safety fears by switching to alternative dog and cat diets—a market shift that guarantees high double-digit growth rates for this category over the next two years, according to a report by Packaged Facts, a division of MarketResearch.com (New York).
“Billions of dollars in pet food brand sales are now up for grabs as a result of the pet food recall crisis and its ongoing effects as consumers seek out safer, higher-quality foods for their pets,” said David Lummis, senior pet market analyst at Packaged Facts. “This is a highly emotional issue for many pet food companies, with many now actively re-examining and restructuring their operations as a result of the recall.”
According to “Product Safety and Alternative Pet Foods: North American Market Outlook,” consumers’ brand-switching will create a shift in the market worth $1.3 billion to $4.3 billion in pet food retail sales.
The main beneficiaries, according to the report, will be “high-quality pet foods chosen as alternatives to traditional brands.” These include high-end natural and organic pet foods; fresh pet foods, including raw/frozen, refrigerated and homemade; and 100 percent U.S.-sourced, locally grown and other smaller-batch pet foods.
Consequently, Packaged Facts has sharply upgraded its sales forecasts for this category. The company now expects annual sales growth for natural pet food to top 25 percent, nearly double its year-ago prediction of 15 percent annual growth.
While very high short-term growth for natural/organic food may level off as the market settles back down, Packaged Facts believes annual growth will remain in the double digits for the next few years. Key factors supporting strong sales growth of this category include heavy marketing efforts by natural/organic marketers to educate consumers about their pet foods and reinforce consumer perceptions that the products are safer; emerging standards for organic pet food production and labeling; a rapid influx of marketers and brands; high interest in natural/organic foods for humans; and favorable shifts among U.S. retailers.
Packaged Facts foresees ongoing healthy growth in sales of raw/frozen pet foods, although not necessarily stemming from the recall. Still, several factors are creating strong opportunities for this category, as well as other types of fresh pet food: new technologies for ensuring product safety; the availability of high-quality human-grade ingredients; consumer interest in natural/organic pet food; smaller, highly involved manufacturers; the availability of more freezer cases from manufacturers; and a focus on convenience.
Packaged Facts predicts that refrigerated pet foods will be commonly available in supermarket chains nationwide in two years, if not sooner.
The inability of government agencies to guarantee the safety of pet and human food ingredients imported into the United States suggests that “100% U.S. sourced ingredients” will emerge as a key pet food market position within the coming months for both new and existing products—especially alternative foods, the report said.
With locally grown ingredients becoming a major trend in human foods. the report predicts that consumers will show much stronger interest in pet food products made from locally grown ingredients as well.
On a related note, expect the ramped-up usage of “custodial care” ingredients, or those that can be traced through a chain of custody that validates safe-handling procedures through the entire supply chain and are never treated as a byproduct.