“Pet Food in the U.S.: Riding the Premium Wave” indicates that the push to convert consumers—and their pets—to higher-priced premium products will continue to be a major market driver in the pet food market, which is projected to reach nearly $19 billion by 2010. Echoing human trends, the pet food market will move toward ever healthier, more functional fare with increasingly targeted benefits; more convenient products based on new forms and package types (especially pre-portioned, single-serve and resealable packages); and additional gourmet/luxury products that key in to pet owners’ growing inclination to pamper their pets.

“The push is really on to feed pets human-quality food that meets the same stringent taste, nutritional and portion-size demands that consumers are experiencing with their own food,” said Don Montuori, publisher of Packaged Facts. “We expect this market to continue to grow at a healthy pace based on the overwhelming consumer acceptance of higher-quality and higher-priced pet foods.”

The pet food market grew 23.4 percent between 2001 and 2005, posting a compound annual growth rate of 5.4 percent.

Dog food represented 60 percent of total pet food sales in 2005, according to the report, while cat food represented 34 percent and other pet food, 6 percent.

Bird food, including wild bird food, represented 43 percent of 2005 sales, followed by fish food (33 percent), small-animal food (17 percent) and reptile food (7 percent). Sales were flat during the five-year period, posting a compound annual growth rate of 1.4 percent as marketers continued to experience heavy pricing pressures from mass-market retailers as well as lower-priced private labels and bulk foods. A declining bird population also contributed to the sluggishness in the category.

Mass merchandisers have assumed the lead among pet food retailers, claiming 34 percent of U.S. retail sales in 2005. Supermarkets, continuing to lose share, claimed 26 percent of sales. Pet specialty stores, including PetSmart and Petco, accounted for 25 percent of sales. Other retailers of pet food made up the balance.

With PetSmart and Petco expanding at a rapid pace, Wal-Mart ramping up its offering of pet supplies, and nontraditional retailers entering the market, independent pet stores and supermarkets continue to feel the squeeze. “Among all outlet types, supermarkets are the most vulnerable since they cannot compete with mass merchandisers on selection and price, or with pet specialty stores on value-added products and pet-care services. Even independent pet stores, while still clearly facing a difficult path as PetSmart and Petco continue to enter more regional markets, have inherent strengths that seem to jibe better with current consumer trends, especially the growing demand for premium pet products and an appreciation for more personalized customer service,” according to Packaged Facts.

Key dog food trends, evidenced by the top 10 package claims seen during the first six months of 2006, include “upscale,” “natural” and “high vitamins.”

Health-related claims tend to slot into three groups: natural/organic, functional/nutrient-enhanced and special diet (segmented by life stage, weight, health condition, breed, etc.).

Whereas the big push a year or two ago was toward novelty human-style foods, such as pizza, popcorn, candy and food bars, much of the emphasis has since shifted toward healthier sounding human-grade fare.

To purchase the complete report, visit www.packagedfacts.com/pub/1190796.html or www.marketresearch.com. [November 2006 PET AGE]