Premium Pet Foods’ Market Share Rising
When he was hawking pet food on the dog show circuit, Bob Showalter wasn’t above chomping on a kibble or two so potential customers would see how much he believed in the product.
“Everything that’s in this dog food is dinner table quality,” Showalter would say, referring to Natural Life, his brand of choice, as he extolled the virtues of whole meats and grains, kelp and yucca.
Now that he’s out of business--pet superstores ate up too much of his mail-order clientele--Showalter is free to concede that “I didn’t particularly care for the taste.”
But his enthusiasm hasn’t dimmed for the kibble, a costly premium brand that is part of the growing market for specialty pet foods.
Once the domain of supermarket aisles and the occasional rural feed store, the diets of Fifi and Fido have become a lucrative business for pet food warehouses, specialty stores and veterinarians.
And corporate America, always hungry for a market niche, is gobbling up pricey lines of pet food faster than a St. Bernard at chow time.
Mary Locante of Ross Township, a Pittsburgh suburb, paused between two bags of Pro Plan premium dog food while her son walked the family’s Jack Russell terrier, Phil, through a warehouse store in search of a toy.
Locante made a special trip to the store because her husband mistakenly bought a puppy formula and she thinks Phil, now a year old, should be switched to the adult stuff.
“It’s too high in fat,” Locante said of the puppy food. “We’ve had two dogs that lived to 16 because we fed them properly, I think.”
Locante’s husband made an easy mistake. Pet store shelves are now loaded with premium brands.
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The market leaders are Iams, whose brands include Iams and Eukanuba, and Hill’s, which makes Science Diet. The two companies share about 62% of the $1.9-billion premium market, a growing segment of the $9-billion overall pet food market catering to the nation’s population of 55 million dogs and 65 million cats.
Combined, Hill’s and Iams have 12% of overall pet food sales. That compares to the 17% held by leader Ralston Purina, maker of several grocery store brands, Nestle’s nearly 16% and H.J. Heinz’s 13%.
Premium lines have a variety of sub-specialties, with special diets for chubby pets, lethargic pets, workaholic animals or allergy-sensitive pets. There are also natural diets for organically correct pets and plain old maintenance diets for ordinary pets.
Premium foods can be double the price of grocery-store brands such as Skippy, Purina Dog Chow or Alpo.
Tim Phillips, a veterinarian and editor at Petfood Industry magazine, said premium lines tend to be higher in fat, more dense, more digestible and more efficient--meaning you feed less per serving and have less stool to clean up when it’s digested.
But the food is expensive for a reason, and in general, people get what they pay for in pet food, said Dr. Terry Swecker, veterinarian and animal nutrition specialist at Virginia Tech.
“They put more money into ingredients,” he said of the premium lines. “And I think that’s pretty consistent.”
The costlier brands also spend more on research and development and follow a consistent recipe, rather than adjusting the content of soy or corn based on the available supply of those ingredients.
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The premium pet food market has evolved during the past 20 years and has put a serious dent in the amount of pet food sold in grocery stores, Phillips said.
Where supermarkets once had a 95% lock on all pet food sales a decade ago, that figure has slipped to about 55%, according to industry analyst John Maxwell of Wheat First Securities in Richmond, Va.
And as pet owners become more educated, they are more picky about what winds up in their animal’s dish.
Robert Samios has made telephone calls, talked to salespeople, consulted breed clubs and magazine articles in search of the perfect food for his golden retrievers, Nike and Bailey.
“Nothing’s too good for my dogs,” he said. “If somebody pays $1,000 or $1,500 for a dog, what difference does a few extra bucks make?”
Pat McDonald shuddered when she thought of the colorful boxes of Meow Mix she used to toss into her shopping cart at the supermarket.
That was 10 years ago. Now she’s got her five cats on low-ash, low-magnesium diets; and the family Rottweiler, Chance, is eating dry, low-fat food.
“I educated myself early and saved myself a lot of money in vet bills,” said McDonald, who scrutinizes cat food labels in search of ash and magnesium, nemeses of the cat’s urinary tract.
Dan Smith, a marketing professor at the University of Pittsburgh’s Katz Graduate School of Business, pins the growth in pet food to an increasingly childless society that is transferring its parenting instincts to animals.
“Surrogate kids--that’s exactly what they are,” Smith said. “We put them on low-fat, high protein foods. We treat them just like people.”
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In fact, there are a lot of similarities between the marketing strategies for pet and baby foods, said Mike Milone, chief operating officer for the Heinz pet food division.
“The biggest difference is when a consumer has a baby, they’re in the baby food market for a window of about six to 12 months,” but dog owners can be targeted for an average of seven to 10 years, and then retargeted when they get a new pet, he said.
Premium foods also take a more sophisticated marketing approach. Grocery store lines concentrate on goals like making food look like little bits of bacon and cheese. Specialty lines are educating sales staff about animal nutrition.
Skippy, a grocery store staple, offers “33% more meaty chunks!” But a Nature’s Recipe vegetarian diet on a nearby shelf promotes itself as nourishment for the dog who “cannot tolerate beef, chicken, pork or even lamb meat,” and premium brand Neura offers formulas for dogs with intestinal, heart and kidney ailments.
So how important is the higher price tag?
Swecker, the animal nutrition expert, said animals are generally thought to have a better quality of life if they are fed better food.
But, he said, “There’s no hard data to prove that, for sure.”
