For many industries, it’s been a challenging and uncertain year. But the pet food industry has used this year to prove its ability to adapt and grow when faced with shifting demands, supply chain disruptions, and the loss of marketing opportunities.
In its 2020 State of the Industry report, Pet Food Processing looks back at the industry’s progress and ahead at its promising future.
Stable growth
Revenue-wise, the pandemic hasn’t stalled the pet food industry’s growth trajectory. The majority of pet food and treat processors (73%) said in an earlier survey that they haven’t experienced any negative impacts on sales. In fact, US pet food sales for the first seven months of 2020 increased by 4.3% compared to the same period in 2019.
Most notably, sales for wet food and treats have been trending upward. In a period of 52 weeks (ending on August 9), wet dog and cat food sales were up by more than 7%. And, from 2018 to 2019, sales for treats and mix-ins grew 12% for dogs and nearly 9% for cats.
A shift toward e-commerce
With more than 40% of dog and cat owners buying premium diets for their pets, many brands are making their premium products available from larger and online retailers. And in a year of quarantines and lockdowns, the ability to sell products online is of greater importance than ever before.
It’s no surprise that online pet retailer Chewy reported a successful second quarter, with revenue up 47% over 2019 and the addition of 4.6 million customers. Similarly, Amazon sold $1.1 billion in pet food and treats in the first half of the year, with a pet food sales boost of 45% compared to the same period last year.
But e-commerce sales were already on the rise before the pandemic — they grew by 30% from 2018 to 2019. And that growth is likely to continue through 2020 and beyond. E-commerce could make up 27% of total US pet product sales in 2020, and experts predict that percentage will increase to 35% by the end of 2024.
Fewer product launches, more variety
Pet food product launches have slowed in the past few years — down from 632 in 2017 to 510 in 2019. By March, when in-person trade shows ended, there were only 169 new products launched for 2020.
But many of those new offerings represent industry trends and changing consumer demands. Companies are diversifying their portfolio with non-kibble foods, new and sustainable proteins, and grain-inclusive recipes. Functional foods are also emerging — Purina is leading the way with its allergen-reducing cat food.
A positive impact on the supply chain
Pet food processors buy agricultural ingredients ranging from meat, poultry, and fish to fruits, vegetables, and grains. But they also use leftovers and byproducts from human food production, thereby reducing food waste and making the supply chain more sustainable.
Research proves that pet food is also boosting the US agricultural economy. In a year’s time (June 2018 to May 2019), pet food facilities purchased 8 billion tons, or $6.9 billion worth, of pet food ingredients. This enabled farmers and farm suppliers to purchase $5.3 billion in additional materials and services.
Given the successful year the pet food industry has had, that level of support is likely to continue. And it comes at a time when it’s needed most.
Source by foodindustryexecutive.com