Country report: United Kingdom Pet populations are stagnating while competition gets fiercer

After the pandemic upswing in adoptions, current growth in UK pet populations is much steadier. In 2022, there were estimated to be 19.3 million dogs and cats in the country. This was approximately 100,000 up on the previous year. The 19.2 million population in 2021 was some 200,000 more than the year before, and in 2020 the number was 19 million – an increase of no less than 1 million compared to 2019.

Some owners have been forced to give up their pets as the cost of living rises. The large dog population declined by 1% last year. Reptiles and fish were also greatly affected, due to the increased cost of maintaining their habitats. Continued growth is, however, expected in smaller dog breeds, cats and other small mammals.

Meanwhile, online sales are spiking, as consumers look for affordable prices and industry players battle to increase their customer base.

Coping with price increases

Pet care prices rose by up to 11% over 2022, driven by supply chain issues and climbing input costs. Meat and poultry make up roughly 50% of the cost of pet food ingredients and have been among the hardest-hit commodities.

As their spending power declines, most consumers have responded by cutting back on non-essential items, trading down to more affordable options, and looking for promotions. One example is buying larger- sized packs of dry pet food. This kind of food is also better suited to the increasingly busy lifestyles of many British pet owners.

Pet humanization is still boosting premium pet food growth, despite the unparalleled price increases. With more consumers wanting the best for their pets, many simply refuse to trade down, even if times are hard. So brands such as Lily’s Kitchen and Naturo are capitalizing on this renewed interest in health and nutrition, and that is boosting value growth in dog and cat food.

E-commerce plus bricks and mortar

A recent development in the UK is the steep rise in pet care sales through e-commerce platforms. This is driven by both the growing segment of younger pet owners and the growing confidence of older generations to make purchases online.

Convenience plus the simplicity of comparing prices and finding good deals are only some of the reasons for this online expansion. And despite these advantages, consumers did return to bricks-and-mortar retailers in 2022, seeking lower prices at discounters, or broader ranges, availability and guidance at pet specialist retailers.

Experienced shop staff are important for the many people who adopted a pet for the first time during the pandemic and need advice on nutrition and pet care. Specialist retailers also saw less downtrading than other retailers, due to higher brand loyalty and consumer awareness. And e-commerce does have its limitations, such as product availability or high delivery fees, which have held back that channel’s growth to some extent.

Beating the competition

As offline retailers and e-commerce platforms battle it out, what aspect of their propositions will make the difference for pet parents?

From a convenience perspective, e-commerce wins easily. The consumer benefits from increasingly fast delivery, combined with the opportunity to browse and find promotions and better deals. Another advantage  is the subscription models on offer there, allowing recurrent purchases of essential pet nutrition. And as larger bags increase in popularity, home delivery means consumers can avoid carrying heavy and bulky packs.

In terms of consumer experience, while pet specialist retailers do provide a level of guidance through educated staff, e-commerce platforms are catching up. Many online retailers are implementing easily accessible information to guide the consumer, or even live chats to mimic what happens in-store. Poppy’s Picnic, a British raw pet food brand, even places

QR codes on in-store refrigerators which redirect consumers to the company’s website and live chat function. Their customer service agents can then engage with the customer directly, giving them advice and guiding them through the purchase.

Personalization

E-commerce does remain a true disruptor, as digitalization allows faster and more efficient innovation. Tailored nutrition lets e-commerce platforms tap into the personalization trend, adapting nutrition to breed, age, and even pet-specific characteristics. Butternut Box, for example, allows owners to personalize their subscription according to their pet’s preferences and levels of activity.

How the future looks?

From 2024 onwards, as the British economy and unit prices are likely to stabilize, the pet care market – including humanization and therefore premiumization – is expected to continue growing, although at a slower pace. As a result, the total UK pet care market is forecast to expand by a compound annual growth rate (CAGR) of 1.4% in value terms from 2023 through 2028. 

Premium therapeutic dog and cat food, including cat and dog treats and mixers, and pet healthcare are expected to continue driving value growth. The 2023-2028 CAGR forecast for pet food is therefore 5% in value terms, highlighting the growing focus on nutrition, well-being and preventative health.

Natural and insect-based

Humanization and premiumization trends are going to boost the growth of natural, less processed pet foods too. Claims such as ‘Natural’ and ‘No Artificial Flavors’ are increasingly common on pet food products. Similarly, ‘High Protein’ and ‘Grain Free’ dominate the segment, appearing on roughly 20% of pet food products in the UK in 2021. So the market for clean and dietary labels appears to have established itself, but still has more potential. On the other hand, the sustainability space remains undeveloped, despite growing demand, with ‘Environmentally Friendly’ claims at just 1.6%.

The alternative protein sector, with brands such as Yora and Mars Petcare’s Lovebug offering insect-based protein pet foods, is expected to grow at a fast pace. Fermentation and mycoprotein are also promising additions to the pet food market.