Pet food market analysis

What is driving the pet food growth?

Despite significant economic uncertainty in many parts of the world, global pet food value sales exhibited a real compound annual growth rate (CAGR) of 3% between 2010 and 2015, to reach US$78 billion (€68.5 billion). What is driving growth in pet ownership, and why are more people treating their pets as family members?

Pet popularity in emerging markets

The expansion of the middle class in emerging markets has been one of the signature economic trends of the early 21st century. With much more discretionary income and greater exposure to Western culture, pet ownership is growing in popularity among this group. For example, in Russia, the number of households with a dog rose from 23% to 26% between 2010 and 2015, while, in India, it increased from 3% to 5%. While pets have traditionally been fed table scraps/leftovers in many of these countries, attitudes are shifting, and more owners are now in the market for packaged pet food.

Pet humanization

This growth in pet ownership has been accompanied by a shift in attitudes towards pets. A growing number of owners perceive pets as family members, even children – the term ‘pet parent’ is now common currency, particularly in North America. As a result, they are prepared to spend more on them, particularly with regard to food.

The factors driving this change include later marriage and childbirth, elevated divorce rates, social atomisation and increased life expectancy. As average household size and social networks shrink, pets are coming to play a more prominent role in the emotional lives of their owners. For example, a survey of dog owners conducted by Channel 4 in the UK during 2014 found that 44% shared their bed with their pets.

Similarities to human food trends

New product launches in premium pet food often closely track human dietary trends. Grain- and gluten-free offerings, brands containing human-grade ingredients and superfoods (everything from quinoa to kale), raw (uncooked) and ‘all-natural’ products, hypoallergenic offerings, brands that do not contain animal by-products (such as organ meat and bone meal) and even vegan brands haveproliferated. 

Between 2010 and 2015, global real value sales of premium dog and cat food rose by 19%, while those of economy and mid-priced offerings increased by just 10% and 9%, respectively. 

In North America, premium products now account for almost half of value sales of cat and dog food (US$15 billion – €13.2 billion out of US$31 billion – €27.2 billion, in 2015). Cats and particularly dogs are also increasingly being indulged: global real value sales of dog treats surged by more than a quarter (26%) between 2010 and 2015, to US$7 billion (€6.1 billion).

Customer awareness

Increasingly, more owners are becoming connected via forums and social media, reading about different diets and becoming savvier when looking for the best diets for their pets. This includes not only scrutinising pet food processing, but also its ingredients, an issue high on manufacturers’ agendas. Indeed, offerings such as freeze dried/air dried are expected to see more advertising and become more popular as they claim to retain nutritional elements. Raw products will also continue to gain the upper hand despite the controversy in the industry about the benefits and several (many of which voluntary and preventative) recalls by companies like Nature Variety or Vital Essentials. ‘Free-from’, with a focus on grain (-free), becoming more mainstream may not be news, but it is also expected to be on the rise,especially outside North America. In spite of this emphasis on healthy ingredients, pet obesity is a growing problem. According to the Association for Pet Obesity Prevention, more than half (54%) of dogs and cats in the US were overweight or obese in 2015. As more owners become aware of this problem, sales of ‘calorie-controlled’ and ‘weight-management’ dog and cat food are on the rise.

Ingredients and labels

The quest for exotic ingredients is set to remain strong as ‘more for less’ is a motto that appeals to many consumers, particularly when such ingredients add more functionality. While rare or exotic ingredients, such as local fruit and berries, have become more sought after, their provenance is also becoming key. Country provenance as a symbol of quality is a widely used occurrence. This issue is also related to the relevance of labelling and savvy consumers. Labelling needs to be more transparent and easier to understand, with caloric content becoming a requirement in the US later in 2016.

Continued growth

Euromonitor International forecasts that growth in demand for pet food will remain robust in the medium term, with real value sales exhibiting a CAGR of 3% between 2015 and 2020, to reach US$88 billion (€77.3 billion). Pet humanisation is clearly not a fad, and with the premiumisation trend continuing to deepen, the North American market is set to remain the engine of global growth. However, emerging markets will continue to grow in importance, with India likely to see pet food value sales almost double in real terms, to US$364 million (€320 million), over the same period.