Promising markets in the world of wet pet food

In 2023, the market for wet dog and cat food is estimated to reach $35 billion (€31.5B), accounting for 27% of the total sales of dog and cat food worldwide. Cat food already makes up 61% of the wet pet food market, and in the next 5 years, it is expected to grow at a faster pace than wet dog food due to the rising popularity of cats, especially in the Asian and Latin American markets.

State of play in growth terms

The COVID-19 lockdowns boosted growth in the pet population, resulting in stronger demand for pet food. This translated into a high growth rate of 5% for wet pet food in 2020. The market continued to grow in 2021, albeit at a lower rate (3.3%) than at the beginning of the pandemic.

In 2022 the wet pet food market stagnated, with volumes increasing by less than 1%. This was partly caused by the post-pandemic return to the office disrupting people’s interaction with their pets, leading to higher rates of abandonment. Additionally, the wet pet food market was further hampered by the economic downturn caused by the invasion of Ukraine and the resulting high inflation. Being generally more expensive than dry pet food, the wet category was hit harder as consumers traded down and looked for cheaper options. Nevertheless, the wet pet food market grew by 13% in value terms (based on fixed currency exchange rates) as the rising costs for transportation, ingredients, packaging and processing impacted unit prices.

Today, the demand for wet pet food continues to grow, albeit slowly. Besides value increases due to ongoing high inflation, volumes are expected to increase by 1.4% in 2023. High costs mean that purchasing patterns are changing and producers are searching for additional margins.

Popularity of premium options

The rising pet food unit prices are putting pressure on growth rates across all price segments of wet pet food, as consumers switch to cheaper dry options and feed pets with leftovers more frequently. Premium food has been the fastest-growing segment in the wet pet food market over the past 5 years and is expected to retain this position in 2023, with a predicted increase of 2% in volume and 10% in value terms (due to the inflationary effect) to reach $17.6 billion (€15.8B). This is because pet owners still prefer to economize on their own consumption rather than on the diet of their pets when facing declines in income and purchasing power.

The premium category is expected to remain the fastest-growing segment over the next 5-year period, although at much lower rates than in the past. Based on constant terms to eliminate the inflation effect, the estimated compound annual growth rate (CAGR) for premium wet pet food is 3.8%, while mid-priced and economy categories will grow at 2.9% and 1.8% CAGR, respectively.

Developing markets

North America and Western Europe are the biggest markets for wet pet food, accounting for 70% of global wet pet food sales. As mature markets, they show modest growth rates, whereas emerging markets are growing at a much faster pace. For example, Asia Pacific accounted for 7.6% of wet pet food sales in 2018. By 2028, this number is expected to have increased to 11%.

In absolute terms, the main contributors to the wet pet food market over the next 5 years will be the US – thanks to its large established domestic market – and China. This is almost entirely due to wet food for cats, which continue to gain popularity in China since they are cheaper and easier to keep in a small apartment in comparison to dogs.

In terms of growth rates, meanwhile, the leaders are expected to be the emerging markets of Vietnam, Brazil and Indonesia for wet dog food, and Indonesia, Mexico and Saudi Arabia for wet cat food. The Indonesian market is benefiting from the e-commerce boom, with fast delivery services and online channels such as WhatsApp. In line with this trend, in 2022 Royal Canin launched its own app through which Indonesian consumers can purchase pet food directly.

The smallest markets for wet pet food globally are the Middle East and Africa. These markets have a scarce pet population, an underdeveloped culture of using prepared pet food and a small middle class, so most consumers cannot afford the relative expense of wet pet food. Nevertheless, wet cat food is a promising category in the Middle East and Africa region, especially in Saudi Arabia, where over the next 5 years it is expected to grow strongly from a low base at 10% CAGR in volume terms.

Leading players

Between them, Mars and Nestlé cover 54% of the wet pet food market. In 2020, supply chain disruptions meant that Mars was outranked by Nestlé, which consolidated its leading position in the subsequent 2 years. From 2022 onwards, Mars reinforced its position by revising its portfolio, investing in existing facilities and acquiring companies such as the premium producer Champion Petfoods in 2023.

Mars is developing rapidly in the emerging markets of Latin America, Eastern Europe, the Middle East and Africa. Nestlé is also gaining market share by developing premium wet cat food and investing in emerging markets such as Thailand. Other top-end market players – General Mills with its Blue Buffalo brand, and Freshpet – demonstrate a strong dynamic in the premium wet pet food segment. The big companies benefited from the economic downturn in 2022 thanks to their stronger resilience during times of increasing operational, logistics and ingredient-related costs. Many smaller companies have been forced to leave the market, facing the absence of high margins and declining consumer purchasing power.

In Asia Pacific, where cat food accounts for 71% of total wet pet food retail sales, the top players are mainly focused on cats. As the market is much more fragmented than other markets around the world, small local brands are developing quickly. As a result, the market share of top companies such as Mars, Nestlé, Maruha Nichiro Holdings and Unicharm is shrinking.

Future outlook

Over the next 5 years, market players’ investments into new technologies will drive the development of new processing methods within the category, such as dry-freeze, raw and biologically appropriate raw food (BARF). Such technologies will make wet pet food healthier and more functional, adding value for pet owners and creating higher margins for producers.

Overall, the wet pet food market is expected to demonstrate resilience to high inflation, and to benefit from the increasing cat population, pet humanization and further growth of emerging markets.