The US and Canada: a comparative profile
While the US pet population increased by 4% for dogs and 3% for cats last year, Canada experienced quite flat growth. The same trend was observed in pet food sales.
Despite being neighbors, the pet food markets in these North American countries are moving at different speeds. There are several reasons for this.
Changes affect pet population growth
As companies finalized work-from-home policies in the US in 2021, many consumers realized that they would have extra time to commit to raising a pet, so adoptions continued to see strong growth. After a 4.2% rise in 2020, the US dog population grew a further 4% in 2021 to reach 87.9 million dogs. The country’s cat population also continued to grow steadily, increasing by 5.3% in 2020 and 3.8% in 2021 to reach 87.3 million cats.
Things went much slower in Canada, with both the dog and cat populations showing relatively flat growth last year, at 0.2% and 0.1% respectively. In 2021, the country’s dog population was 7.4 million and the cat population was 8.2 million. In contrast to the US, increased consumer mobility led to fewer pet adoptions in Canada in 2021, as people spent less time at home, and trends began to normalize.
US sales – and prices – up
Continued growth in pet populations drove sales of pet food in both markets, particularly in the US, where the pet food market is significantly larger than in Canada. Retail volume sales for dog and cat food in the US increased by 5.5% in 2021, compared to 4.5% in 2020.
US value sales growth was 12% in 2021, up from 8% in 2020. This higher value growth was driven partly by premiumization, but also by supply chain disruptions and inflationary pressure that contributed to higher unit prices across all pet food categories.
Shortages as well as supply disruptions directly impacted ingredients suppliers and product manufacturers. For example, the cost of chicken – the most common protein used in pet food – increased substantially in 2021, putting pressure on margins and retail prices. So many pet food companies were forced to raise prices that year, and they have implemented even larger price hikes in 2022 as supply issues and inflationary pressure have worsened.
A different picture in Canada
The trend was a bit different in Canada, as growth in dog and cat food significantly slowed in 2021. Retail volume sales increased by 1.2% in 2021, compared to 4.1% in 2020. This slowdown in volume was mainly fueled by the slower growth of pet populations in 2021.
Retail value sales increased by 4.6%, compared with 8.2% in 2020, as the Canadian pet food market faced the same supply chain disruptions as the US market. If inflationary pressure begins to normalize in 2023 and beyond, prices in both markets are expected to stabilize and growth will follow a more familiar trajectory.
Pandemic-related retail trends
After a strong year in 2020, e-commerce maintained high levels of pet care growth during 2021 in both the US and Canada, and this has continued into 2022.
As new variants of the COVID-19 virus emerged in 2021, many consumers continued to avoid in-store shopping to lower their risk of getting sick.
Additionally, people appreciate the convenience of online ordering, as a lot of sites offer a wide range of options at various price points, as well as subscription services.
Alongside this continued growth in e-commerce was a rise in sales at bricks-and-mortar outlets such as supermarkets and other mass channels in 2021. These channels struggled in 2020, as most consumers didn’t leave their homes to do any shopping, and many ordered their goods online. But sales picked up in 2021 for these outlets, as well as for pet superstores. Going forward, consumers are likely to adopt an omnichannel approach, shopping both online and in stores.
The future of North American pet care
In 2023 and beyond, the premiumization trend is set to re-emerge in wet and, particularly, dry dog food, buoyed by an anticipated post pandemic economic rebound and heightened local consumer interest in health and wellness, which many owners will apply to their pets too.
Consumers will also continue to be fussy about food for their pets, many of them increasingly seeking out nutritious food with no artificial colorings, flavors or preservatives. Humanization remains an important trend in pet food, as owners increasingly view their pets as valued family members and seek to provide the best care for them. More and more dog and cat foods are looking less like kibble and more like food that humans would eat, with fresh meat, grains and vegetables.
Both markets will see continued positive growth for retail volume sales of dog and cat food through 2027, as pet populations continue to rise, with the US market increasing at a compound annual growth rate (CAGR) of 0.91% and the Canadian market at a rate of 2.65%.