KibbleCon 2022, hosted by Kansas State University’s Pet Food Program and K-State Innovation Partners, kicked off the evening of October 19 with a welcome reception at the Bluemont Hotel in Manhattan, Kansas, USA, featuring highlight the conference sponsors (full disclosure: Petfood Industry/Petfood Forum is the exclusive media partner for the 2022 event). Attendees, however, got down to business on October 20, with a full day of presentations and discussions by various industry experts, including K-State professors, ingredient suppliers, pet food manufacturers. companies, data analysts and equipment suppliers.
The current pet food economy
Dr. Aleksan Shanoyan, Associate Professor in K-State’s Department of Agricultural Economics, discussed “principles and findings from the latest research in pet food economics and management” as well as recent consumer research that show that pet owners are becoming more and more feature-oriented when it comes to feeding their pets. In an analysis of online consumer reviews of pet food, “health” and “ingredients” were by far the top two attributes mentioned.
In a mature market, Shanoyan said, it can be difficult to stand out as a pet food company with such dominant demands from pet owners, but it can be done by keeping an eye on differentiation based on specialization, whether physical (formulation, processing, packaging), perceptual (marketing and advertising) or supply chain (organic, local, human quality).
During the luncheon keynote, “Measuring the pet industry in 2022 – what’s trending and what’s next?” Chris Storves, Associate Client Director at NielsenIQ, dipped into the pet food industry’s current economic challenges, particularly inflation.
“Throughout the United States, pet care inflation continues to rise visibly,” Storves said during his presentation, with the pet care price index sitting at 130.73 in September 2022, up 25.03 points compared to September 2021. In this context, prices continue to rise. in key categories, including cat food (price index of 130.6, up 25.12 points from the previous year); dog food (133.8, up 28.11 points); and especially bird food, which was indexed at 133.8 in September 2022, an increase of 30.1 points compared to 2021.
It’s important to note, then, that inflation is a major contributor to dollar growth in the pet care space, Storves said — in fact, 91.4% of dollar growth. dollar in pet food is currently due to inflation (only slightly lower than the total 94.7% growth due to inflation in overall pet care).
The United States continues to be, by far, the largest pet food market by revenue, according to Guy Allen, senior economist for K-State’s IGP Institute and speaker on “The Volatility of Pet Foods.” prices, changing supply chains and other economic drivers of food, ingredients and agricultural products. In 2021, according to its presentation, US pet food market revenue reached approximately US$43.68 billion, while the UK came in second with US$6.6 billion. When it comes to U.S. export markets for dog and cat food, Canada continues to be the country’s top partner, followed by Mexico, Japan, South Korea, China and the United States. Australia (based on 2020 data).
There are plenty of challenges beyond inflation that affect the global market, according to Allen. Among the industry’s main concerns are geopolitical issues such as the Russian-Ukrainian war, China-US relations, rising tensions between Iran and Israel and in the South China Sea, current crude oil prices ( seven-year high), and increased government policies around the world to restrict trade and protect domestic markets. Fundamental supply and demand issues are also at play due to factors such as weather, record demand in the face of tight supply, rising fossil fuel prices and animal health issues.
How do consumers deal with economic challenges?
In response to this, pet owners continue to say (for now) that their brand purchases aren’t going to change. Rather than shifting down in the market (from super premium to premium, or from premium to economy), customers are instead shifting their buying habits to things like smaller packaging to get temporary relief from price at checkout, according to Storves. In fact, while larger-sized bags continue to drive dry dog food sales, the increased growth is coming from smaller-sized bags, he said. Conversely, in the dry cat food space, small bags are driving sales, but the growth is coming from larger bags, perhaps because cat owners think they can “raise” the price a bit in order to to buy in bulk to save money in the longer term. .
Online shopping continues to grow, with online growth dwarfing that of in-store shopping for the majority of pet care categories, according to Storves. This does not mean that there is no in-store purchase; in fact, omnichannel shoppers (those who buy both in-store and online) are dramatically increasing the value of sales in the pet space right now, Storves said, representing 28% of pet shoppers. pet and 53% of pet dollars.
Some key pet food segments are also seeing accelerated growth in 2022, showing the continued willingness of pet owners to go the extra mile for their pets. Meal enhancers (excluding treats) are up 35.5% from 2021, while 100% freeze-dried products are up 33.2%. More modestly but still significantly, frozen products are up 17.0% compared to 2021 and those in the “plain” segment are up 12.2% compared to a year ago.
Suffice it to say that although the global economy is far from stable and everyone is looking for ways to keep their money, pet food remains an area of growth and opportunity in a period hard.
For more on KibbleCon 2022, including the full speaker list and itinerary, go to www.kibblecon.com.