Recession-Woof!

Paul Newman once won a $10 bet with Jay Leno after eating from a can of Newman's Own human-grade Chicken and Brown Rice dog food on The Tonight Show. While it's doubtful other pet owners will follow suit, many may have been tempted given the restaurant-quality recipes, high-end cuts of meat and grilling, steaming, simmering and marinating that go into today's premium pet foods. But the human appeal

Paul Newman once won a $10 bet with Jay Leno after eating from a can of Newman's Own human-grade Chicken and Brown Rice dog food on The Tonight Show.

While it's doubtful other pet owners will follow suit, many may have been tempted given the restaurant-quality recipes, high-end cuts of meat and grilling, steaming, simmering and marinating that go into today's premium pet foods.

But the human appeal doesn't end there. More and more products boasting antioxidants, omega-3s and fiber are finding themselves alongside people foods touting similar components on pantry shelves. There's even occasion-based foods like appetizers for cats and bacon and egg breakfasts for dogs.

“It's all geared to appeal to human sensibilities because pets don't really care that much,” noted David Lummis, senior pet market analyst for Packaged Facts, Rockville, Md.

Such foods have gained momentum since the major pet food recall of 2007 brought food safety concerns to the fore. Consumers demonstrated their willingness to pay for natural, domestically sourced ingredients, and manufacturers, in turn, introduced high-end products that fit the bill.

More than one in 10 (11%) pet foods launched so far this year were premium, while value items comprised just 2%, according to Mintel.

Among the recent introductions are Bit-O-Luv's Bistro Beef Recipe Dog Treats that claim to be slow-roasted to perfection with USDA beef; Fancy Feast Elegant Medleys Tuscany Collection, including meat and fish in savory sauce with long-grain rice and garden greens; and Lazy Dog Cookie's Banana Cream Pup-Pie Dog Treats made with 100% all natural human-grade ingredients such as freeze-dried fruit, nuts and vegetable toppings.

Ingredients like trout, Yukon Gold potatoes, carrots, zucchini and Fuji apples can be found in Merrick Pet Care's Campfire Trout Feast; cage-free, flax seed and apple in Dogswell Veggie Life Vitality snacks; and whole wheat flour, non-fat milk and eggs in Blue Dog Bakery treats.

Despite economic pressures, pet owners continue to make room in their budgets for this premium fare.

“It's continued, rather surprisingly, through the recession that pet owners have been spending more on pet food,” said Lummis.

Many of these purchases are driven by concerns with health, especially since fewer than 1% of pet owners have pet insurance.

“Partly to avoid catastrophic costs later on, more and more pet owners have been trading up and buying healthier foods,” Lummis said.

The trend is evident at Straub's Markets, St. Louis, where sales of Castor & Pollux Organix and natural Ultramix dog and cat foods, are selling well.

Items in the lines count organic fruits and vegetables and free-range chicken among their ingredients.

“Our sales on this line and other premium foods have been on the rise for the last several years,” said Straub's grocery manager Roger McElroy. “I expect sales to continue to rise as more and more customers discover their pet's positive reaction to premium-quality foods.”

Shoppers at Food Lion, Salisbury, N.C., are likewise investing in their pet's diet, said Jimmy Faller, category manager of pet and baby.

“They want their pets to live longer so they're looking for more holistic products,” he said.

In addition to buying foods that support dental health, fight against hip dysplasia and improve pet's skin and coat, shoppers are avoiding costly veterinarian visits by medicating dogs and cats at home with products from Hartz, Faller said.

National-brand loyalty is also being demonstrated — more so by dog owners than cat — since they fear that unfamiliar brands could wreak havoc on a dog's stomach, which tends to be weak, added Faller.

“Changing their diets could cause distress … and a big mess,” he said.

While Food Lion shoppers have scaled back on wet dog food purchases to help manage costs, Purina's Beneful Prepared Meals are the best-selling premium item in stores. The wet meals come in varieties like Savory Rice & Lamb Stew with peas and carrots; Roasted Turkey Medley with corn, wild rice, peas and barley; and Beef Stew with peas, carrots, rice and barley.

Sales of items in that line have also fared well at Bashas', noted Jack Paulk, category manager of pet, paper and laundry for the Chandler, Ariz.-based chain.

He attributes Beneful's success to its clear plastic container that lets shoppers see the meal. Prices range from $1 to $1.19 per container.

“When you have an upscale product like that, it has to have a little eye appeal,” he said.

Paulk blames packaging that conceals products like Purina's Chef Michael's canine creations for less than stellar sales. But it's doubtful that premium purchases will fall off anytime soon.

A Packaged Facts' February poll of 1,668 pet owners found that only 19% of respondents agreed that they anticipated spending less on pet food/supplies in the next 12 months. Of that 19%, only 5% agreed a lot with this forecast and 14% agreed a little.

“People are going to take care of their pets and their babies first, and they'll sacrifice the extras for themselves,” noted Paulk.

At Bashas', that means purchasing pet foods like Rachael Ray's Nutrish dry food that uses natural ingredients, and donates sale proceeds to pet charities.

Del Monte's Gravy Train dog food is also selling well due to its price point, said Paulk, and shoppers are bypassing Purina ONE dry dog food, in favor of Purina's Beneful dry dog food, priced slightly lower.

“Customers tend to go to Beneful thinking there are good things about it, yet it's priced a little better than ONE,” he said. Private-label “dog food is also going gangbusters.”

Sales of many canned wet foods have fallen off a bit due to higher tin costs, but Paulk still deems the category “recession-proof.”

Part of the reason sales haven't suffered as dramatically as in other categories is because, as they cut back on sales of pet clothing and toys, shoppers aren't frequenting one-stop pet shops as often. Instead, they are seeking pet food at grocery stores, Lummis said.

“The consumer really doesn't want to shop in the pet specialty store and pay the higher prices,” said Faller.

Food Lion has successfully courted these consumers with its pet food club that awards age-specific offers for pet food to owners as they leave the checkout.

“We've seen penetration increase as a result,” said Faller, who declined to elaborate.

Food Lion shoppers are also managing costs by buying in bulk, purchasing items on promotion and trading to private labels, especially for their cats.

Later this month, the chain will expand its Home 360 pet brand items when it rolls out canned wet dog foods that benefit joint and tension, skin and coat, and digestion.

“They're definitively equivalent to the national brand, if not exceeding it,” Faller said.

Top New Pet Product Marketing Claims in 2008
Natural 265
High Vitamins 238
Upscale 224
High Minerals 166
No Preservatives 158
High Protein 142
Source: Datamonitor's ProductScan Online