The pet food category only continues to grow in terms of dollar share, and increasingly the humanization of pets also continues to be a strong trend in U.S. households.
Pets are being treated like family now more than ever before — think pet daycares and pet spas — so it makes sense that they start eating like the closest of relatives.
According to recent research by Bloomberg Intelligence, the pet food industry continues to put on some serious weight in terms of total dollars. In the U.S. alone, the pet market is expected to rise from $128.6 billion to $195.6 billion by 2030. The nutrition sector is leading this charge, as pet owners continue to spend most of their pet budget on food. The Bloomberg survey also said 27.5% of respondents go to either Target or Walmart for their pet products.
The data from Bloomberg indicates that the U.S. currently holds a 47% share of the global pet food market — a number expected to grow to 55% over the next seven years. When it comes to the premium/fresh, those options currently only account for 1% of the total pet food sector, but it’s a sector on a much faster growth pace than any other pet food category in the near future.
Market experts are predicting that fresh pet food will ultimately account for $6 billion in U.S. sales by 2030, ultimately accounting for 11% of the market.
We are no longer talking about just scraps under the table. Shoppers are
putting everything they have into the treatment of their pets, and health and wellness is of the utmost importance. Quality food, including the refrigerated variety, is at the top of the grocery list … and pet owners are buying, even despite inflation.
The rise of fresh
The growth of fresh pet food can be traced back to the emergence of organic human food about a decade ago, according to Diana Rosero-Pena, a senior analyst at Bloomberg Intelligence.
“There has been that movement of being more cognizant about the food that you consume,” she said. “And because there has been the humanization of pets in the past 10 years as well, and they are now considered family, then that care is going to their [pet] feeding demands as well.”
“We look at the total for the pet food category, but [fresh] is where we are seeing exponential growth,” said Sarah Marzano, director of retail strategy at Chicago-based market research firm Circana. “And that goes back to this notion of the consumer being really hyper aware of health and wellness.”
For the rest of 2023, retailers can expect to see steady numbers in the pet food category. After seeing double-digit growth in the early months of the year, Rosero-Pena said she believes the buying pace will slow slightly heading into the second half of the year. She said that pattern should hold going into 2024.
Highlighting value, along with health and wellness properties, will be important on the store floor, according to Marzano. But so far, pet food seems to remain inflation proof, as shoppers continue to stick to quality, premium brands despite the continued rise in prices.
Circana data indicates a consistent demand in pet food and treats despite increasing prices. Shoppers remain loyal to national brands versus private-label brands.
Retailers like Walmart and Target have expanded their pet food selections recently and Rosero-Pena said the increased variety should be a major driver of sales as 2023 rolls to a close.
Ecommerce and pet food
Ecommerce has been on the rise for pet food purchases since the COVID-19 pandemic, but there has also been an uptick in foot traffic at brick-and-mortar locations, according to Marzano. Along those same lines, overall purchase volume has been on the decline because shoppers are no longer in the stock-up mode brought on by the pandemic.
Again, the increase in more shoppers coming into the store is an opportunity for grocers to “coax those consumers into making some of those purchases that are less replenishable,” said Marzano.
U.S. ecommerce pet food sales are estimated to reach $57.7 billion by 2030, capturing nearly a third of the market (29.5%) compared to $27.9 billion in 2022, according to Bloomberg Intelligence research.
Still, annual growth in ecommerce sales dropped by more than 20% over the last few years and is closer to 10% as the pandemic fizzles out.
In early May, Instacart announced the expansion of its partnership with PetSmart to offer same-day delivery from the Instacart App and website from nearly 1,500 PetSmart stores across the U.S.
The expansion into the U.S. follows the successful launch of the partnership to power same-day delivery from over 150 PetSmart stores in Canada.
Millennials and Gen Zers have been at the forefront of the health and wellness focus when it comes to eating, so it is no surprise that both groups are using the same approach when it comes to their pets. Research also indicates that both groups are the ones who are willing to pay a little more for quality.
“The younger generation has a higher incidence of pet ownership,” said Marzano.
Bloomberg’s Roser-Pena said younger generations are simply more adamant about feeding their pets better, and “as Gen Zs become of age and start getting jobs themselves, they also seem to be more prone to have pets or getting another pet in the next five years.”
And with pets come health concerns and maintenance. Roser-Pena said the penetration of pet insurance is less than 5% in the U.S., which means more shoppers are turning to the healthy, premium pet food as a way to try to avoid unnecessary veterinary costs down the road.