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According to Nielsen data, U.S. pet owners spent 46% more on pet food online in 2020 versus 2019.

Rising demand, supply issues impacting pet food category

Banner sales growth a double-edged sword as industry experiences manufacturing hiccups

With the pet food industry coming off a banner 2020, strong demand due to a growing pet population and supply disruptions are causing scattered shortages of pet food across retail channels.

During Global Pet Expo (GPE) Digital Access 2021, Steve King, president and CEO of the American Pet Products Association (APPA), noted that pet food and pet product supply and transportation issues stemming from the pandemic are likely to continue throughout 2021 and into the first part of 2022, even as the U.S. pet care market experienced significant sales growth that will also carry through this year.

The latest APPA data on the total U.S. pet market showed growth of 6.7% in 2020, reaching $103 billion for the year — the first time sales have ever topped $100 billion. Pet food was the main driver for this growth, increasing 9.7% for sales of $42 billion.

According to Nielsen data, U.S. pet owners spent 46% more on pet food online in 2020 versus 2019.

The strong sales growth, especially in e-commerce, had a significant impact on supply chains in the pet industry, King noted, leading to some product and raw material shortages that continue today. Product manufacturers were challenged by shifts in production, while also dealing with worker safety protocols due to the pandemic, worker shortages attributed to illness or quarantining and competitors for labor arising from companies such as Amazon. All of these factors have led to supply disruption.

In addition, some shortages of raw materials, from ingredients to packaging materials, like aluminum cans for wet pet food, arose and continue now.

"The availability of transportation and drivers, as well as weather incidents, can impact the movement of ingredients and finished products across the country,” added Dana Brooks, president and CEO of the Pet Food Institute, based in Washington, D.C., in an interview with WGRZ in Western New York. “This can be further compounded by regulatory and trade developments on supplies and ingredients that ripple up the supply chain, such as delays of international shipments or slower inspections due to the pandemic."

Brooks also said pet owners, many of whom are working from home, are spending more time with their animals, feeding them more and buying more treats.

"The Pet Food Institute (PFI) strongly encourages shoppers to only purchase the amount food they would regularly need. Be assured that America’s pet food makers are working to safely produce food for your pets, and we recommend contacting the individual company for assistance regarding a specific dog or cat food product," Brooks said.

Wet food in cans may be harder to come by for a few months, e-commerce pet food retailer Chewy CEO Sumit Singh told Yahoo Finance Live in late March.

"Wet food is a really popular category within pet food and it makes up roughly 20% or 30% of the category. What's happening is a high-quality problem to have actually. Three or four manufacturers produce wet canned food in the United States and they were running high utilization levels given the secular trends in pets and the demand arrived, and shot the capacity constraints. So as a result, you have an imbalance and a bit of a shortage," he said. 

"The shortage is at the industrywide level, so like isolated out-of-stocks. We are working very closely with these manufacturers and vendors to be able to course correct. It's going to take a few months before new capacity comes online, but ultimately there should be new capacity released into the marketplace and the situation should go back to normal. We are being hyper vigilant on this right now, and so far we are not seeing material loss of demand and momentum as a result of this."

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