How consumers are keeping their furry friends fed

Global sales of pet food grew to an estimated $120.9 billion last year and are on track to hit $177.1 billion by 2030, according to ReportLinker.

US consumers spent $50 billion on pet foods and treats in 2021, the latest year tracked by Packaged Facts. About 90.5 million US homes have at least one pet – that’s 70%, up from 56% in 1988, the first year tracking started, according to the 2021-2022 APPA National Pet Owners Survey from the American Pet Products Association.

Dogs are the most popular pet, with a presence in 69 million American households, followed by cats at 45.3 million, and freshwater fish and birds at 11.8 million and 9.9 million, respectively.

Pet parents feel inflation’s pinch

Pet food prices have risen along with inflation in every other category. Prices for pet food were up 15.1% in January from the same month last year, according to the Consumer Price Index, and prices for other pet supplies rose 12% in the same period.

A report from Morgan Stanley out last November found that US households are home to 5 million more pets than at the start of the pandemic, and it predicts that spending on pets will grow 8% annually through 2030.

The rise was fueled largely by millennials, who are now the biggest pet-owning demographic group.

“As Millennials become homeowners, delay having children and increasingly have smaller families, they tend to spend more on their pets than older pet owners do, especially on premium food and services,” Morgan Stanley analyst Simeon Gutman said in the report.

“The increase in ownership during the pandemic was driven primarily by this cohort, and they are likely to accelerate the trends toward treating pets like humans and providing premium care. As a result, the COVID benefit to the pet industry likely has a long tail.”

Dedicated pet parents are finding ways to keep feeding their pets their favorite foods as prices rise, including clipping coupons and shopping sales, the report says.

“Consumers are less willing to cut pet spending even when real personal disposable income declines,” Gutman said.

Many are also embracing subscription services and rewards memberships with companies like Chewy, PetSmart and Petco that often offer perks for regular orders and repeat purchases of pets’ favorite foods.

And, while seeking bargains amid inflation, at least one report found that consumers planned to stick with their favorite brands when it comes to pet food. A Pet Trends Report from NielsenIQ found that two-thirds of dog and cat owners surveyed in the second quarter of 2022 had no plans to trade down from their preferred brands, even if a less-pricey option was available.

Supply chain delays

Finding those products became increasingly challenging for many over the past few years, even when money was no object. Highly publicized supply chain challenges often led to empty shelves and reports of shortages of popular pet foods.

Pet food prices rose as a result of months of shortages in 2021 and 2022 related to supply chain delays, and there are signs that pressure has abated this year.

An annual report from Alltech released in January found that global pet food production surged 7.25% last year, and production in the US was up 6.12%.

“Those shelves are just now getting replenished, which means the inflation should finally slow, but consumers have had to make decisions,” Morgan Stanley’s Gutman told the Wall Street Journal last month.

A survey done for the Journal by Zappi in February found that about half of the 1,000 respondents were cutting back on some pet expenses, and one family interviewed for the store reported trading down to less-pricey pet food options.

A separate survey from the American Pet Products Association released in February found that higher gas and grocery prices were affecting some pet owners’ spending – 60% reported spending less on discretionary pet products including toys and grooming supplies, but just 7% said they were spending less on food for their furry friends.

What’s next in pet food innovation?

And, as people continue to embrace pets as family members, buzz has been building around so-called human-grade pet food, which as yet has no legal definition but basically means pet food made with ingredients that are suitable for human consumption. Currently, human-grade food makes up only about 2% of the total category.

At a conference last month, executives from Purina PetCare and its parent, Nestle, shared thoughts on the feasibility and business prospects of doing human-grade food on a larger scale.

“When we look at food from a Purina perspective, we look at function and form,” said Purina PetCare CEO Nina Leigh Krueger said, as quoted in Just food. “And it’s really important to remember that humans get their nutrition from thousands of products and pet owners maybe feed one or two [products] to get 100% of their [pets’] nutrients. We definitely think it’s a space where growth will be but we’re taking our time and making sure that we enter it in the right way.”

Another pet food trend that’s increasingly reflecting human trends is the rise of plant-based options.

Innovation around plant-based dog food is focused on increasing the protein content, eliminating allergens and bringing the price closer to conventional dog food brands, according to a report by Global Insight Services.

Vegan dog foods, which are free of all animal products as well as harmful chemicals and additives have been shown to reduce allergies, improve digestion and raise energy levels, the report says, and can be especially appealing to pet parents who themselves eat a vegan diet for ethical and environmental reasons.