NONFOODS: Pet Food: Pet peeves

The introduction of 38 new pet food products with "no wheat" on their labels since June 4 -- more than were rolled out in all of 2006 -- shows just how fast the pet food industry has changed since the recent spate of recalls that emptied shelves in many supermarkets' pet departments.

Consumers continue to worry about pet food safety, and this concern will likely turn the industry upside-down as many shoppers shy away from traditional mass-produced pet food and turn to alternative offerings. This could cause a brand shift in the market worth $1.3 billion to $4.3 billion in pet food retail sales, according to a new study by New York-based market research firm Packaged Facts.

The report, Product Safety and Alternative Pet Foods: North American Market Outlook, traces government, industry, and consumer responses to the pet food recall crisis. It also probes the implications for North American sales of alternative pet foods, which are now being touted as both safer and healthier than their traditional counterparts.

The main beneficiaries in the brand-switching trend, Packaged Facts predicts, will be higher-quality pet foods -- especially natural and organic pet foods, but also the often overlapping product segments of raw/frozen, refrigerated, homemade, 100 percent U.S.-sourced, locally grown, and other smaller-batch pet foods.

While many of these alternative brands had significant momentum before the recall, concern over pet food safety stands to boost sales of these items even more, according to the report.

Natural/organics star

Long before the pet food recall, natural/organic products were among the brightest stars in the category, with annual sales gains far surpassing those of the market as a whole. Packaged Facts' August 2006 report, Pet Food in the U.S.: Riding the Premium Wave, projected that U.S. sales of natural (including organic) pet food would top the $1 billion mark by 2010, with the organic segment approaching $100 million, reflecting compound annual growth rates of 15 percent and 25 percent, respectively.

In the new edition of its U.S. Market for Natural, Organic, and Sustainable Pet Products report (currently being prepared for publication in September 2007), Packaged Facts will adjust those figures sharply up, based on the aftermath of the recalls and other relevant developments.

As bad as the pet food recall has been for marketers of big-batch mainstream pet foods, by all reports it has been a boon to marketers of smaller-batch natural and organic pet foods. Despite the protests of "regular pet food" manufacturers that there's no scientific proof that such products are healthier, many natural and virtually all organic products contain higher-quality ingredients and are produced in more closely monitored environments, according to Packaged Facts. In many cases, this is simply a function of the companies and production batches' being much smaller, making it possible for owners to be more directly involved with the products, from ingredient sourcing to final inspection.

Moreover, many consumers perceive natural and organic products to be healthier and safer.

Raw, frozen, and refrigerated

The June 1 issue of Progressive Grocer reported how St. Louis-based Schnuck Markets serendipitously installed refrigerated pet food cases for its Fresh Pet line of pet food the week of the recall, and saw sales of the refrigerated products skyrocket as pet owners sought out offerings free from the problematic additives and preservatives -- and the resulting risk of contamination -- found in traditional pet foods.

Packaged Facts believes that refrigerated pet food will be commonly available in supermarket chains nationwide within the next two years, if not sooner.

Although the Association of American Feed Control Officials doesn't permit the term "human-grade" to appear on pet food labels, many smaller pet food makers also promote their products as being made in part or in whole from human-grade ingredients.

In the wake of the recall, human-grade, both as a production standard and a marketing positioning, will gain importance in the North American pet food market in the months ahead, according to Packaged Facts, since such ingredients are perceived by consumers to be safer and higher in quality.

The inability of government agencies to guarantee that pet and human food ingredients imported to the United States are safe suggests that "100 percent U.S. -sourced ingredients" will emerge as a key pet food market positioning on new and existing products alike, especially among alternative products.

For their part, larger companies that can't afford to completely nix imported ingredients will be mounting a concerted effort to get the word out that they're curtailing imports of ingredients from questionable locations.

The full report is available for purchase at
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