food

Animal Feed Market – Trends, Industry Competitiveness and Future Prospects

PET FOOD MARKET

The pet food market was valued at $74.9 billion in 2016. North America had the largest share of the world market in 2016 with over 35%. The second largest market is Europe, followed by Asia-Pacific with around 20% market share, accelerating the trend of pet owners around the world. In North America, the United States holds the largest market share of pets and pet owners, which are expected to register a high CAGR over the period 2017-2022 (forecast period).

TASTE FOR NEW EXPERIENCES AND PORTIONS AS A PLEASURE ALIBI

Flavors and textures become bolder, more complex, more authentic and more specific. The correlation of pet food and the modern formats where freeze-dried bits are mixed with kibble or treats for texture variation is leading pet owners to choose from a range of different shapes, textures and flavors. In addition, clean labeling continues to increase. Health-conscious consumers are looking for permissible treats, like treats in smaller portion sizes or sweets with healthier ingredients like chia seeds or yogurt. Pet treats are evolving in terms of ingredients with functional or other nutritional benefits that allow pet owners to indulge their pets without the guilt. New dog food products accounted for 80% of global launches in 2015. September 2015-September 2016 launches keep intact the health-related trend of new products by category. The share for cat food was around 68% worldwide. This health and wellness trend has generated good sales for manufacturers. Some examples in this regard are Hill’s Ideal Balance, a new range of dog and cat food combining natural ingredients with Hill’s perfectly balanced diet, now available in South Africa. CORE® RawRev, a new high-protein, grain-free product, is launched by Wellness CORE®, a group of grain-free, natural animal nutrition companies.

IMPROVEMENT IN DISTRIBUTION NETWORK LEADS TO GROWTH IN SALES OF PET FOOD

The high level of internet connectivity available in major countries encourages the use of e-commerce websites as an effective sales channel. The concepts of convenience, prosperity or exclusivity, security and market awareness play a very important role in developing countries. The unreliability of local goods, as recent scandals have shown, also makes people dependent on foreign goods. These are made readily available via e-commerce, further increasing sales. With the industry’s two pet supermarkets, PetSmart and Petco, the e-commerce channel is exploding in pet product sales. The late adoption of market connectivity in the smaller markets of small economies like Vietnam, Thailand, etc. is a source of infrastructure delays and almost negligible product awareness. These stores offer the emerging market advantages of less regulation and competition. As e-commerce increases, companies are negotiating the ever-changing internet landscape with factors such as dealing with giants like Amazon deciding to sell through similar e-commerce sites and mergers and acquisitions. In April 2017, for example, PetSmart announced its acquisition of Chewy.com, further dismaying independent pet retailers. In response, Tuffy’s Pet Food, a manufacturer of independent and family-owned companies, announced it would withdraw its products from Chewy as it would be owned by the largest US pet store chain. Although Tuffy’s is reporting very positive feedback, not every business breaks away from major e-commerce sites so easily.

“FREE FROM ALL” AND “FLEXITARIAN EFFECT” BOTH GO THEIR WAY

Although consumers today are part-time vegetarians, they seem to be doing the opposite when it comes to pet foods. Pet owners are looking for diet options that focus on the carnivorous nature of dogs and cats, increasing the number of products with high and fresh meat claims. Despite the demand for carnivorous diets, vegetables are still in the mainstream and manufacturers are innovating their existing products. “Free from” for everyone – the “free from” trend has been growing for the last few years and has now entered the mainstream. Pet food is formulated with people in mind, containing organic and non-GMO ingredients. These ingredients are used in low-carb recipes and have gluten-free claims on new grain products, rising from one in 15 in 2011 to one in five in 2016. New product launches with organic or non-GMO ingredients are seeing growth in the market. Sales of organic and natural feed are expected to increase by 14.6% annually over the next two years. At Petco and PetSmart, organic pet food purchases account for 7.1% and 5.6%, respectively, and organic veterinary clinic purchases for 5.3%. Brands are communicating more about production processes due to consumers’ increasing interest in naturalness, authenticity and transparency. This also applies to shoppers, especially those who want products in non-traditional formats such as raw, freeze-dried, frozen and baked. Balchem​​Corp., a global health and nutrition company, has introduced a new line of specialty nutrients and unique processing additives. The Omega Plus range was launched in the South Island in September 2016 after two years of continuous research and development. Additionally, Bob Martin launched Simply+, a line of products marketed as “nutritionally advanced food that provides dogs with all the essentials of a healthy diet.”

CROSS BORDER ZONE TO MEET STRONG DEMAND

The domestic market in China is growing at an annual rate of over 30% and is poised to accelerate at the same pace and reach CNY 150 billion and above by 2022, making it the third largest market globally. In addition, Hangzhou, Zhejiang Province, inaugurated the first cross-border pet industry pilot zone in Jianggan District. The Experimental Zone will steer reforms to regulate and authorize cross-border imports. It will study the introduction of national standards in the industry and promote the export of domestically made products. In addition, more than 35 companies have been established in the trial zone, including cross-border e-commerce sites such as Tmall, Kaola Beibei and related logistics and warehousing companies. The zone basically enables one-stop services and aims to register open, transparent and intelligent pet food import channels and regulatory policies. Similar efforts are being made by countries to focus on growing pet populations and trends. Market participants are taking full advantage of this situation and investing in R&D for innovative product launches.

NOTABLE MARKET DEVELOPMENTS

1. Nestlé Purina opened a new manufacturing facility at its Bük plant in northwestern Hungary, making the plant the largest manufacturing center in Europe, and opened the US$86 million factories in Brazil. This move is intended to help Nestlé Purina grow faster than the domestic market.

2. Carna4: Formulas inspired by health food trends. This manufacturer takes inspiration from the human health food industry to formulate innovative and wholesome recipes for dogs and cats.

3. PetLife Exceeds Expectations for Acquisition of Dr. Geoff’s real pet food. PetLife Pharmaceuticals, Inc., a developer of a new generation of powerful veterinary anticancer drugs and pet nutraceuticals, announced the acquisition of Dr. Geoff’s Real Food for Pets™ and expansion plans for a nationwide launch.

4. German company entering Thailand. Interquell, a Germany-based dog and cat food company, entered the Thai industry by forming a joint venture called Happy Pet (Thailand) Co Ltd with partner Technic Pet Holding, Pets International reported. Interquell holds 49% of the joint venture. Interquell owns the premium brands Happy Dog and Happy Cat.

TOPICS COVERED IN THE REPORT

How will face-to-face interaction fuel the pet food market in the digital age?

Is low thiamine cat food the cause of death in Australian cats?

Gluten-free foods, GMO foods that have made a name for themselves in the pet food industry.

Edible insects are creeping into pet food popularity.

Humanization and premiumization at peak levels in the pet industry.

Will the US and China continue their dominance in the pet food market? What are the emerging markets?

Will the growing market connection in Asian countries Vietnam, Thailand etc. strengthen the Asia-Pacific pet food market;

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Amine

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