Dog food manufacturers say the demand for quality, nutritionally dense products and the power of communication are driving retail food sales.
Pet food sales continue to grow, despite a frustratingly slow recovery in just about every other segment of the economy. Sales hit $18.76 billion in 2010, a 6.8-percent jump over the previous year, and they are projected to increase an additional 4.1 percent in 2011 to $19.5 billion, according to the American Pet Products Association (APPA). Of all pet-related retail spending, food is the largest category.
This is good news for pet industry retailers, but the news carries challenges. Central to this growth in spending is a consumer passionately committed to the pet as a member of the family and armed with knowledge and the will to use it. To sell effectively, dog food company officials say, storeowners must be well-informed about their products and able to communicate technically sophisticated concepts to their customers.
Spreading the Word
“The challenge for retailers is there are lots of good products out there,” says Diane Peterson, Mulligan Stew’s chief sales and marketing officer. “It’s up to them to learn.”
Of course, Mulligan Stew also does its part. The company offers informational webinars to train storeowners and employees about the increasingly complex science of nutritional formulation and how to communicate the relative benefits of individual products.
“Retailers have to get to know how the product works,” Peterson says. Consumers might be well informed and willing to become better informed, she says, but they also need to trust the store employee and feel confident that retailers know what they are talking about.
Jill Gainer, director of communications and consumer insights at Nature’s Variety, agrees. “Retailers are really important in spreading the message of healthy diets for pets,” Gainer says. “And it’s great that the retailers are so knowledgeable, because something we continue to see increasing is consumer self-education on health, and nutrition’s contribution to health. They aren’t accepting the status quo and are increasingly turning to natural/holistic.”
Industry research bears out this trend toward greater demand for health. Market-research company Packaged Facts reports that health-oriented products are on track to becoming the fastest-growing category in the pet industry over the next five years.
Dog food manufacturers have known for many years that pet owners care deeply about the health of their pets, and the choices they make about canine diets reflect this. Of course, as foods manufacturers increasingly use higher-quality ingredients, prices have climbed. Dog food sales testify that consumers are willing to pay higher prices, as long as they see the benefit.
“Prices are a constant consideration,” says Gainer. “Retailers can communicate the advantages of these higher quality foods in terms of better pet health and fewer trips to the vet.”
Social Media Marketplace
No discussion of communications is complete that does not include the role of social media. Facebook, Twitter, podcasts, email, smart phone technology–social media has revolutionized the marketplace, as it has virtually every other facet of modern life worldwide.
“For retailers, social media can be a game changing tool,” says Frank Hon, director of operations at Canidae Natural Pet Food Company. “A single store can invigorate hundreds or even thousands of customers to be their ‘brand evangelists’ who will endorse that store to their friends. This is no different then an old-fashioned, third-party recommendation, but social media technology makes it easier for news and opinion–both good and bad–to spread quickly.”
Lauren Grimm, PR director for Fromm Family Pet Food, says the number of Facebook fans grew from 137 in November 2009, when the company first launched its social media presence, to more than 4,500 fans today.
“We’re averaging about 100 new fans a day,” she says. The challenge is maintaining a level of personal responsiveness that social media demands. It’s time-consuming, but it’s important, Grimm said.
Gainer agrees. “Facebook is a place where a retailer can let the essence of [the] store come through–much more so than a TV, radio or print ad,” she says. “You can have a real-time, live conversation with people who want to interact with you. Just remember, it’s a two-way street, and consumers expect to be heard and replied to when they’ve engaged with you in a social media setting. So, you can’t just put up a Facebook page, and let it ride.”
What’s Hot in Canine Diets
Dog foods continue to be developed and marketed to target increasingly specific nutritional needs, which, of course, demands that retailers work hard to stay up-to-date and to be able to communicate with consumers.
“Pet owners have proven steadfast in not wanting to compromise on their pets’ nutrition, and have even stated in industry surveys that they would reduce their expenses in other areas before downgrading their pets’ diets,” Hon says.
Among some of the most notable trends dog food companies are emphasizing are raw diets. According to Packaged Facts, the sale of frozen or refrigerated raw dog food jumped 10 percent in 2010. Meanwhile, many manufacturers are meeting the growing demand for grain-free diets and formulas that target specific health issues. Pet owners are particularly concerned about food allergies that many dogs suffer from, which are caused by poor-quality or inappropriate ingredients.
“We see several trends dominating the market today in terms of increasing demand and sales–grain-free foods and foods with added beneficial nutrients like prebiotics and probiotics,” says Hon. “Sales of natural pet foods are outpacing the greater market segment, and within that, grain-free foods are rising even faster with a projected 65-percent gain this year. Most of those sales are occurring at pet specialty, not big box.”
Mulligan Stew is focused on formula-driven products that target specific dietary or nutritional needs for dogs. “We’re known for alternate therapies,” says Peterson, adding that the company has developed patent-pending formulas using four ingredients that address important health issues.
Nature’s Variety is also formulating product geared toward particular nutritional needs. The company has recently introduced a line of foods that offer a single-source ingredient to address the needs of dogs that have sensitive stomachs or severe allergies.
Meanwhile, grain-free diets remain strong performers for Fromm, says Grimm.
In the minds of dog owners, food represents health and wellness. Dog food companies get that and are providing a rich and, it might seem at times, overwhelming range of dog food formulas based on hard nutritional science and complex ingredient panels. Pet owners will pay a higher price, but only if they’re convinced they’re getting what they expect. Store operators can profit only by learning fast and communicating effectively. With the kind of projected growth this segment is poised for, that’s not a bad investment.
Dan Headrick is a freelance writer who lives and works in Raleigh, NC. Dan and his wife Pam Guthrie opened Wag Pet Boutique in 2003. The store received numerous community and industry awards.