How the DCM Crisis Has Affected Pet Food Sales
While the lasting impact of the FDA’s report is unknown, its influence is clear.
Without a doubt, the DCM crisis has shaken up our industry. The fast rise and fall of grain-free pet food has been a disruptive force on both category and industry sales. While the lasting impact is yet to be seen, what can be told is the measured influence the DCM crisis has had on the current state of the industry, as seen by Nielsen numbers.
For context, many pet food manufacturers and retailers saw the grain-free trend as a sizeable opportunity and found success through offering primarily or exclusively grain-free pet foods. In fact, out of the top 150 food brands in the U.S. pet retail space, over a quarter saw 90 percent or more of their total business coming from grain-free foods and treats. According to Nielsen, in pet retail (specialty pet food stores), grain-free food and treats reached nearly 50 percent of all dollars sold in 2019, and in the traditional food/drug/mass channel, sales hit $1.3B during the same timeframe (up 54 percent versus 2017).
Fast-forward to today, and the runaway success of grain-free diets has taken a dramatic turn. After the FDA first announced a public investigation into grain-free pet foods and their potential link to canine dilated cardiomyopathy (DCM) in 2017, the agency then issued two additional announcements by the middle of 2019, including one that directly named 16 brands and implicated them in the investigation.
A Shake Up in Sales
Prior to the announcement in 2017, Nielsen data shows that year-over-year growth of grain-free products in pet retail hit 9.2 percent. In 2019, year-over-year growth dropped all the way down to -1.3 percent.
It should also be noted that the 16 brands named directly in the FDA’s third report were hit particularly hard. Nielsen data shows that the named brands (in pet retail) collectively saw grain-free sales decline -13.3 percent year-over-year by end of 2019. However, the sales shockwave was not limited to those named brands. Across the category, all other brands took a hit to grain-free dollar sales as well, seeing growth rates plummet 16 percentage points from prior to the FDA announcement to the end of 2019.
Interesting to note is that in contrast to the fall of grain-free, grain-in pet food sales increased by over 6 percentage points from 2017 to 2019. The best positioned brands were those that already had a good offering of grain-in foods in their lineups to offer as an alternative to concerned pet parents.
THE INDUSTRY REACTS
Whether or not pet parents have been turned off of grain-free foods for good, we know that the mindset of many consumers has been affected. According to a Nielsen Omnibus study, at least one in 10 respondents directly linked grain-free dog dry foods to DCM or heart issues in dogs.
As a result, manufacturers are left trying to adapt within a vacuum of definitive answers. Many brands who historically never offered grain-in products are rushing to give consumers another choice by adding grain-in products to their mix, rebranding grains as “healthy,” “ancient,” “wholesome” or “friendly,” while other brands are touting numerous and varied “heart healthy” claims, calling out taurine levels or the absence of other underlying ingredients implicated in the FDA reports, such as legumes, peas, lentils and potatoes.
And until there is more clarity on grain-free food’s potential link to DCM (or not), we can expect many veterinarians and retailers to “play-it-safe” and recommend existing and new grain-in foods in the interim.
THE LASTING IMPACT IS YET TO BE SEEN
As manufacturers scramble to adapt to shifting consumer demands and retailers try to educate and guide worried pet parents, we—as an industry—are all left to answer the question, “What will the lasting impact of the DCM scare be?” Has grain-free been forever tainted in the minds of pet parents, or is this just a short-term comeback for grains? While these questions are yet to be answered, one key takeaway for all companies is that in uncertain environments, data-driven decisions can help maximize opportunities and minimize damage. As our industry waits for an update from the FDA, take solace in data, empower your planning process by gaining additional visibility into the space and be proactive on how your company can move forward.
Sean Simpson is the Client Manager, Pet Vertical at Nielsen Global Connect.