The Big Chill
Despite several recalls in 2015, the frozen pet food category continues to grow at a hot pace.
Frozen food has been one of the pet industry’s big success stories in the last decade, jumping from $36 million in sales in 2011 to $65 million just three years later. Five years ago, only 38 percent of retailers had a freezer installed; that number nearly doubled, to 58 percent, by 2014. In addition, the average number of frozen items carried per store grew from 11.3 to 13.4 during that same span.
However, the success of the category was tested last year, when several brands were forced to recall frozen items after the FDA discovered listeria and salmonella at a number of raw pet food plants. The popular press picked up on the story, hanging a big question mark on the frozen category.
For pet owners, the benefits of raw pet foods are clear: They produce shinier coats, cleaner teeth and higher energy levels. But are the benefits worth the risk?
Roughly a year later, data from GfK’s pet specialty POS (point-of-sale) panel suggests that manufacturers may have been more concerned than pet owners. Over the past 12 months, we have seen a significant drop in the innovation rate for the frozen category, which accounted for just 1.8 percent of all new items launched—a big change from the 3.5- to 5.5-percent levels we had seen in recent years.
Even as innovation has slowed, sales of frozen items have continued to be strong, rising to $97.3 million as of June 2016—roughly $1,160 per store each month. Frozen is up 10 percent from last year in both sales ($88.9M in 2015) and velocity (about $1,050 per store per month in 2015).
At the same time, we also saw a surge in interest for freeze-dried foods, a safer raw diet alternative. Freeze-dried full meal products accounted for five percent of all new pet food products in the past 12 months, compared to just 1.7 percent in 2014. Freeze-dried poses fewer salmonella risks, is easier to handle, and can be stored on shelf at room temperature. However, the cost of these items can be a big burden for consumers, with freeze-dried prices roughly seven to eight times higher than frozen—a whopping $33 per pound, compared to $4 to $5 for frozen foods.
Clearly, many pet owners want the benefits that a paleo-style pet diet can offer, which means that manufacturers and retailers have an ongoing opportunity for added growth. Brands learned a lot from last year’s recalls and have improved safety measures. If they believe in the category, they need to work hard with retailers to reassure consumers while remaining vigilant on the safety front. Compared to freeze-dried, frozen is a bargain; and raw frozen foods are truly unprocessed, while freeze-dried is subjected to high-pressure pasteurization (HPP). The risks of raw and frozen remain, but brands and retailers have a clear chance to remind pet owners of the many things this category has to offer, while continuing to do an A-plus job on safety.
Want to know how your sales, discounts, and stocking decisions compare to the full US pet specialty industry? Join GfK’s point-of-sale panel to find out! Contact firstname.lastname@example.org.
Maria Lange is Business Group Director of GfK’s POS Tracking team in Pet Specialty. She consults with major manufacturers and retailers about pet industry trends and speaks frequently at industry conferences.