Six Pet Trends to Watch in 2016
A look at some of the key product categories that are going to be big sales generators in pet stores this year.
Each year brings new trends to the pet universe. Some are variations on familiar themes, while others are straight out of left field. Recently we have seen new product categories on the rise, such as freeze-dried foods, paleo diets and holiday treats—you name it. So, how do you separate the keepers from the sleepers? Data from GfK’s point-of-sale panel representing over 11,000 U.S. pet retail outlets help define the pet universe. And while we cannot predict the future, we can use data as our guide to likely developments—and opportunities—in the pet space.
With this in mind, here are six trends that bear watching in 2016:
#1. Grain-Free Keeps Gaining
Continuing its strong performance from the past several years, the $2.8-billion grain-free category is still growing at an amazing 25 percent year over year. Nearly half (45.5 percent) of all new items in 2015 were grain free (compared to 42.7 percent the year before), and this category accounted for 35 percent of all food sales in pet retail. If grain-free pet foods continue their strong surge, they may account for over 40 percent of all pet retail food sales next year. It is the growth of the grain-free category that is almost single-handedly keeping the natural category in the black.
#2. Consumers Cautiously Experimenting with Raw Diets
The raw category is still growing quickly, but persistent recalls are hindering its ascent. The majority of recalls in 2015 were attributed to frozen raw pet foods. However, sales for this category grew at a rate of 36 percent over the past 12 months (up from 27 percent in 2014) to $82 million. But another metric suggests that the trend may have already hit a ceiling in the U.S.; last year, 4.7 percent of all new pet food products were frozen raw items, but in 2015 that number shrank to 2.3 percent. Distribution and growth in average sales per store remained strong but slowed slightly compared to 2014. Nonetheless, frozen pet food is now being offered at more than half of all pet specialty stores (55 percent) in the U.S. Clearly, raw is making in-roads, but the category could do more if not for recall worries.
Raw in other forms has been finding great success. Mixing in freeze-dried raw pieces to enhance kibble was a big thing in 2015. The “kibble-plus” option allows pet owner and pet to explore the expensive raw category without fully committing to it. Raw-alternative foods—in pure form (100 percent freeze-dried or 100 percent dehydrated) or as a combo (part freeze-dried, part dehydrated)—grew at a rate of 62 percent YOY and now account for nearly $200 million in sales annually. More than half of that is generated by the kibble-plus products, which allow customers to upgrade their pet’s regular diet to an enhanced raw/kibble combination.
#3. Value Natural—A New Generation of Savvy Shopping Choices
Millennials, now the largest pet-owning generation, are looking for quality and a deal. And they have found both in natural brands offered at an affordable price, also known as “Value Naturals.” Mostly available in familiar big-box stores, these options are 20 percent cheaper than top-tier natural brands. This is tough news for big manufacturers, posing added competition in an already challenging environment. Value naturals accounted for $426 million in sales during 2015 (up 19 percent from 2014) and gained about 20 percent shelf space last year alone. Look for this category to grow as Millennials acquire more and more pets.
#4. Enhancing Pet Diets
Meal enhancers racked up $21 million in sales in 2015. While that may not sound like much, it represents incredible 332-percent growth versus the year before. The number of SKUs for the category has more than doubled since 2013, from 65 to 128, with roughly four out of five being for dogs. The strong sales growth of this emerging segment in pet retail has been driven by freeze-dried meal mixers and wet, chunky food toppers (think beef or chicken stew). Freeze-dried mixers accounted for 63 percent ($13.1 million) of all meal enhancer sales in 2015, for a remarkable 625-percent growth rate year over year. Look for this emerging category to continue its top-notch performance.
#5. Treats, the Perennial Trend
Treats belong on the trends-to-watch list every year—after all, who doesn’t want to treat their furry loved one? Treats are the fastest growing pet retail category, offering the biggest margin for retailers, who made more space for these items in 2015 (30 percent more SKUs per store than in 2014).
Treats are also the most innovative segment. Of all newly launched items in 2015 (about 3,300), 40 percent were treats. And don’t forget about holiday-themed treats—especially at Halloween and Christmas. For Christmas alone, the number of available SKUs more than doubled since 2014 (from 23 items to 59 in 2015), and sales nearly tripled. We expect to see continued growth for holiday treats again in 2016.
#6. The Future is…. Paleolithic?
If the pet industry continues to follow big trends in human eating and pampering, then the still very young paleo trend is destined to take off. Paleo has its own shelf at Whole Foods, and PetSmart picked up the concept, dedicating a little area to these diets at the end of 2015. Paleo products are still rare in the pet world, but the category fits with the high-protein, ancestral trend that many brands have been following over the past years.
What pet retail trends are you expecting to see in 2016? Let me know, and have a great sales year this year.
Maria Lange is Business Group Director of GfK’s POS Tracking (Pet) team. You can reach her at firstname.lastname@example.org.