Six Trends to Watch in 2017
There are several nutrition trends generating a lot of buzz in the pet industry, but buzz alone will not bring success to today’s brands and retailers.
When an industry is healthy, there is always plenty of chatter. Which categories and products will be the blockbusters of tomorrow, and which may become obsolete before their time?
There is definitely plenty of buzz around the pet marketplace, much of which was heard at Global Pet Expo—and that is a good sign. When people care enough to trade stories and speculations, you know that there is money to be made.
However, when it comes to translating talk into action, turning buzz into business, the smartest players base their decisions on data and not just gut feelings or past experience. The swift ascent of natural products to the pinnacle of the pet industry illustrates how unpredictable consumers can be and how much you need verifiable facts to develop the right products, messages and promotions, as well as bring the right mix of SKUs to retail shelves.
Point-of-sale (POS) data from GfK’s U.S. Pet Specialty Retail Panel provides a wealth of insight into what is really happening in the industry. And it can help us separate the most promising new trends from the ones that may require more caution. Let’s take a look at some of the trends creating the most buzz in the pet industry today.
According to GfK’s findings, more than half (53 percent) of all new pet food items are now grain-free. However, the category still accounts for just 39 percent of overall sales. This means that healthy revenue growth should continue in 2017, with abundant SKUs and variations on this theme.
Pet owners have also embraced limited-ingredient diets (LID). Initially, these were created to alleviate food allergies in pets, but the transparency of knowing exactly what their four-pawed companions are consuming is also a big plus for doting owners—a benefit that is helping to drive further LID success. In the past year, we have seen sales of LID items rise by six percent.
Seasonal Treats & Foods
The seasonal category has been a hub for innovation and is attracting all-important Millennial pet owners with its focus on customization and shared pet/human moments. Seasonal treats now account for $9.5 million in sales annually, with 15 SKUs added in the past year. Last year, we actually saw the first dry seasonal food launched. There were more wet and dry seasonal foods launched last year (23) compared to treats (15).
Products especially for small and toy breeds represent another strong sector. As urbanization continues, young people are resisting the move to the suburbs, making smaller dogs the smarter choice for more and more owners. As a result, we have seen products offering smaller portions (for smaller tummies) gain $300 million in annual revenue since 2011.
We do not expect to see many truly declining categories or brands in 2017. Sales in frozen are still recovering from the raw frozen recalls in 2015, and some stores may have already maxed out the space they can devote to frozen products. But we see this as a hold rather than any kind of a real downturn. At the same time, freeze-dried and dehydrated raw alternative options continue to grow rapidly in the marketplace—especially popular as mixers and toppers or in the kibble-plus format.
The Latest Buzz
There is no doubt that the natural trend will continue to shape and expand our pet vocabulary in 2017, but we expect the emphasis to be more on the food’s preparation and branding, rather than actual ingredients. Associated buzzwords that do speak directly to ingredients are organic and non-GMO, which have also become popular labels and benefits for human food. These terms suggest environment-friendly farming methods and avoidance of pesticides, non-natural fertilizers or chemicals—in other words, the purest and most natural ingredients and conditions possible.
In different ways, sustainable and family owned labels connote a homegrown approach, environment-friendly practices, local sourcing and the comfort of familiar brands. Humane food also helps pet owners have a clear conscience, suggesting that protein sources were ethically raised and treated (e.g., free-run and cage-free conditions).
As the year progresses, data will give us the clearest barometer of which trends are ascending and which may still be struggling to take off. Whatever decisions you make in 2017, be sure they are grounded in facts as much as intuition.
Maria Lange is business group director of GfK’s Pet POS Tracking team. Want to find how GfK data can help drive better decisions for your store or brand? Contact Lange at firstname.lastname@example.org.