News Pet Treats Show Strong Growth

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Pet treats show strong growth
16th August 2012

by Sandra Pearce


Driven largely by social changes in which many owners increasingly humanise their pets, value sales of treats are booming, with average annual growth not far below 10% despite difficult economic conditions, reports Paula Flores, global head of pet care research at Euromonitor International.

While the wider economy has struggled in recent years, the UK pet treats market has performed exceptionally well. Over the 2007-2012 period (figures for the latter year being based on part-year sales), real value sales of both dog and cat treats increased by more than 50%, according to Euromonitor International data.

Sales of dog treats exhibited a real compound annual growth rate (CAGR) of 9.3% over this period, reaching US$577.8 million (£368 million), while sales of cat treats exhibited a real CAGR of 8.9% to reach US$69.2 million (£44 million).

This growth in value sales of dog treats is particularly impressive given the fact that the UK’s dog population shrank from 9.1 million to 8.8 million between 2007 and 2010, before recovering to 8.9 million in 2012. Between 2007 and 2012, the country’s cat population rose from 7.9 million to 8.8 million. Over the 2007-2012 period, the proportion of UK households with a pet dog fell from 20.8% to 18%, while the proportion with a pet cat rose from 24.9% to 25.5%.

Mars and Nestlé still dominant…
Multinationals Mars and Nestlé dominate the UK dog treats market, accounting for over 55% of value sales between them in 2011, according to Euromonitor International data. Mars is the undisputed market leader, commanding a value share of 35.7% in 2011. This share has remained stable in recent years, with almost all of the
company’s sales in this category accounted for by its Pedigree brand. Nestlé’s Bonio, Bakers and Winalot brands held a cumulative value share of 19.7% in 2011.

In spite of the fact that private label products are gaining share in many fast-moving consumer goods markets in the UK, their value share of dog treats declined between 2007 and 2011, from 25.7% to 20.7%. Over the same period, the share of value sales accounted for by small producers (defined as accounting for significantly less than 0.1% of value sales) soared from 10.7% to 18.2%.

This growth has been due in large part to the increased popularity of alternative treats (such as those containing all-natural or holistic ingredients) and artisanal products produced by dog bakeries. The significantly higher unit prices charged by many of these small producers has been a major driver of growth in value sales.

The competitive landscape is quite similar in cat treats, with Mars and Nestlé accounting for 37.9% and 19.1% of value sales respectively in 2011. The value share of private label declined from 8.8% to 7.2% between 2007 and 2011, with the value share of small producers rising from 30.2% to 31.2%.

The main difference between the dog and cat treats markets in the UK is the fact that the latter is much less developed than the former, a
characteristic the UK shares with most other developed pet care markets.

The main factors driving premiumisation in pet treats are social, namely the fact that many owners are increasingly treating their dogs and cats as ersatz children. This is being driven by a host of factors, such as the fact that many young people are delaying marriage and starting a family for social and economic reasons, social atomisation, increased longevity and the country’s relatively high divorce rate. All of these factors are helping to shrink household size, which is leading owners to increasingly humanise their pets.

Many UK pet owners now commonly refer to themselves as their pet’s “mummy” or “daddy”.

A survey conducted during February 2011 by ICM Research on behalf of John Lewis Insurance found that a quarter of Britons routinely allowed their pets to share the same bed as a family member. Women were found to be more likely than men to bed down with their pet (27% versus 22%).

Consumer guilt about not being able to spend enough time with their pets may also be boosting sales. According to a survey conducted by K9 magazine in early 2011, 51% of its readers are having to work longer hours, with a growing number of them coming to regard such pet care services as dog walking, cat visiting and dog boarding as unavoidable expenses.

Potential growth areas
Euromonitor International predicts that dog and cat treats will exhibit real value CAGRs of 9.6% and 5.7% respectively over the 2012-2017 period. As a result, value sales of dog treats will be worth around US$912 million (£582 million) by the end of this period, with value sales of cat treats worth nearly US$92 million (£59 million).

When assessing likely new trends in the UK market, it is best to look towards the US, where the humanisation trend is more developed.
Examples of recent product launches in the US market that could be successfully applied to the UK include Neptune City, New Jersey-based Nylabone’s all-natural, grain-free dog biscuits, Secaucus, New Jersey-based Freshpet’s Ready to Bake Cookies for Dogs and Denver, Colorado-based The Bear & The Rat’s frozen yoghurt for dogs, which contains probiotics.

With the steady rise in rate of pet obesity in the UK, low-calorie dog and cat treats are also likely to grow in popularity. Convenience is also likely to grow in importance as a factor in the purchasing decisions of UK pet owners. In the US, the All American Pet Food Co markets cereal bars for dogs, placing particular emphasis on distributing them via convenience stores in order to drive impulse purchasing.