Premiumization Drives $7 Billion Natural Pet Product Market

Natural pet products are on track to exceed $7 billion in 2014, according to market research publisher Packaged Facts.

Although the recession softened consumer spending, premiumization has been driving much of the pet market growth, and this trend has emerged as an essential aspect of the natural pet products segment, according to “Natural, Organic, and Eco-Friendly Pet Products in the U.S., 5th Edition.”

Natural pet food will account for the vast majority of sales ($6.6 billion by the end of the year) with natural pet care products comprising the remainder.

With pet household growth rates modest at best, the overall pet market has been seeing little expansion in terms of volume sales, so marketers have been driving dollar gains by converting pet owners to higher-priced products.



In the pet food arena, margins on superpremium foods can reach 40%, compared with 30% for premium brands and 20% or less for standard brands.

Although not all superpremium products are natural, more and more of them are, with natural products at the core of the premiumization trend, especially with regard to pet food.

The flip side of this trend is that offering a “natural” product is no longer enough to attract consumer attention. Marketers must find additional product features to entice purchasers and justify the heightened price tag.

Pet product marketers can rest assured that the natural pet products trend isn’t going anywhere any time soon, despite the fact that there is still no official definition of what is “natural," says Shannon Brown, market research analyst, Packaged Facts.

“The more consumers educate themselves about some of the problems associated with traditional pet products (including safety issues), the greater the likelihood that natural products will grow to encompass an ever-increasing portion of pet product sales,” Brown tells Marketing Daily.

In addition, trends from the human market continue to impact pet products, so marketers would be wise to tune into ingredient and environmental-related trends along those lines, Brown adds.

To meet consumer demand and justify the higher prices of premium products, virtually all pet product marketers are focusing more intensively on pet health. This is good news for natural and organic products since many consumers increasingly view natural and organic products as being healthier.

Pet owners are willing to spend more if they believe that the products offer health and wellness benefits. According to Packaged Facts’ April/May 2014 survey results, 64% of pet owners believe that high-quality pet foods are effective for preventive health care, and 68% are willing to spend extra money to ensure the wellness of their pets.

Pet owners want to make sure the products they are purchasing are fulfilling their pets’ needs, both overall and in specific ways. The Packaged Facts survey also revealed that 62% of pet owners check product labels on the pet foods they buy, and 42% are concerned about their pet having food intolerance or allergies.

Consumers are interested in providing their pets with ingredients that are USDA “human-grade” certified. There is a continued movement of natural pet products into the mass market private label space (vis a vis entries such as Wegmans' new line and Whole Foods’ revamp of its private label line).

“It will also be interesting to see if, in coming years, raw food marketers are able to maintain momentum, given the potentially damaging naysaying of the FDA, AVMA and AAHA in terms of product safety as well as the recalls that continue to plague this natural food sub-segment,” Brown says.
"Cat Eating" photo from Shutterstock.

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