How pet food can grow from change and disruption
SEPTEMBER 23, 2020 DEBBIE PHILLIPS-DONALDSON
For pet food, change is a constant, especially in 2020. Of course, looking back at the past five to 10 years, that can be said about just every aspect of business and life; but this year, changes have accelerated at light speed.
The dizzying rate of disruption and transformation emerged as a common theme among the sessions presented during Petfood Forum CONNECT, a virtual event that took place September 9-10 and 15-17.
E-commerce leading the charge for change
Take e-commerce, for example. While it has been growing by double digits in many product categories over the past several years, the pandemic and resulting lockdowns have driven consumers to buy even more online or to try online purchasing for the first time – and stick with it. Thus, some experts have said the share of consumers sales they expected e-commerce to reach by 2025 or beyond has been achieved already in 2020.
For pet food specifically, e-commerce sales soared 51% from February to March 2020, according to data from Rakuten and Nielsen, as COVID-19-driven lockdowns began. Though that robust growth dipped somewhat the following months, it remained positive and, by July, was back up to a 34% increase over February, said Sean Simpson, associate client director for Nielsen, during his Petfood Forum CONNECT presentation.
In fact, e-commerce has now become, for the first time, the leading channel for U.S. pet food sales, according to Packaged Facts’ report “Pet Food in the U.S., 15th edition,” released in July 2020. Year to date, the channel accounts for 22% of sales, at US$6.4 billion, including the “online sales of all omnichannel players,” the report said. Before 2020, Packaged Facts had projected that by 2024, e-commerce would comprise a 27% share of the U.S. pet food market; now that projection stands at 34%.
Growth in newer premium pet foods, but value is key
E-commerce is not the only thing changing rapidly. David Sprinkle, publisher and research director for Packaged Facts, along with Simpson and other pet food experts presenting during Petfood Forum CONNECT, discussed the increasing consumer interest and growing sales in different product types, including freeze-dried and refrigerated, mixers and toppers. That extends to packaging of the products, with newer formats such as cups and trays for wet pet food, cartons for toppers and broths, and pouches for just about every product type.
Yet those are all premium pet foods and packages, and several experts also cautioned that economic impact from the pandemic, which has left millions unemployed or elsewise struggling with lower levels of income, could well lead to many pet owners needing to decrease their pet food spending. “There will be a most definite recessionary impact on pet food and pet products,” said Lynn Dornblaser, director of innovation and insight for Mintel, during a panel discussion on pet food trends emerging from 2020 and beyond.
While humanization – the fact that pets are beloved family members, our “fur babies,” as Dornblaser put it – means pet owners are very likely to ensure they have the best possible, it’s essential for pet food brands to provide value and particularly to communicate that value. She suggested keying on product attributes such as nutrition or palatability, or focusing on broader initiatives the company may be undertaking in terms of protecting the environment or serving at-risk pets or local communities.
Max Davis, business unit manager for Waldner Americas and another panelist, said he believes this focus on value may provide opportunity for a private label manufacturer to release a premium product under their own label: saving cost without sacrificing all the quality. Indeed, Packaged Facts also projected private label as a potential growth area in its July 2020 report.
The keynote speaker for Petfood Forum CONNECT, consumer product goods expert Bonin Bough, also discussed the importance of providing value and offered his own suggestions. “That value doesn't mean I have to sell more for less,” he said. “It could mean I can add value … Create greater value, so the consumer is buying something and getting ultimately more for it from a perception standpoint, not necessarily specifically from an actual product standpoint.”
Learning to cope, even thrive, with change
We humans are not always able to easily accommodate or process change, especially when so much comes at us so quickly and relentlessly, as it has in 2020. (Heck, who would have thought back in January that Petfood Forum would be taking place only online, rather than in Kansas City, as it has for several years now?)
Yet, every person and especially every business now has to learn to not only grow more comfortable with change but also to anticipate it and handle it as proactively as possible. If there’s any silver lining to this year, it may be that it’s training us all for that learning and growth. As Bough said, adapting to the pandemic has taught pet food companies and brands that they can adapt readily to unprecedented change, and the reflexes and skills gained by that can help with future, necessary adaptation.
“Keep that muscle memory that any change you want to make, you can do it much faster than you ever gave yourself credit for,” Bough said. “I believe that pace is what’s going to unlock growth.”