Dogs and Cats: Retail Rainmakers

March 15, 2010

Long regarded as a recession-resistant area of the store, the pet foods category didn't disappoint during this economic tumult.

Long regarded as a recession-resistant area of the store, the pet foods category didn't disappoint during this economic tumult. Four-legged emotional crutches in tough times, dogs and cats earn their rewards of devotion, foods and treats just by being their natural selves. Nice gig.

According to the American Pet Products Association 2009-2010 National Pet Owners Survey, 45.6 million U.S. households own at least one dog and 38.2 million own at least one cat. Many house multiple pets at a time: 77.5 million dogs and 93.6 million cats are owned across the U.S.

APPA estimates that owners will spend $18.28 billion on pet food alone in 2010, up from $17.65 billion actually spent in 2008. The 2010 breakout for each owned dog will be $229 on food plus $64 on food treats; the projection for cats is $203 for food plus $37 for food treats.

U.S. food, drug and mass merchandiser stores (including Walmart) captured a high proportion of pet food spending in the 52 weeks ended January 23, 2010 - $11.88 billion, up 5.7% over the prior year, a growth rate sliced nearly in half from the prior year's advance of 11.1%, according to Nielsen figures.

It doesn't mean people are feeding their dogs and cats less. Most likely they are being lured by the appeals of specialty stores such as Petco and PetSmart, which allow pets into the stores, run events and have broader assortments. By contrast, supermarkets tend to treat this department as a convenience rather than a destination, with limited assortments and merchandising. 

Still, that 5.7% dollar growth looks pretty good compared with human food categories - especially since it is driven by just 70.8% of U.S. households which bought a pet food product at least once during the 52 weeks ended December 26, 2009, according to Nielsen Homescan Consumer Facts. This is a cumulative household penetration figure that incorporates several dog and cat food and treat segments. The highest among them: dog and cat treats, 47.3%, followed by dry dog food, 37.6%, and dry cat food, 35.3%. All Nielsen data are for prepackaged, UPC-coded products only.

Dollar sales of dry dog food, the largest segment, jumped by 10.6% to $4.36 billion in the 52 weeks ended January 23, 2010, on top of a 13.7% gain in the previous year. The private label component of dry dog food leaped by 18.3% to $878.5 million, while the branded component advanced by 8.8% to $3.48 billion, the data showed.

Dollar sales of dry cat food, the second-largest segment, grew by 6.3% to $2.17 billion in the latest 52 weeks, following a 10.1% rise the year before. The private label component of dry cat food slid 3.0% to $267.4 million, while the branded component rose by 7.8% to $1.91 billion, Nielsen reported.

Eyeing the private label opportunity, Supervalu just launched its own 100-SKU WholeCare Pet brand of foods and supplies to be priced 15% to 30% lower than national brands.

Some consumers apparently found a way to trim their dog and cat food spend without compromising on their pets' eating preferences. The dollar sales growth rates of larger bags - which provide a lower cost per ounce - reached the double-digit range. Bags of dry dog food between 30.1 and 42.0 pounds were up 22.5%, and bags larger than that were up 11.4% in the latest 52 weeks. Bags of dry cat food larger than 10 pounds were up 17.4% during the period.