Pet food sales reached US$36 billion in 2019, according to Nielsen, even

though grain-free sales decreased.

The U.S. pet food market grew 7.3% in 2019, reaching US$36 billion, accordingto Maria Lange, vice president of strategic verticals pet and cannabis forNielsen. That growth happened despite the continuing decline of sales ofgrain-free pet food, she said.

Lange presented this and other data at the 13th Annual Pet Food Conference,organized by the American Feed Industry Association during the InternationalProduction & Processing Expo on January 28 in Atlanta, Georgia, USA.

Pet food e-commerce fuels growth

Unsurprisingly, 65% of the U.S. pet food market growth was driven bye-commerce, Lange said. Specifically, the online channel increased 28.5%,reaching US$5.8 billion in pet food sales. It now accounts for 16% of the petfood market. Boosting the e-commerce boom are consumer motivations such asprice/value, convenience, variety and experience, she added.

The largest channel for pet food sales in 2019, at 44%, was what Lange calledmainstream retail – meaning grocery and mass market stores – which saw salesof US$15.8 billion, reflecting 6.7% year-over-year (YOY) growth.

Pet specialty retail was the lone channel seeing a decline, of -1.5%, endingup at US$8.3 billion sales and 23% of the market. That is likely due to thedecrease in grain-free pet food, an important category for pet specialtystores, Lange said.

The remaining 17% of the market is comprised of sales through outlets such asveterinary clinics, farm and feed stores, Costco, direct-to-consumer andothers. While Nielsen doesn’t track sales in those outlets, Lange estimatedpet food reached US$6.3 billion in 2019, up 3.5% over the prior year.

Data ties grain-free sales slide to FDA DCM announcements

Lange’s data on grain-free pet food sales made a stark point: For the firsthalf of 2018, the category was still increasing at 8.4% YOY in pet specialty;by the end of 2019, the category had decreased 5.9% in that channel. Sheexplained that the first Food and Drug Administration (FDA) alert over itsinvestigation into canine dilated cardiomyopathy (DCM) and grain-free productsoccurred in July 2018; by end of 2019, the agency had issued two moreannouncements, including one in June 2019 naming brands implicated in theinvestigation.

Comparatively, the overall U.S. market experienced slight growth of 3% forgrain-free pet sales in 2019, showing the impact on the pet specialty channel.The blow was even worse for the 16 pet food brands named most prominently inFDA’s June 2019 announcement; their sales declined -13.3% by end of 2019,Lange said.

In contrast, “with grain” pet food sales increased by 4% in 2019 in theoverall U.S. market, though sales in pet specialty dropped -1.6%. For the 16brands prominently named by FDA, their pet foods with grains also declined in2019, falling -10.9%.

Premium pet foods in newer formats, private label see growth

Picking up some of the sales growth slack, newer pet food formats such asfreeze-dried, dehydrated, frozen, refrigerated and fresh are taking moremarket share, Lange’s data showed. For example, partially freeze-dried anddehydrated products accounted for 9% of the dry pet food market in 2017; thatshare rose to 13.1% in 2019. On the wet side, frozen pet foods’ shareincreased from 11.9% in 2017 to 17.6% in 2019.

In addition, the overall dry category declined by -4.9% YOY in 2019, mainlydue to a -9.2% drop in traditional dry pet food sales, while what Lange called“preserved” foods (freeze-dried and dehydrated) soared 39.1%. On the otherhand, wet pet food sales overall grew by 5%, fueled by a 55.4% boost from“fresh” categories such as frozen and refrigerated. At the same time,traditional, shelf-stable wet pet food decreased by -1.8%.

As a sign of how these types of products are even going mainstream, Langepresented data on the growth of freeze-dried pet food in mass market outlets.“Kibble plus” pet foods, which combine freeze-dried bits with traditionalkibble, reached US$7.3 million in 2019 in the mass channel, despite theaverage store carrying only two such items.

Another growth category – one helping brick-and-mortar outlets fight thee-commerce boom, Lange said – is private label. In the pet specialty channel,private label pet food sales have soared 75% since 2017 and 19% in 2019 alone.In the overall U.S. pet food market, private label products reached US$2.2billion in sales last year.

Source: By Debbie Phillips-Donaldson Pet Food Industry

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