United States – Food and Drugs Law – Premium Pet Food

Market Overview

The pet food industry has undergone significant evolution over
the years, driven by changing consumer preferences, advances in
nutrition science, and a growing awareness of the importance of pet
health and wellness. Historically, pet food was predominantly
composed of processed ingredients such as meat by-products, grains,
and fillers. However, pet owners are becoming more discerning about
the ingredients that go into their pets’ diets, looking for
options that mirror their own preferences for whole, recognizable
ingredients. This trend has led to the emergence of innovative
brands that prioritize the use of high-quality, human-grade
ingredients and employ gentle processing techniques to preserve
nutritional integrity.

As a result, the premium pet food sector has experienced
significant growth and innovation in recent years, leading to
increased competition among brands vying for market share. As
consumer demand for natural, high-quality pet food options
continues to rise, new entrants are emerging, and existing players
are expanding their product offerings to meet evolving consumer
preferences.

Premium pet food grew to $2.8B of total revenue in 2023, with a
CAGR of 4.4% since 2019. This represented 4.9% of total pet food
sales of $57.4B in the U.S. in 2023. Premium pet food is projected
to grow by 2.0% annually and reach $3.2B in 2030.

_{Source: IBISWorld Apr 2024}

Significant innovation has occurred in the refrigerated and
frozen pet food sector where revenue has grown to $890M as of 2023
and now represents 31.7% of total premium pet food sales. This
equates to growth of over 30% per year since 2019, contributing
significantly to the overall expansion of the premium pet food
sector. This trend is expected to continue and offers both
manufacturers and retailers competitive opportunities to drive
market share growth.

_{Source: PET Food Processing, Circana}

Brands like Freshpet, the clear winner in this space with 89.8%
market share, emphasize transparency, quality, and sustainability,
which resonate with consumers seeking alternatives to traditional
pet food.

_{Source: PET Food Processing, Circana}

Price Points by Pet Food Type

As consumer preferences have evolved, so has their willingness
to pay significantly more for wet, fresh, and raw pet food. This
trend of trading up to more expensive products brings the
opportunity for manufacturers and retailers to increase their
average sale prices and drive margin.

_{Source: Tufts University Cummings School of Veterinary
Medicine}

Innovations in Premium and Fresh Pet Food

The trend toward premium and fresh pet food has encouraged
brands to innovate and introduce high-end products featuring exotic
proteins, organic ingredients, and specialized formulations
targeting specific health concerns.

High Pressure Processing (HPP) is a non-thermal
food preservation technique that utilizes high pressure to
inactivate harmful bacteria, molds, and yeasts while preserving the
sensory and nutritional qualities of food.

• HPP offers several advantages for fresh pet food manufacturers,
  including extended shelf life without the need for preservatives,
  improved food safety, and retention of vitamins, enzymes, and
  flavor. Brands that are using HPP include Freshpet, Steve’s
  Real Food, Primal Pet Foods, Nature’s Variety, and Stella &
  Chewy’s.

Freeze-drying, also known as lyophilization, is
a dehydration process that involves freezing the product and then
removing the ice crystals through sublimation, resulting in a dry
and shelf-stable product.

• Freeze-drying offers numerous benefits for fresh pet food,
  including the preservation of nutrients, texture, and flavor, as
  well as increased convenience and a longer shelf life. Brands that
  are offering freeze-dried options include Open Farm, Nulo
  Freestyle, Stella and Chewy’s, Bravo, Vital Essentials, Halo,
  Grandma Lucy’s, and Wellness CORE (Wellness Pet).

Human-grade pet food refers to products that
are formulated using ingredients and processes that meet the same
safety and quality standards as food intended for human
consumption. Brands that use human-grade ingredients include The
Farmer’s Dog, The Honest Kitchen, A Pup Above, Ollie, Raised
Right, and Nom Nom.

Personalized nutrition for pets involves
tailoring their diet to meet their individual nutritional
requirements, considering factors such as age, breed, activity
level, and health conditions.

• Advances in technology, such as mobile apps and online
  platforms, have made it easier for pet owners to access
  personalized nutrition services and customized meal plans for their
  pets. Brands that are offering personalized nutrition include The
  Farmer’s Dog, Freshpet Custom Meals, Ollie, and Nom Nom.

Sustainable and Eco-Friendly Practices

With growing concerns about environmental sustainability, pet
food manufacturers are increasingly adopting eco-friendly practices
to reduce their environmental footprint.

• Sustainable packaging solutions, such as biodegradable
  materials, recyclable packaging, and compostable options, are
  becoming more prevalent in the pet food industry.




• A growing number of pet food brands are committed to
  sustainability and environmental stewardship, incorporating
  sustainable sourcing, manufacturing, and packaging practices into
  their operations. Examples of these brands include The Farmer’s
  Dog, Nature’s Recipe, Pet Plate, Open Farm, The Honest Kitchen,
  Wild Earth, and Wellness Pet.

Refrigerated and Frozen Pet Food Requirements

Pet specialty retailers dedicate the most space to the category
and generally have up to four refrigerated and/or frozen coolers
located within the pet food section of their stores. This currently
provides up to 16 linear feet of space and as the category grows
this space will need to be expanded. Retailers are generally
merchandising between 16 to 24 SKUs per cooler/freezer, for a range
of 64 to 96 SKUs carried in the largest physical assortments.

There are several requirements that retailers must consider to
achieve an impactful shopping experience while delivering the
highest quality pet food.

• Reliable cold chain distribution capability to ensure high
  quality.




• Frequent product rotation to guarantee the selling of dated
  products with limited shelf-life.




• Regular maintenance of coolers and freezers so that equipment
  functions properly.




• Effective signage and pricing options to provide enticing
  customer communication.

Challenges and Considerations

Pet food manufacturers must navigate a complex regulatory
landscape, ensuring compliance with food safety regulations,
labeling requirements, and quality standards. Fresh and natural pet
food products may come at a higher price point compared to
traditional pet food options, posing challenges for
budget-conscious pet owners.

There is a need to educate consumers about the benefits of fresh
pet food, including its nutritional advantages, ingredient
transparency, and positive impact on pet health and well-being.
Many consumers may be unaware of the differences between
conventional pet food and fresh alternatives, making education a
crucial component of market growth and consumer adoption.

Conclusion and Actions

The premium and fresh pet food sector is poised for continued
growth and innovation, driven by consumer demand for natural,
high-quality pet food options. As competition intensifies, brands
will need to continue differentiating themselves.

Look for ways to stand out from the competitive set through
focus on:

• Product innovation, brand storytelling, and customer-centric
  strategies.




• Operational excellence to ensure high product quality standards
  are upheld.




• Manufacturing and distribution capabilities to product
  mix.




• Demand planning, production planning, and inventory management
  guided by effective Sales, Inventory, and Operations Planning
  (SIOP) processes to gain market share.

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• Merchandise Planning and Allocation




• Assortment Management




• Pricing Optimization




• Demand and Production Planning




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• Supply Chain Operations




• Labor Planning and Optimization

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.