Good Prospects for North American Pet Care

The North American market remains key to the future of pet care. As a matter of fact, it accounts for over a third of global value sales (US$29 billion of an estimated global figure of US$96 billion in 2013). In value terms, the US market alone is the largest pet care market in the world, nearly four times bigger than that of Brazil, the world’s second largest market. North Americans are pet lovers and this is reflected in the region’s large pet population. Some 37% of US households had a dog in 2013, compared with 35% in Canada. For cats, these figures were 32% and 38%, respectively.

A strong premiumisation trend is the main driver of growth in this market. Real value sales of premium dog and cat food grew by 3% in 2013 (to US$10.2 billion) and hardly a week seems to pass without at least one new premium or super-premium brand being launched in what is becoming an increasingly competitive space. Many of these products are marketed as all-natural, human-grade, grain-free, raw, holistic or hypoallergenic.

Constant Value Sales of Dog and Cat Food in the US by Price Point: 2008-2013

US$ Billion

marchgraph

Euromonitor International from trade sources/national statistics

2013 saw Del Monte tapping strongly into this area through the acquisition of Natural Balance. Other established players like Mars and Procter & Gamble have attempted to tap into this growth by acquiring niche players, but with mixed results. Colgate-Palmolive launched Hill’s Ideal Balance in the US, in addition to the global launch of Hill’s Prescription Diet Metabolic (which targets owners seeking to manage the weight of their pet) and the re-launch of Hill’s Science Diet with natural ingredients and an improved taste.

This trend towards pet pampering/humanisation shows no sign of slowing down anytime soon. It is largely driven by such socio-economic factors as shrinking household size (especially strong growth in the number of single- and two-person households), shrinking family size, an ageing population and urbanisation. For example, the number of single-person households in the US grew by 7.7% between 2007 and 2012, to 33.5 million, while the median age of the population in Canada rose from 39.2 to 40 years over the same period. These trends are helping to transform a growing number of pet owners into “pet parents” who treat their pets as children for whom virtually no expense is spared.

While all these factors offer good prospects for 2014, conditions are becoming more challenging and competition is fierce. Players require strong and targeted strategies in order to innovate and differentiate their products. Possible stricter US FDA (Food and Drug Administration) legislation, rising commodity prices as well as new premium private label offerings are some of the challenges manufacturers will face in the near future.