PET PRODUCTS BOOMING
by Jane Mundy

 

 

Until recently, pet paraphernalia was limited to specialty stores. In 2005, however, pet owners can add pet food, toys and health care products to their grocery list and enjoy "one-stop-shopping" while they are out buying their jug of milk or loaf of bread.

 

If there is one area of sales growth you can bet on, it is pet products. One reason for the increase in sales is that many baby boomers have chosen to remain childless; consequently, they have more money to spend on their furry loved ones. Pet products was one of the few categories that didn't see decreasing sales after 9/11; people turned to their families for comfort and entertainment and for many people, their family includes their pets. Increasingly, pets have replaced the extended family that used to live together, and they (especially dogs) have become companions for the elderly, particularly those who live alone. Statistics Canada figures show that nationally, Canadians spent $3.7 billion last year on pet food, health care and toys — British Columbians alone spent $500 million last year on their pets.

 

Furthermore, since 9/11 there has been a trend toward people spending more time at home, which explains the increase in sales of wild bird products —baby boomers want to bring nature into their own backyards rather than go to nature. According to ACNielsen's MarketTrack Report for 52 weeks to December 25, 2004, although unit sales for wild bird seed were only up one per cent nationally, both Alberta and British Columbia saw a seven per cent increase in unit sales.

 

Yule-Hyde Association supplies bird feeders, and David Roth, the company's National Sales Manager, supports these statistics. "More and more, we see baby boomers get involved in the garden and buy more bird feeders and various categories within bird feeders," he reports. His company has enjoyed a "constant increase, trending up in a brisk fashion, [due to] people spending money at home and making their back yard fashionable," he says.

 

Trends in pet products have a strong correlation to trends in human products and concerns. Just as obesity has become a huge issue with the human population in North America, there is a growing emphasis on weight management for both dogs and cats. In a 2003 Nestle Purina survey, the majority of pet owners (84 per cent of dog- and 70 per cent of cat-owners) believed their pets had an ideal body weight, while Canadian veterinarians reported that 42 per cent of dogs were overweight. (In that same year, 33 per cent of adult Canadians were overweight, according to Statistics Canada). As a result, Nestle Purina recently launched Purina ONE™, Healthy Weight Management Formula for adult dogs, and Purina ONE™ Indoor Cat Formula.  At the same time, Purina stated that "although pet owners want to ensure their pet's health and well-being, they also want to treat them every so often. In-store promotions that encourage impulse purchases will increase traffic in the pet aisle."

 

Guy Prospero, vice president of Canadian Business at Hartz Mountain, says that the consumer is demanding natural and healthy products, in both food and in toys. "People are willing to pay a little premium for [value-added products], not just the ‘same old, same old’," he says. And pet products have a great mark-up. Hartz pet supplies include toys, treats, rawhide and natural treat products; HBC (health and beauty products) such as shampoo and ear cleaners; aquatics such as fish food and supplies; and bird and small animal food. Prospero says that of all these categories, the main growth area is toys. He stresses the importance of keeping toys new and of offering a fresh assortment to consumers: "Each year, these items contribute more than twice their dollar value in growth," he says. The best sellers are those with extra value; for example, toys with ridges add dental benefits. Another growth area is edible dog bones; there are many varieties already on the market but the latest item on the shelf is infused rawhide, which purports to smack of flavour throughout the bone. "You want to make it palatable because it is good for your pet, it removes plaque and tartar, it's a good babysitter and it's 99 per cent protein," says Prospero.

 

Roy Bennin is the group marketing manager for the dog portfolio at Effem, which makes

Pedigree and Caesar dog brands along with Whiskas and Sheba cat brands. Bennin sees growth areas consistent with trends — his company is experiencing double- digit growth with snacks and treats for dogs and cats. "If I was a retailer, this is important, because a snack is a compliment to the main meal,” says Bennin. “So our approach is that we want to provide functional snacks and treats so they have product benefit." Product benefit comes in the shape of Dentabone and Dentastix. Dentabone is for brushing and Dentastix is for flossing; it even has a Breathbuster coming out: just like humans: brush, floss and rinse. "Oral care is on people's minds,” Bennin says, “but consumers are unsure about it so we provide an enjoyable oral care, and [these products] are quickly growing …Feeding dry kibble is not the whole solution, it just helps.” This year Effem launched oral care products in different sizes and that's a good thing for the smaller pooches- one-third of the dog population is considered small.

 

Effem knows that dogs love the taste of wet (canned) food and that most owners feed their dogs a combination of dry and wet food. With this in mind, it has launched Meaty Mixers, "basically a wet dog food in a pouch, no kitchen utensils required." Bennin goes on to say that "Four out of 10 households feed wet and of those four, nine out of 10 mix with dry. So as a retailer, feeding wet and dry is more valuable. Dry only is worth about $250 to a grocer retailer for one medium-sized dog over one year — i.e., the consumer to the retailer is worth $250. Wet plus dry food is worth $450. “

 

At Retail Results, a wholesale distribution company, Ross Gordon believes in bringing in proven-winner products: recognizing growth in the pet industry, the company is currently launching pet products. For instance, is your cat tired of the same old catnip cushions? Try Retail Results' honeysuckle Pillow. Retail Results reports that " it's considered a healthy alternative, and kitty won't fall asleep after playing with it — as happens with catnip."  (Some owners might think a cat nap is a good thing). It does have a good catnip option with it's re-fillable Velcro sacks. Among dog toys, balls are perennially popular but are now made of different types of materials that are more durable than they were in the past. Again, Retail Results offers a value-added product: spiky rings for tossing that have uneven surfaces to stimulate dogs’ gums. Retail Results is launching "Greenies" in grocery stores this year — it's a nutritious dog chew with the most dollar sales in the treats category  in North America.  "Because the demand is already built in from the pet trade, now is the time for the grocery stores to capitalize on [these products]," says Gordon.

 

OTHER CRITTERS

Innumerable nutritional studies of pet foods have been conducted by companies supplying dog and cat products but birds, small animals and aquatic pets haven't been considered — until recently. After making an effort to better understand nutritional requirements, Hartz, along with several universities, is developing new products for these groups, and it has five veterinarians on staff. According to Prospero, "there have been major strides in the past five years … rabbit and gerbil food is beyond pellets."  Instead, vitamins are added to food made from natural ingredients. It's good to know that these little critters are moving into the same league as dogs and cats.

 

 

MERCHANDISING

Like selling spaghetti with sauce, merchandising complementary categories also works for pet products. Bennin suggests that products are placed "side by side on the shelf. Advertise both simultaneously." He also says that the key factor for the retailer is to have the right assortment. If a customer's particular brand is out of stock, he or she will go elsewhere. And variety is the second challenge. There will always be a hard rubber ball and vinyl newspapers and catnip on the shelves, but as Bennin says, "the shelf doesn't stretch." Another consideration is that "there are life cycles to most products; even though they do not have expiry dates, still keep the products moving," he advises.

 

Traditionally, consumers buy dry pet food from grocery stores; snacks and treats are rarely on the shopping list and are, therefore, impulse items. "I would encourage retailers to display snacks in high profile locations, and those retailers [who do] tend to out-perform those who don't," says Bennin. 

 

The third challenge to the retailer is consumer awareness. "People go to aisle seven to buy cereal but not aisle eight to buy dog food, so you have to aggressively announce that you are in the pet food business," Bennin says. Retailers generally don't support pet needs as aggressively as they do other categories, so Bennin suggests that retailers give it a higher profile in-store (out-of-aisle) and in flyers.

 

Retail Results puts retailer starter kits together. The kit for a small retailer comprises six of every 26 items and kits for larger retailers have 12 of each. Although Greenies aren't included (they are sold separately as singles or four-ounce packages and in five sizes from "little bits" to jumbo) Gordon says that these kits "provide a reasonable selection that covers different product groups so the retailer doesn't have to choose …. We have done the work for the retailer based on our combined knowledge from years in the [pet product] industry." Paws On is the brand name for the kits and each kit comes with signage. "Good impulse buys see this signage by the cash register or bunk end," Gordon says. Finally, Gordon advises that Spring and Summer are the best seasons for retails to get into toys because that's when animals play outside the most.

 

John Schmidt, of Kitsilano’s' Choices Market, says that for pet food, packaging works best to catch people's eye because it is a hard thing for a grocer to know what works best. He reports that currently, cat food sells the most, more than dog food and birdseed. "We are getting more varieties, but toys aren't flying off the shelf," he says. But snacks are popular, mainly for dogs, especially Greenies. Natural snacks and healthier products are increasingly popular, Schmidt says. As for seasonal sales changes, they aren't that noticeable.  Schmidt says he would be willing to have sales reps bring in promotional materials, but he sees promos as putting items on sale, and with pet products, "We don't really need to."

 

 

Bob Morisseau, regional grocery merchandiser for Capers Community Markets  in Vancouver, is inundated with dog cookies. "Everyone is making them," he says, "every Mom and Pop cottage industry." But that isn't the case when it comes to pet food. Capers is very particular about the products it sells. 

 

"When we look at the pet section we have different criteria -- it is more commodity driven ," says Morisseau. "We are trying to find holistic pet food, human grade food, so for us it is about the product more than the category…But when we do find the right product, it is a supply issue," he says.  Even the BSE problem interrupted pet food coming in from the US.  "We lost several beef-flavoured dog and cat foods," Morisseau said. But its biggest complaint is that many companies Capers deals with are too slow and it is currently looking for other companies.

 

"This year we are about to re-birth our pet food section by bringing in lots of brands that haven't been available in Canada," says Morisseau. Capers is looking for products that meet their goals, not only with a good food grade, but minimal preservatives and "a small environment 'foot print' such as pet food in foil bags rather than metal cans," he says.

 

Lastly Morisseau says that space is simply determined by what the customer decides with their wallet. As for advertising,  "One thing we are doing this year is dog washes - - we invite people to bring their pet to our store and wash them in our parking lot or community room, and all the proceeds will go to charity," says Morisseau. And it's fun.

 

 

Demographics in this country aren't going to change any time soon; people are having fewer children and living longer. And Canadians want to pamper their pets. This translates to a boom in pet product sales —savvy retailers who haven't done so already should make room on their shelves.