ORLANDO, FLA. — During its “The State of Pet: What’s Next and What’s Trending in 2023” discussion, NielsenIQ shared its latest animal market research study at Global Pet Expo from March 22 to 24 in Orlando. Representatives from the marketplace research study company dove deep into market development, the latest customer insights, sustainability patterns and more.
Market development
Kicking off the discussion, Andrea Binder, vice president of retail account advancement at NielsenIQ, highlighted the animal food market’s volume and development throughout the world.
For the year ended Dec. 4, 2022, Europe and North America stay leading dog in dog and cat food volume, reaching 5.7 billion equivalent (EQ) systems and 5.6 EQ systems, respectively. Though Europe holds the biggest volume, the area experienced no development in volume, reducing 0.7% from the previous year, whereas North America increased 0.3%.
Latin America experienced one of the most volume development at 4.8%, accumulating 866 million EQ systems. Asia likewise experienced big development, increasing 2.9% to 186 million EQ systems. Africa was the only area to experience an extreme development decrease, reducing 4.5% to reach 144 million EQ systems of volume of dog and cat food.
“If we look at a global snapshot that [NielsenIQ] did over the last year, what we’re able to see is that in dog and cat food, North America and Europe are really the drivers of volume,” Binder revealed. “But growth has been pretty stable, if not declining in Europe over the last year. When we look at where the growth is coming from, although on smaller scale, we see Asia and Latin America and especially driving some of the growth in the pet food space.”
Shifting focus to the whole animal care market, Binder shared that the market continues to be driven by both in-store and online sellers, likewise called omni sales. According to NielsenIQ Discover Omnisales, the United States animal care market collected $77.5 billion in 2022, a 13.4% boost from 2021. Thirty-8 percent of these sales originated from online-only sellers, an 18.8% boost from 2021, and 62% of these originated from in-store only sales, a 10.2% boost from 2021. Though in-store continues to produce most of sales, online dollar share is gradually increasing, according to NielsenIQ, acquiring 1.8 points in 2022.
With this development in mind, Binder compared the animal care market’s development to that of other markets, consisting of human food, gen merch, health and appeal and other durable goods markets, revealing that animal care has actually grown 10.2% in-store and 18.8% online in 2022.
“[Pet care is] the second fastest growing department in both [in-store and online] segments,” she included. “In-store it’s only being outpaced by human food and online it’s only being outpaced by household care. Otherwise, those growth rates of 10% and nearly 19% are significantly higher than some of the other departments across the store.”
Additionally, most of animal care sections are experiencing faster development online than in-store, according to Binder.
“Nearly all categories are growing online faster than they are in stores,” she said.
These classifications consist of dog treats and cat treats, dry and wet dog and cat foods, various foods and other pet foodstuff.
While the market continues to see development, Binder explained that the development is primarily being driven by inflationary pressure and not systems offered. In December 2022, the United States animal retail market experienced a 4.9% boost in dollar development, nevertheless the system volume reduced 9.4% throughout the exact same month. As customers experience increasing expenses on their animal care items, numerous have actually required to trading throughout the classification to help minimize their spending.
Binder showcased this pattern, highlighting the modification in share throughout private-label, premium, middle and worth animal foodstuff in the year ended February 2023. Dry dog food experienced a 0.4% classification share decrease in the premium section, whereas private-label and worth dry dog foods increased 0.4% and 0.1% in share, respectively. On the other hand, wet dog food experienced share boosts of 1.9% and 0.3% in both the middle and private-label sections. Dry cat food experienced very little trading throughout the private-label, premium, middle and worth sectors, nevertheless private-label wet cat food reduced one of the most in share at 1.5%.
Consumer insights
Sam Smith, associate customer director at NielsenIQ, detailed the latest customer patterns in the middle of the market’s ongoing development.
According to NielsenIQ, 110.6 million families bought pet care items in 2022, an almost 2% boost from a year earlier. Value per purchaser has boost 10.7% in 2022 to $680. There are roughly 60.2 million families that bought dog items and 36.9 million that bought cat items. Though there are less cat-owning families throughout the United States, these families have a greater worth per purchaser at $986, a boost of 12% in 2021, whereas dog-owning families have a $899 worth per purchaser, a boost of 11.3%.
“Households are spending more whether they’re going for products like freeze dried or natural or frozen that have a higher price tag,” Smith detailed. “The whole industry is spending more; households are spending more.”
Within the omnichannel space, Smith shared that animal food omni consumers drove one of the most dollar development within the whole United States animal nutrition market in 2022. In-store just families still stay king, representing 56.1% of all United States animal food acquiring families, though they experienced a 4.0% decline from 2021. Online just consumers preserve a meager share of 2.9% of overall United States animal food purchasers, a decline of 2.2%. Omni families provide the biggest opportunities for animal care brand names, representing 41.0% of all pet food acquiring families, a boost of 6.2%.
In dollar share, in-store represented 35.9% of overall United States animal food dollar share, a big decrease of 7.1% in 2022. Online just represented a meager 3.0% of overall dollar share, a decline of 4.1%. Omnichannel just continued to grow, representing 61.1% of overall United States animal food dollar share, a boost of almost 5% from 2021.
“[Omnichannel] truly is the space that needs to be played in,” Smith explained. “You’re going have households that want to buy in-store for certain needs, and you’re going to have households that want to set it and forget it and buy online for certain needs. These households are extremely valuable.
“These are the households that are very important for the pet care space and they’re going to continue to grow as people continue to adopt the Omni type of mentality,” he included.
Fueling the development in omnichannel are customer pickup and direct-delivery shipping approaches. According to Smith, heavy animal foodstuff, like dry and wet dog food, experienced more powerful development in customer pickup and lighter items, like dog and cat treats, and dry and wet cat food, experienced more powerful development in being delivered straight to customers.
Sustainability patterns
Lastly, Sherry Frey, vice president of overall health at NielsenIQ, shared the latest sustainability patterns and customer insights within the animal care market. According to Frey, sustainability associates deal appealing opportunities for the animal nutrition and animal care market.
The concept of sustainability is drastically speeding up, and there’s a couple of factors for this,” she revealed. “From a governmental standpoint, the fact that we are now having to report Scope 3 greenhouse gas emissions officially starting in 2024, we’re seeing this increase of government regulations, and we are also seeing fines/taxes against greenwashing. At the same time, we’re seeing the reality of climate change and its exploding costs — it’s driving energy prices up. So this is a big area of opportunity.”
According to Frey, governmental requireds, fresh legislation, reporting requirements, fines and more; increasing expenses brought on by environment modification, like energy costs, cost of items and supply chain interruption; and increasing customer need are all developing momentum for sustainability.
Within customer need, Frey shared that sustainability is simply among numerous things customers think about when purchasing items, consisting of those for their animals. According to NielsenIQ 2023 Sustainability Report, 92% of customers declare sustainability is very important to them, with 42% concurring that sustainability is far more crucial today than it was 2 years earlier.
The term “sustainability” can represent a range of things for animal market customers. Reduced contamination or tidy for the environment, defense of natural deposits and much better for the world are the most popular customer meanings of sustainability, according to international research study from NielsenIQ. Other significances consist of cutting emissions, safeguarding wildlife, much better worker conditions, returning to society and much better for minorities.
Not just exists a bounty of various significances for “sustainability,” however there is likewise a generational distinction of the term and what it incorporates.
“We found that in developing countries there was an increased interest in that social aspect, where in more developed countries like the United States, the United Kingdom and the European Union, we found it was much more of a focus on the environmental aspects,” Frey shared. “The other interesting thing that we found was some nuances between older consumers and younger consumers. Older consumers tend to see sustainability more on the environmental front, whereas younger consumers believe in the environmental, but they are also very much looking at the social aspects.
“One of the things that we recently did is we took a look at heavy, medium and light users in environmental sustainability,” she included. “Across all age cohorts, the most fascinating thing we found was that the youngest generation (consumers that are 18 to 24 years old) are the low usage households. Though there’s not a lot of them today in terms of their spend, there’s so many more of them, 55% of [younger consumers] are buying environmental. This is critically important when you think about your future consumers and being able to really understand what sustainability means to your consumers.”
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With a range of significances for sustainability, NielsenIQ dove much deeper into item declares that suggest sustainability to customers. According to the marketplace research study company, the most crucial claims that make a brand name sustainable cover sourcing and product packaging. Among the sourcing claims, the most crucial consist of accountable, morally and in your area sourced. Among product packaging claims, the most crucial to customers consist of sustainable product packaging and eco-friendly. Other declares that make a brand name sustainable consist of environment-friendly, decreased or zero-waste, much better for the world, defense of natural deposits, following ESG, licensed sustainable, cruelty totally free and how the item is carried.
Frey likewise revealed that consumer-packaged items items with sustainability claims are growing much faster than those with no, though out of a lot of CPG items, animal food continues to have the most affordable variety of claims. Brands with more sustainability associated claims likewise gain from greater customer commitment, with more than 50% of these brand names experiencing repeat rates of approximately 34%, according to NielsenIQ.
“We’re not seeing a lot of claims [in pet food],” she said. “Now the perspective here doesn’t mean that sustainability isn’t important, it actually means that there’s a huge opportunity to really understand the sustainable claims that are important to your consumers.”
Additionally, Frey revealed that families that own more animals express a greater interest in sustainability and sustainable items, likely due to the thought effect multi-pet ownership might have on the environment. Top sustainable issues for families owning numerous animals consist of ecological sustainability, sustainable product packaging, social duty and animal well-being.
“The more pets that the consumer has, generally there’s some higher level of interest in environmental and sustainability overall,” Frey said.
In animal care particularly, there are a range of sustainability claims experiencing big development and offering brand names opportunities to separate their items in the extremely competitive space, according to Frey. Within the animal well-being sector, “farm raised,” “wild-caught,” “humane,” “cage-free” and “free-range” claims held the biggest quantity of overall animal market sales in the year ended February 2023.
Within the ecologically sustainable sector, sustainability claim accreditations, “zero waste,” sustainable forestry accreditations and “renewable energy” claims held the biggest quantity of overall sales. Within social duty, the claim “responsibly sourced” boasted the greatest overall sales. Claims like “ethical” and “women-owned” are likewise experiencing development albeit at a slower speed. On the product packaging side, “recycled packaging,” “recyclable,” “plastic-free,” “100% recycled paper” and “BPA-free” declares held to a lot of sales.
NielsenIQ discovered that animal care brand names are benefiting from the wide range of sustainability claims, boasting a mix of claims throughout all quality sectors to more separate their items and show their dedication to sustainability.
“Brands that did better played across multiple of these pillars,” she explained. “They didn’t just play in environmental, they didn’t just play in packaging, they played in multiple pillars. We saw their performance two times better than if they were just playing in one of the claims. The hypothesis here is that when you’re in multiple pillars, you’re indicating to consumers that you are really into [sustainability].”
Ending the discussion, Frey highlighted the sustainable actions customers desire pet care market business to take. According to NielsenIQ’s Omnibus Survey from December 2021, the most popular actions customers desire business to make focus on product packaging and waste. More than half (53%) think business ought to work to lower their quantity of plastic in product packaging, 46% desire business to utilize sustainable product packaging products, and 44% claim business ought to lower their quantity of item packaging.
Regarding waste, 51% of customers think business ought to effectively remove product waste, 44% desire business to lower their production waste by reestablishing it into the production procedure, and 37% claim business ought to lower their carbon emissions. Less popular actions deal with the supply chain, like just utilizing sustainable providers, minimizing basic material transportation and utilizing in your area sourced components.
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