While the growth of the US pet food market has brought a proliferation of specialized formulations and packaging options that mirror human food trends, a competitive omnichannel retail landscape and the maturing of the US market challenge both large and small processors are trying to gain market share.

Domestically, the majority of Americans own a pet. The American Pet Product Association 2017–2018 Pet Ownership Survey found that 68% of US households own a pet and spend an average of $300 annually on pet food and treats. The US pet food market is expected to reach $30 billion in 2022 and is anticipated to grow at a compound annual growth rate (CAGR) of 3.36% between 2017 and 2022, according to Zion Market Research.

Pet food and pet snacks have become the largest center-of-the-store category in the US food and beverage market, generating more than $30 billion in annual retail sales across all channels.

Changes in the air

Packaging plays a key role in how brands differentiate product lines in this exploding market. Dry pet food processors report that the net-weight bag size is consistently getting smaller, with a higher percentage of production runs going into bag sizes of less than 10 lbs. And a lower percentage going into bag sizes of more than 20 lbs.

Domestically, the majority of Americans own a pet. The American Pet Product Association 2017–2018 Pet Consumers are embracing convenience over cost resulting in a demand for single-serve and convenience packaging in both pet food and pet treats. The complexity of today’s pet food formulas — the high-meat, high-fat, low-starch formulas — are challenging to process and require specialized processing equipment and premium packaging features that offer product stability and protection, shelf appeal and sustainability.

Pet owners are clearly passionate about their pets and look for products that mirror the pet owners’ belief systems. The highly competitive and dynamic pet food and treat market follows food and health trends seen on the human-food side.

With trends emerging twice as fast as they have in the past from human food to pet food, brands today must be prepared to pivot and adapt to stay competitive. Pet owners are paying much closer attention to the health and welfare of their pets as well. This increased attention is resulting in more specialized pet food and treat formulations for life-stage, health issues and species-specific.

Sustaining the growth

International exports also offer US processors growth opportunities. North America is responsible for 31% of pet food production globally, according to the Alltech Global Feed Survey 2018. Pet Food Institute (PFI), the national trade association for US pet food and treat processors, reports that the maturing of the domestic pet food and treat market will have processors looking to increase exports in order to grow.

Data from the American Pet Products Association and market research firm GfK show that manufacturers have seen a predictable and steady increase in domestic sales over the past 10 years. Meanwhile, the total volume of pet food sales has experienced a slight decrease, indicating that pet ownership rates have held relatively steady while demand for premium pet food has grown. This new reality means that access to foreign markets will be critical for future growth for US pet food and treat processors.

Sustained business growth of US pet food and treat processors contributes significantly to the US economy. The Institute for Feed Education and Research (IFEEDER) commissioned a yearlong research project to quantify the US animal feed and pet food manufacturing industry’s contribution to the national economy. This first-ever economic analysis focused on 2016. The study found that a total of 517 US pet food manufacturing facilities contributed $126 billion to the US economy and more than 398,000 jobs.

The US also leads the pet food ingredients market, holding about 30% share globally and about 80% share in North America, according to research company Markets and Markets. The US pet food ingredients market is projected to grow from $10.4 billion in 2018 to $13.3 billion in 2023 at a CAGR of 5%, which is faster than both the overall pet food market and the pet food processing equipment market.

One factor driving demand for processing equipment as well as production improvements in the pet food and treat industry is the Food and Drug Administration’s Food Safety Modernization Act Preventative Controls for Animal Food rule. These FDA rules are shrinking the gap between the sanitary requirements of a human food processing facility and an animal food processing facility.

Consumer demand for safe pet food and treats that mimic the diets humans consume is shrinking the gap even further. In the fractured and increasingly sophisticated pet food and treat market, processors have the benefit of a growing market but face steep challenges to stay current, relevant and competitive. For the US pet food and treat processors that can continually adapt, the future looks bright.