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Trend Watch: Growing Demand for Functional Pet Food

 

Emily Woon
Industry Manager
Pet food and Pet care
Euromonitor International

&

Yvonne Kok
Research Manager
Euromonitor International

 

A corollary of premiumisation, but one that is worthy of attention in its own right is the increasingly demand and proliferation of functional pet food products.

All of the major players in the pet food market have now developed a wide variety of functional products by either launching extensions of existing brands or creating entirely new product lines. One of the most established forces in the functional segment is Colgate-Palmolive, whose Hillís Science Diet accounted for close to a quarter of the value of premium pet food sales in North America in 2006. Globally, it enjoyed a premium pet food market share of 14 percent in 2006, making it the segmentís leading brand. Among the functional products marketed in this range are dog foods that claim to clean teeth and freshen breath (Oral Care Adult), maintain healthy skin (Sensitive Skin Adult) and are easily digestible (Sensitive Stomach Adult).

One of the emerging niches in functional pet food consists of products that claim to have a positive impact on a petís behaviour. Once again, Colgate-Palmolive has been to the fore, with a product that claims to calm nervous dogs (Active Adult) available as part of its Science Diet range, but similar products have been launched by Nestlť Purina and others, usually as new iterations of popular, existing brands.

Some of these products are low in protein and simple carbohydrates, while others contain vitamin B. As the anthropomorphism trend (i.e. treating animals as if they are human in behaviour or character) deepens, products offering behavioural benefits are likely to prove increasingly popular with consumers.

Nestlť Purina challenges higher-end Hillís Prescription Diet

The higher-end Hillís Prescription Diet, which is only sold through veterinarians, is even more focused on functional benefits, containing products specifically formulated to protect against such health risks as heart disease (Canine g/d), hypertension and heartworms (Canine h/d), arthritis (Canine j/d), kidney failure (Canine k/d), diabetes (Canine w/d) and food allergies (Canine z/d). A similar range of products is also targeted at the feline market.

However, Nestlť Purinaís Pro Plan, which is also sold exclusively through veterinarians, has now surged ahead of Hillís Prescription Diet in the premium dog and cat food segment. Pro Planís global retail value share of premium pet food grew to 3.4 percent by 2006. Between 2000 and 2006, the market share of Hillís Prescription Diet fell from 1.5 to 1.2 percent.

Pro Planís success has been aided by the fact that it is more widely distributed than Hillís Prescription Diet, marketing the range through both specialist pet retailers and veterinarians (Hillís Prescription Diet is marketed solely through the latter channel), indicating that this type of product is entering the mainstream market. Moreover, mimicking the Atkins Diet, Nestlť Purina has reformulated its entire line of Pro Plan cat foods to contain protein levels of at least 40 percent, which the company claims is the highest percentage of protein now available in any dry cat food brand.

The biggest obstacle to the growth of this niche is the fact that veterinarians are becoming less important as a channel for pet food sales. Although selling a product exclusively through this channel does seem to lend it additional credibility with at least some consumers, if current trends are not reversed, the limits to market penetration inherent in this strategy may eventually outweigh its benefits. This would force both Colgate-Palmolive and Nestlť Purina to either broaden the distribution of their respective products, perhaps weakening their appeal in the process, or resign themselves to a legacy market.

Pet food products which are functional for the owner, rather than the pet

Another recent development is the creation of a pet food that dramatically reduces the number of times an animal has to defecate. Developed in the Netherlands by Energique, its eponymous dog food is claimed to be almost entirely absorbed into a petís body, with the remainder coming out in the form of a small, dry, easily disposable pellet. Energique is totally meat-based, and the company claims that the protein, vitamins and minerals contained in the product are more like the diet that dogs have in the wild than conventional pet food.

Although these claims are disputed by some experts in the field, this product has received considerable media attention and will probably appeal to apartment dwellers and the growing number of pet owners whose animals are indoors and/or unsupervised for extended periods. More generally, it also shows the potential of products that are functional for the pet owner, in that it makes owning a pet easier, rather than for the pet itself.

Functional segment well placed for future growth

Moving forward, the functional pet food segment is likely to become more nuanced in a manner similar to the wider premium segment. While sales through the veterinary channel are likely to come under pressure, products with behavioural benefits and offerings that make pet ownership more convenient are likely to grow in popularity. Overall, the deepening of the pet anthropomorphism trend will continue to drive growth in this segment. Although overall economic conditions remain a downside risk, functional pet foods are likely to be in a better position to weather any downturn in the market than the premium segment as a whole because of the specific functionality of their offering.

An eye on India

Conversely, while the market for pet food in India is becoming more segmented, there are more developments and interest in life stage and breed specific products as opposed to condition specific, functional products. Dog food, for instance, is slowly taking on the form that pet owners can relate to and manufacturers are placing lesser emphasis on highlighting functional benefits as compared to ingredients. The pet humanisation trend has permeated the metros where pet owners are increasingly transferring their own expectations for food onto their pets. As most pet owners are reluctant to feed their pets food that they cannot identify with, manufacturers have been prominently displaying ingredients and pictures of food such as meat, vegetables and milk on the packaging. More focused brands such as Royal Canin German Shepherd, Propett Adult Small Breed and Pedigree Puppy Chicken with Milk, amongst others, are certainly gracing more shelf space.

In the longer run, while dog food manufacturers are expected to launch more functional food that targets such specific age cycles and breeds of dogs, products that serves a specific function such as a weaning diet or a shiny coat for dogs will gain popularity with a niche group of sophisticated, well-informed dog owners. With Effem India launching the Pedigree Professional range in early 2008 and thus allowing the company to gain entry to the upper priced end of the market, other manufacturers are expected to follow suit.

Similar to the canine population, such new product developments are also on the map for the feline population although this is expected to remain quite niche and is unlikely to be on the same scale as development of functional dog food. Effem India has made a concerted effort to raise the profile of Whiskas in the country by adding age-specific functional food such as Whiskas Kitten to its portfolio in order to further segment cat food in the country. Alliance International is also expected to extend its new launch Propett to cat food in late 2008 while Venkyís India is also expected to beef up its cat food portfolio by adding more functional cat food in the short term.   

    

  
  

 

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