Pet Food Manufacturing and the Pandemic: Inside an Industry Boom

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Millions of households across the globe have acquired a new pet since the outbreak of the Covid-19 pandemic. The growth in pet ownership in 2020-2021 has seen unprecedented demand in the pet food sector – a true industry boom.

Here we provide an overview of the latest pet food industry trends, and answer the question: how can pet food manufacturers respond to changes in consumer demands to take advantage of these new trends?

The pet food industry & the pandemic – an overview

Prior to Covid-19, pet food manufacturing had seen five years of consistent growth. Since the onset of the pandemic, there has been a significant increase in pet ownership, which has led to greater demand for and sales of pet food.

Pet ownership

3.2 million UK households have acquired a pet since the start of the pandemic.

What has changed in the UK’s pet food industry?

3.2 million UK households have acquired a pet since the start of the pandemic. This increase in pet ownership—along with panic buying—has created a huge surge in demand for pet food.

Pets in the UK are increasingly treated as family members and companions as the newer generation of pet owners become more isolated.

The new standing of pets in the family has led to a move away from table scraps and home-cooked pet food towards higher quality manufactured pet food products.  This is particularly true of dog owners who more and more are shopping for premium, nutrient-rich dog food.

 How has the US pet food industry changed?

In 2020 pet industry sales exceeded $100 billion for the first time in the US, with sales in the pet food and treat categories increasing by almost 10%. In 2021, sales in these categories are projected to grow an additional 5%.

Before the pandemic, 67% of households in the US had pets, and 60% of pet owners tended to buy their pet products in store in person.  During the first year of the pandemic online shopping for pets increased more than 15%.

In the latest APPA pet owners survey, 35% of respondents said they had spent more in the past year on pet supplies—including food and wellness products—than in the preceding year.

What changes have there been in the NZ and Australian pet food sector?

Dog ownership in Australia increased in the first year of the COVID-19 pandemic, leading to an overall increase in sales of dog food. Sales of pet food and treats increased 9.7 percent in the year from 2019.

At the start of the pandemic and the 2020 lockdowns, dog owners opted to purchase in bulk, hoarding quantities of dog food to ensure ‘man’s best friend’ was well-fed during lockdowns.

dog food

Dogs ate well during the pandemic, which boosted sales for manufacturers

Business Wire predicts that the Australian pet food market will grow to $2.9 billion in the next four years.

New Zealand industry sources report that pet food suppliers sold three months’ worth of products in just two weeks during the Covid-19 lockdown.

The importance of pets to their owners has boosted demand for premium pet food – New Zealanders, like many others, also turned to pet ownership for comfort and companionship.

The pandemic and the pet food industry

Industry growth is positive news, but sudden, unprecedented growth comes with substantial issues. Many pet food manufacturers significantly scaled up production to meet the increased demand for pet food during the pandemic.

At the same time they had to respond to supply chain disruptions, plus the need to keep employees safe, and schedule production around employee absence due to infection or quarantining.

Production forecasting is based on historical data, which also presented a challenge to some pet food manufacturers, who had difficulty increasing or shifting production quickly.  In addition, global demand surges led to a shortage of raw materials for pet food products and certain packaging materials.

These issues resulted in backlogs and severely impacted order fulfilment. This was exacerbated by international shipping problems, such as fewer operating ships, lower container availability and higher prices.  Shortages in ground transportation equipment and significant delays in unloading materials from ships on to trucks also disrupted lead times. These disruptions and escalated costs are expected to continue into 2022.

pandemic puppies

Surveys show that two out of five puppy purchases were directly influenced by the pandemic.

The pandemic puppy phenomenon

Dog adoption rates rose, on average, by 40% in 2020, and foster organisations found it difficult to keep up with demand.

Social science research has long reported on the mental health benefits of pet ownership, and strongly supports the view that owning or interacting with companion animals such as cats and dogs can help with anxiety and depression.  This appears to be particularly true in stressful situations, which may account for the boom in dog ownership and dog adoption during the pandemic.

In the UK the Royal Veterinary College surveyed over 6,500 adults who made a puppy purchase between March and December 2020.  Survey responses indicated that two out of five puppy purchases were directly influenced by the pandemic. The American Veterinary Medical Association also reported a 50% rise in new pet ownership between March and August 2020.

The downside to the increase in puppy purchases is an increase in pet surrenders.  As new owners return to their workplaces, pets accustomed to having their humans around may suffer from separation anxiety. The resultant destructive behaviour has led to pet surrender cases of owners ill-prepared for the responsibilities of pet ownership.

Equally, some new pet owners failed to investigate the cost of caring for a pet and as they experienced financial difficulties, or struggled to find jobs, chose to surrender pets.

Raw dog food

Pet owners are changing what they feed their animals.

Pet food industry trends for 2021 and beyond

Pet humanisation has led to a growth in demand for pet care products and services. Pet owners are now more discerning when it comes to what they feed their pets.

The most significant trend is that pets, much like their human owners, are now being offered vegetarian, vegan, grain-free, raw, and organic diets.

Over 50% of pet owners are willing to pay more for pet products that are ethically sourced and eco-friendly.

The recent  APPA survey indicated pet owners preferred pet food with premium, humanely sourced, sustainable ingredients:

  • 19% of respondents reported a preference for non-GMO ingredients
  • 13% indicated a preference for human-grade ingredients

Consumer demand for human-grade pet food for their pets’ diet and nutrition will change how factories process pet food in the future.

As pet food manufacturers work to meet evolving consumer demand, they will need to utilise food manufacturing software used in other industries. Food manufacturing software helps efficiently manage production runs, as well as the traceability of alternative proteins and plant-based raw ingredients.

Below we examine 6 key trends in pet food manufacturing for 2021:

  1. Raw pet food
  2. Private label pet food manufacturing
  3. Online private brands and pet food eCommerce
  4. Superpremiumisation
  5. Innovations in Pet Treats
  6. Hemp in Pet Treats

1. Raw pet food

The thinking behind a raw food diet—whether for people or pets—is that heating food destroys the nutrients and natural enzymes that boost digestion and fight chronic disease.  Raw pet food is usually made up of natural or organic products, whole or ground bone, organ and muscle meat, pet-safe fresh fruits and vegetables, and other ingredients such as raw eggs and yogurt.

Raw pet food can be store-bought or homemade.  Raw food can be freeze-dried or dehydrated for longer shelf life, but meticulous care is needed when handling and preparing raw food.  Proponents of raw food diets cite several benefits to pets – more energy, shinier coats, healthier skin, better dental health, and smaller stools.

2. Private label pet food manufacturing

According to the Private Label Manufacturers Association, the growth in private label pet food was four times higher than national brands prior to the pandemic.

This growth is expected to continue as financial hardship suffered through job losses and flow-on effects of the pandemic mean that lower income households will look to buy quality affordable pet food products.

Cash-strapped pet owners will increasingly seek to purchase alternative direct-to-consumer private label pet food if they can purchase this at a cheaper price point.

Pet treats

Pet treats are a high growth category.

3. Online private brands and pet food eCommerce

Sales of private label pet food has always been strong in many regions globally, especially in Western Europe.  In 2019 private label pet food sales reached $2.2 billion in the US and have continued to rise.  The pandemic hastened the rise in eCommerce as pet owners stayed at home and ordered pet food online.

Globally pet food buyers have led a dramatic shift to eCommerce preferences throughout the pandemic.  Largely a result of social distancing and personal safety measures, pet owners increasingly switched to online retailers for contactless delivery options.  Prior to the pandemic eCommerce in the US made up 16% of the online pet food category, and currently sits at 23% of the category.

4. Superpremiumisation

In contrast to the trend for cheaper pet food options, an increasing number of pet owners are looking for the same qualities in a pet food as they look for in their own food.  This is because most people see pets as part of the family, and so premium plant-based foods, superfoods, ancient-grains, and novel proteins are now important considerations in pet food purchasing decisions.

5. Innovations in Pet Treats

Pet owners feed their pets nine treats a day on average. Pet treats represent a high growth category and pet food manufacturers must be innovative with new products to keep ahead of the competition.

The variety of new products in this category is huge, with new product launches including smoothies that can be fed straight from the tube, new mousse treats, dairy-free human-grade ice treats, and bone broths for both cats and dogs. There are even lorikeet bars and canary treat lollipops for feathered friends.

Pet treats come infused with essential vitamins, minerals and fatty acids. They boast numerous claims such as promoting strong bones and teeth, healthy fur, and better immune function.

This has driven a general shift toward transparency in the treat category. Pet-owning consumers want healthy ingredients and seek to easily understand the ingredient list.  Food manufacturing software therefore will become a necessary tool to help businesses track ingredients and easily itemise beneficial nutrients.

6. Hemp in Pet Treats

Lauded as one of nature’s wonder plants, and an excellent source of plant-based protein, hemp is packed with vitamins, minerals, and omega fatty acids – all of which are claimed to promote healthy skin and joints, and to help fight inflammatory conditions such as allergies and arthritis.

Hemp products also contribute to healthy fur and shiny coats on animals.  Hemp seeds and oil are easily combined with other protein sources to support a pet’s optimal health and are increasingly becoming a key ingredient in the pet food treat category.

Inventory management software and the pet food industry

The many recent manufacturing challenges brought about by the Covid-19 pandemic support a need for precise inventory management. In the short term, many challenges will persist for manufacturers:

  • Supply chain disruptions
  • Increased consumer demand
  • A shortage of ingredients and packaging materials
  • Worker safety protocols

Inventory management software—in particular food manufacturing software—is essential to track product margins with high-cost special ingredients.  Batch tracking the expiry dates of fresh ingredients with food manufacturing software also becomes increasingly important, especially for raw food and perishables.

4 benefits of using cloud-based software for pet food manufacturing

Manufacturers can realise the following four benefits by implementing cloud-based inventory management software, which we discuss in more detail below:

  1. Remote working efficiency
  2. eCommerce integration
  3. Multichannel sales
  4. Enhanced customer satisfaction

1. Remote working efficiency

This is particularly relevant in the current COVID-19 environment, since cloud-based inventory management software enables managers, production staff and other employees to access inventory data from anywhere at any time.

2. eCommerce integration

Cloud software integrates seamlessly with other systems. Sales order management is crucial for online selling, and pet food manufacturers can more effectively respond to high demand by linking their warehouse to their eCommerce store.

Cloud integration optimises resource management and provides accurate, relevant, and timely information to all business areas.

Food manufacturing software gives the pet food industry the agility to pounce on opportunities.

3. Multichannel sales

A multichannel approach enables consumers to enjoy a seamless, tailored shopping experience.

Done well, multichannel sales provide customers – whether B2B or B2C – with a unified, real-time view of inventory stock online, in-store and at distribution centres. This gives customers specifics of available products, stock quantities and where the products can be purchased.

4. Enhanced customer satisfaction

Customer service is a high priority for the modern consumer.  Improving the customer experience through better technology and automation has influenced the way customers purchase pet products and services.  Inventory management software in particular enhances customer satisfaction by giving access to real time stock availability and lead times.

More about the author:

Greg Roughan - Unleashed Software
Greg Roughan

Article by Greg Roughan in collaboration with our team of inventory management and business specialists. Greg has been writing, publishing and working with content for more than 20 years. His writing motto is 'don't be boring'. His outdoors motto is ''I wish I hadn't brought my headtorch', said nobody, ever'. He lives in Auckland, New Zealand, with his family.

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