The State of the Pet Industry in 2023
2023 is a period of both growth and challenges for the Pet industry. One of the biggest factors in the state of the pet industry is price increases. Prices through 2022 climbed, lapping the price increases of 2021. While dollar sales are up, units are on the decline. In fact, the average spend per item per store per week nearly broke $20. Yet, the purchase assortment has declined to levels lower than in the last three years.
With mixed signals from the market, many emerging pet brands are struggling to make gains. Some are choosing to cut their assortments and focus on successful product offerings. Others are focusing on one channel only and eschewing an omnisales approach. But, these actions may not be based on the best information on the state of the market and how consumers are choosing to behave in an inflationary environment.
So, what does this all mean for emerging pet brands? You’ll want to take a closer look at the trends shaping the market and how you can become aligned with the future of the category. In the end, this all comes down to how well you understand the consumer and identifying the factors that affect demand in your category.
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Top 5 Pet Trends for Pet Brands
As you can tell, there are both ample upsides and unique challenges facing emerging pet brands in 2023. Whether you sell pet food, supplies, treats, or something else, there are major trends likely affecting your brand. But, they aren’t all negative, so there’s still plenty of opportunity lying in wait.
With that in mind, here are the 5 top pet trends affecting pet brands across the board:
1. Price Increases
Unfortunately, no industry is immune to radical shifts in the market like inflation and consumers’ fear of an impending recession. After a 2-month period of disinflation, the average unit price for CPG products increased to 11% in January. The rise in CPG prices continues to surpass (and nearly double) the CPI, causing ongoing concern over the price of necessities and an impending consumer recession. This shift is certainly making its presence known in the pet category.
For example, in 2022 pet food prices increase by an average of $0.30. This is the largest jump seen in the past five years and one that is concerning for both brands and consumers alike. As the cost per item increases, consumers are likely to cut back on their total basket, limiting pet brands’ ability to sell multiple SKUs per transaction. To conflate the issue, the lowest demographics spent +21.4% more on pet food during the same time period. As such, their ability to buy a broader variety is diminishing.
2. Assortment Reduction
Often going hand-in-hand with inflationary price increases, assortment reduction is a tactic many pet brands are employing to keep their margins and avoid excess inventory issues. In 2022, the total number of pet food UPCs sold dropped by 2.4%. This is the first time assortment sales have dropped in the category in more than four years. As a result, pet brands are starting to question whether their full product assortment is worth keeping.
This means assortment optimization is becoming more important than ever, especially for emerging brands. This means brands need to rely heavily on data analysis and insights. Pet brands need to ensure that they have reliable data and analysis tools to make informed decisions about their product mix. Unfortunately, many brands are only seeing a part of the picture via retail sales or a third-party company. Acting on inaccurate or old data leaves brands in the dark struggling to keep pace as their competition takes more shelf space and grows.
3. Humanization of Pets
On a more positive note, more and more pet owners are treating their pets like members of the family. This has led to a greater demand for higher quality and more natural pet foods as well as more consumers seeking out toys and treats for their pets. Pet food brands are increasingly marketing their products as healthy, natural, and organic, with ingredients that are similar to what humans would eat.
This means many of the trends we’re seeing in human food are also showing up in Pet. Healthier diet alternatives, sustainable goods, and ethical sourcing are all areas where consumers are spending more money. This is an area where brands like Shameless Pets are well-positioned to align with pet owners and gain market traction going forward.
4. Omnichannel Shopping
Whether consumers are looking for pet food, supplies, toys, or treats, they’re embracing omnishopping in droves. In fact, more than one in five (22%) shoppers now plan an in-store shopping trip combined with a prior online order. This means emerging pet brands have even more opportunities to connect with prospective customers across the channels.
It’s important to not that omnichannel shoppers exhibit some different behavior than their brick-and-mortar counterparts. Rather than searching by brand, omnichannel shoppers tend to search by product attribute. That is, using terms like “gluten-free”, “sustainable”, and “ethically sourced”. This means you can better align product packaging and listings by looking at the stated and qualified product attributes you use on your products.
5. Pet Ownership on the Rise
One of the best pieces of news for bet brands is that there are more Pet Care households in 2022 and the number is rising! Even better, these households are spending a greater amount on average over last year. At the end of 2022, there were more than 110 million households buying pet products with an average value per buyer of $680. That’s a 10.7% increase over the previous year and rising. However, it is still important to remember the role inflation and price increase play in the growth of the household’s spend. Additionally, evidence shows that the biggest driver of growth in Pet Care still comes from existing households purchasing or repurchasing for their pets.
Top 4 Pet Trends for Pet Food Brands
The Dog & Cat Food industry surpassed $47 billion across in-store and online, with continued double-digit growth trends vs. previous years. But, that doesn’t mean it’s an easy path to success. There are several significant trends that are currently impacting the pet food industry and pet food brands. Overall, pet food brands that can meet the growing demand for natural, sustainable, personalized, and alternative protein sources, while also leveraging the benefits of eCommerce, are likely to be successful in the coming years.
Some of the biggest pet trends for pet food brands include:
1. Grain-Free Stagnation
For many years, we continued to see more consumers embracing grain-free pet food. But, the past three years have shown signs of consumer fatigue or disinterest in taking this route. Last year, sales of grain-free dry dog food hovered around $1.4 billion, a modest 4.5% growth YoY. But, this number is still down from 2019 and the growth rate appears to be slowing. Meanwhile, grain-in dry dog food grew by more than 20% in both retail and online channels during the same time period. This seems to show that more consumers are returning to grain-in pet food.
Additionally, in September of 2020, the FDA released a report on their findings which indicated that they do not officially know the connection between a “grain-free” diet and canine dilated cardiomyopathy (DCM) in dogs. Until there is a clear answer to these lingering questions, pet parents are making health decisions for their pets that they would make for themselves.
2. Sustainability Mindsets
Over the past 10 years, we have seen positive consumer sentiment toward sustainability and anticipated that purchasing preferences would drive the industry toward a green revolution. But a combination of challenges has slowed progress and led to a situation where consumers and companies have not driven the change anticipated. Still, many pet owners are becoming more environmentally conscious, which has led to a demand for more sustainable pet food packaging and production practices. Brands that are incorporating sustainable practices into their production processes and packaging are gaining popularity among pet owners.
For example, Pet products identified as “certified human raised and handled” grew by 110% in sales over the last two years to account for $11 million in sales. “Ethical” products grew 48% to $11.7 million, while “cruelty-free” products increased by 10% to account for $18 million in sales. Clearly, many consumers are taking sustainability to heart and it’s impacting every category they shop in, including Pet.
3. Demand for Personalization
One of the biggest trends we’ve seen in online retail is a focus on personalization. But, when it comes to food, this is more than just personalized product pages or assortment offerings. Today’s consumers are looking for products that are personalized to their unique diets and health needs. Just as with human food, pet owners are increasingly seeking out customized or personalized diets for their pets. This has led to a rise in pet food brands that offer tailored diets and supplements to meet specific pet health needs.
As concerns over the environmental impact of animal agriculture continue to grow, more pet food brands are exploring alternative protein sources such as plant-based, insect-based, and lab-grown meat. This trend is likely to continue as pet owners look for more sustainable and ethical protein sources for their pets. Understanding how human food trends have impacted pet food search terms can help you build a better future for your brand and assortment.
4. The Rise of eCommerce
The growth of eCommerce has played a major role in CPG over the past few years. In fact, eCommerce spending is expected to reach $36 billion in 2023 — a 20% projected increase from 2022. This impact is no different for the pet food industry, with more pet owners choosing to buy pet food online. This has led to a rise in direct-to-consumer pet food brands, which can offer a wider range of products and faster shipping times. While in-store sales are still providing the bulk of dollars, online sales are growing at a faster pace across wet and dry food and treats.
However, there is another major reason to keep an eye on online. While the majority of Pet Food dollars are still coming through brick-and-mortar locations, online sales are driving the emerging trends. If you’re looking to get in on emerging trends early, online sales can help identify the future of Pet. Once you’ve discovered how to adapt to online retail trends, you can start reaching new customers and build a presence across channels.
Don’t Grow Your Pet Brand Alone
Growing a Pet brand requires understanding your customers, sales trends, growth opportunities, and future demand. Which is a lot to ask if you don’t have access to accurate data and valuable insights.
Byzzer powered by NielsenIQ provides emerging Pet brands access to the essential data they need to successfully react to these shifting tides and build growth strategies. Current retail measurement data shows how comparable products perform in various retail channels, helping you target the right retailers and distributors. We also track online and omnichannel sales.
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