Market overview
The pet food industry has undergone significant evolution over the years, driven by changing consumer preferences, advances in nutritional science, and a growing awareness of the importance of pet health and wellness. Historically, pet food has predominantly consisted of processed ingredients such as meat by-products, grains, and fillers. However, pet owners are becoming more discerning about the ingredients in their pets’ diets, seeking options that meet their own preferences for whole, recognizable ingredients. This trend has led to the emergence of innovative brands that prioritize the use of high-quality ingredients suitable for human consumption and employ gentle processing techniques to preserve nutritional integrity.
As a result, the premium pet food sector has seen significant growth and innovation in recent years, leading to increased competition among brands battling for market share. As consumer demand for natural, high-quality pet food options continues to grow, new market entrants are emerging and existing players are expanding their product offerings to meet changing consumer preferences.
Total premium pet food sales increased to $2.8 billion by 2023, with a compound annual growth rate of 4.4% since 2019. This represented 4.9% of total U.S. pet food sales of $57.4 billion in 2023. Premium pet food is expected to grow at an annual rate of 2.0% to reach $3.2 billion in 2030.
Source: IBISWorld April 2024
There have been significant innovations in the chilled and frozen pet food space. Sales have grown to $890 million by 2023 and now account for 31.7% of total premium pet food sales. This represents growth of over 30% per year since 2019 and is contributing significantly to the overall expansion of the premium pet food sector. This trend is expected to continue, providing competitive opportunities for both manufacturers and retailers to increase market share.
Source: PET Food Processing, Circana
Brands like Freshpet, the clear winner in this area with a market share of 89.8%, value transparency, quality and sustainability and thus resonate with consumers looking for alternatives to conventional pet food.
Source: PET Food Processing, Circana
Price points by pet food type
As consumer preferences have changed, so has their willingness to pay significantly more for wet, fresh and raw food. This trend toward more expensive products offers manufacturers and retailers the opportunity to increase their average selling prices and increase profit margins.
Source: Tufts University Cummings School of Veterinary Medicine
Innovations in premium and fresh pet food
The trend towards high-quality and fresh pet food has encouraged brands to innovate and launch high-quality products containing exotic proteins, organic ingredients and special recipes for specific health problems.
High pressure processing (HPP) is a non-thermal food preservation technique that uses high pressure to kill harmful bacteria, molds and yeasts while preserving the sensory and nutritional properties of the food.
- HPP offers several benefits to fresh pet food manufacturers, including longer shelf life without preservatives, improved food safety, and the preservation of vitamins, enzymes, and flavor. Brands that use HPP include Freshpet, Steve’s Real Food, Primal Pet Foods, Nature’s Variety, and Stella & Chewy’s.
Freeze-dryingalso known as freeze-drying, is a dehydration process in which the product is frozen and then the ice crystals are removed by sublimation, creating a dry and shelf-stable product.
- Freeze-drying offers numerous benefits for fresh pet food, including preserving nutrients, texture and flavor, as well as increased convenience and a longer shelf life. Brands that offer freeze-dried options include Open Farm, Nulo Freestyle, Stella and Chewy’s, Bravo, Vital Essentials, Halo, Grandma Lucy’s and Wellness CORE (Wellness Pet).
Food-grade animal feed refers to products made with ingredients and processes that meet the same safety and quality standards as foods intended for human consumption. Brands that use human-grade ingredients include The Farmer’s Dog, The Honest Kitchen, A Pup Above, Ollie, Raised Right and Nom Nom.
Personalized nutrition Pet nutrition is about tailoring their diet to their individual nutritional needs, taking into account factors such as age, breed, activity level and health status.
- Technological advancements such as mobile apps and online platforms have made it easier for pet owners to access personalized nutrition services and customized meal plans for their pets. Brands that offer personalized nutrition include The Farmer’s Dog, Freshpet Custom Meals, Ollie and Nom Nom.
Sustainable and environmentally friendly practices
With growing concerns about environmental sustainability, pet food manufacturers are increasingly turning to environmentally friendly practices to reduce their carbon footprint.
- Sustainable packaging solutions such as biodegradable materials, recyclable packaging and compostable options are becoming increasingly popular in the pet food industry.
- More and more pet food brands are committing to sustainability and environmental stewardship, incorporating sustainable sourcing, manufacturing and packaging practices into their operations. Examples of these brands include The Farmer’s Dog, Nature’s Recipe, Pet Plate, Open Farm, The Honest Kitchen, Wild Earth and Wellness Pet.
Requirements for chilled and frozen animal feed
Pet specialty retailers dedicate the most space to this category and typically have up to four refrigerators and/or freezers in the pet food section of their stores. This currently provides up to 16 linear feet of space and as the category grows, this space will need to be expanded. Retailers typically market between 16 and 24 SKUs per refrigerator/freezer, with the largest physical assortments containing 64 to 96 SKUs.
To create an impressive shopping experience while delivering the highest quality pet food, retailers must consider several requirements.
- Reliable cold chain distribution to ensure high quality.
- Frequent product changes to ensure the sale of obsolete products with limited shelf life.
- Regular maintenance of refrigerators and freezers to ensure the appliances function properly.
- Effective signage and pricing options for attractive customer communication.
Challenges and considerations
Pet food manufacturers must navigate a complex regulatory environment and ensure compliance with food safety regulations, labeling requirements and quality standards. Fresh and natural pet food can be more expensive compared to traditional pet food options, posing challenges for price-conscious pet owners.
There is a need to educate consumers about the benefits of fresh pet food, including its nutritional benefits, ingredient transparency and its positive impact on animal health and welfare. Many consumers may not be aware of the differences between conventional pet food and fresh alternatives, so education is a critical factor in market growth and consumer acceptance.
Conclusion and measures
The premium and fresh pet food sector is poised for further growth and innovation, driven by consumer demand for natural, high-quality pet food options. With increasing competition, brands must continue to differentiate themselves.
Look for ways to differentiate yourself from the competition by focusing on:
- Product innovation, brand storytelling and customer-centric strategies.
- Operational excellence to ensure high product quality standards are maintained.
- Manufacturing and distribution capacities for the product mix.
- Demand planning, production planning and inventory management using effective Sales, Inventory and Operations Planning (SIOP) processes to gain market share.
