With nearly 18m cats and dogs living with almost 10m owners across the UK, 36% of all UK households regularly purchase pet food. Based on average feeding guidelines, a cat will consume close to 1,500 pouches of cat food each year, resulting in one of the most frequently repeat-purchased categories in grocery.
Stephanie Case, category and customer marketing director for Mars Petcare UK, notes that the petcare category is growing at 3.4% across the board – more than twice as fast as total FMCG (1.5%).
“It is worth an incredible £2.3bn,” she adds. “This represents a huge opportunity for both wholesalers and retailers. The bond between owners and their pets is a strong one, and is reflected in consumers’ purchasing habits, as they look for the best products on the market from the brands they know and trust. We know that premiumisation, care and treats are set to fuel growth further in 2017.”
Why is range optimisation important?
This should, in theory, represent a win-win-win situation for manufacturers, wholesalers and retailers. However, Hyperama Wholesale commercial director Aris Poulis says there is a lot of work that needs to be done to help all three groups get the most out of the petcare category, with several areas in particular needing a stronger focus.
He says: “Optimisation of the range and correct allocation of investment is essential. In recent years, there has been a lack of focus in the sector, mainly due to heavy investment that went into the multiples to fight the growth of own-label.
“Regular promotional evaluation is also needed to combat the repetitiveness in activities that do not necessarily generate growth. Additionally, in recent years, the promotional funding in growing categories, such as treats, was particularly low for the sector.
“Manufacturers also need to move investment away from segments that are declining, such as cans, where the profit on return is low for all parties involved, to more premium categories.”
Championing the wholesale channel
Felix is on a mission to champion the wholesale channel this year, though, and is working to address some of the concerns Poulis has raised.
Liz Wood, market development organisation director for Felix, says: “Felix ran a number of initiatives to champion the wholesale channel throughout 2016 and this will continue in 2017. The brand has made major improvements to its packaging so that branding is much more prevalent in wholesale environments.
“We have also been investing in communications to champion Felix as the number one pet food brand and therefore the brand that should be first on retailers’ shopping lists. Additionally, we have been communicating a message about the profitability of pouches versus cans – another area where retailers can improve sales by moving on from more traditional options.”
Wood argues that stocking bestsellers is key for any wholesaler. However, retailers may not know what sells best. “Single-serve wet cat food is the largest component of the pet food category. Yet, according to research, only 42% of retailers know that cat pouches sell more than traditional multiserve cans, with many stocking cans over pouches because they wrongly think that cans are the top sellers.
“In convenience, cat pouches outsell cans nine to one and a total of 421,000 shoppers buy cans in the convenience sector each year, compared to 1.5 million purchasing single-serve pouches. Therefore, wholesalers should be stocking pouches that are going to help their convenience retailer customers capitalise on this demand.”
Growth in cat food expenditure
Wood acknowledges that consumers are spending more on their cats. This is reflected in the growing demand for premium products, which Felix caters for with its As Good As It Looks range, which is growing at 13.9% year on year. There are two new multipacks in the Doubly Delicious sub-range: Ocean Recipes and Country Recipes.
“Doubly Delicious is growing at 23.7% year on year, offering a clear point of difference within the Felix range with dual flavours in one pouch,” she adds.
Like Mars, Felix also expects premiumisation and snacking trends to continue to grow in the petcare category in the coming year.
Wood concludes: “Pet food remains a vital area of sales for the wholesale sector. Consumers who own pets buy pet food regularly, making it very valuable for convenience – something that wholesalers should capitalise on.
“In convenience outlets, sales of single-serve cat food have increased by 3.7% in the year to date and it is now worth more than £79m. This is more than four times the value of traditional multiserve cans, which are worth just £19.5m and declining by 1.4% per year.”
Mars’ Case says: “Treats exchanged between owners and their pets can enhance the strong emotional bond between them, as well as providing functional health benefits. There is no doubt that care and treats are fast-becoming the number one must-stock items for retailers, unlocking greater basket spend and encouraging those all-important impulse purchases. Our figures show cat treat sales at £121m and dog treat sales at £381m, up 8.9%.
Innovation in petcare
“At Mars Petcare, we have introduced several new and exciting products to the category in recent months, which have been designed to meet the needs of pets and their owners, enhance the relationship between the two, and are based on our expert understanding and insight. These include Pedigree DentaFlex, a longer-lasting chew that helps reduce the build-up of plaque and tartar. We have also brought innovations to our range of main meal products, such as the best ever Whiskas pouch recipe and a pack redesign across both wet and dry formats.”
Hyperama’s Poulis is eager to see the category given a boost in the year ahead with some exciting innovation. He says: “Innovation, as with every sector, is key. And the truth is that recently, there have not been many new ideas or products in the petcare market. The main changes, excluding the treats category, have focused on packaging alterations in the size or the material used, such as alutrays or pouches. That reengineers existing lines but without offering anything innovative to the consumer.”
While wholesalers would be advised to take on board suppliers’ advice regarding adjusting their range to marginalise canned products, they also need to see more to help them and their retail customers generate excitement and boost sales in the petcare category this year.