Watching the Natural and Organic Petfood Market

Even with the recession, sales of natural and organic products are on the rise.

US retail sales of natural pet products had been growing at teen double-digit rates since 2002, and during 2007 leapt to 43%, according to the Packaged Facts Natural, Organic and Eco-Friendly Pet Products in the US report.

Though sales continued strong in 2008, rising another 20%, 2009 was another story. The 2009 growth rate of natural pet products only slightly outpaced that of pet products overall, increasing just 6% as the recession took hold. Packaged Facts believes this slowdown to be temporary, with sales regaining steam in 2010 and edging back into the double digits in 2011.

Sales of organic pet food also felt the recessionary pinch. According to the Organic Trade Association’s 2010 Organic Industry Survey, the annual sales increase fell back to 10% in 2009, from 48% in 2008 and similarly impressive levels in prior years. Nevertheless, organic pet food since 2003 has lifted sales from US$14 million to US$85 million, or just shy of 6% of total sales of natural pet food.

Entering the market

There are two fast-track means of entering the natural and organic market, according to Packaged Facts data: acquisition of natural specialists (Proctor & Gamble acquiring Natura Pet Products in 2010, for example) and introduction of new products by traditional marketers with some opting for line extensions and others for new brand lines. In the vast US pet food market, formulating and positioning products along natural, organic and holistic lines represents a way for traditional marketers to:

• Pique pet owners’ interests and convert them to more expensive fare;
• Carve out a niche or strengthen their foothold in pet specialty stores, natural supermarkets and online; and
• Set themselves apart from marketers still focusing on mainstream fare.

Affordability an issue

However, particularly in a price-conscious era, affordability is a big issue for consumers. Among pet owners overall, half (52%) agree that they would buy natural/organic pet products more often if these products were more affordable, compared with only 22% who disagree.

According to Organic Monitor, “The economic slowdown has reduced consumer spending power; organic food sales have been affected because of their price premium.” That said, and perhaps partly as a function of the economy, the pace of entry into the organic segment by new companies has been relatively slow for the past couple of years. Nonetheless, the organic segment continues to attract attention market wide.