In Clear Focus: The US Pet Food Industry
In Clear Focus this week: industry innovations in pet food, packaging, and pet product marketing. Debbie Phillips-Donaldson, editor-in-chief of Petfood Industry magazine, explains what’s new and notable in the world of pet care. In this episode, we learn about emerging trends in pet food packaging, the use of insect-based protein as an ingredient, and the kind of online content that engages pet owners the most. We also hear why highly personalized diets for pets, based on DNA testing, might soon be available.
Adrian Tennant: You’re listening to IN CLEAR FOCUS, a unique perspective on the business of advertising. Produced weekly by Bigeye. I’m your host, Adrian Tennant, VP of Insights at Bigeye. An audience-focused, creative-driven, full-service advertising agency, Bigeye is based in Orlando, Florida, but serves clients across the United States and beyond. Bigeye’s pet marketing services, promote pet-related products and services through strategically targeted communications to engage with owners and veterinarians. Thank you for choosing to spend time with us today. If you’ve been listening to IN CLEAR FOCUS since our first episode, you’ll know that earlier this year, Bigeye undertook a national study into the behaviors and attitudes of pet owners. As a pet care marketing agency, we were interested in the findings that suggested new behaviors among younger pet owners, especially with regards to the kinds of foods they choose for their pets and how they’re most likely to seek recommendations. In today’s show, we’re joined by a guest who is truly immersed in the topic of pet food and a professional observer of pet food marketing. Debbie Phillips-Donaldson is editor-in-chief of the magazine Pet Food Industry. Debbie directs all content for the magazine plus the website, petfoodindustry.com, e-Newsletters, Petfood Forum conferences, and related media and publications. Debbie has been in the industry and with Watt Global Media, the parent company of Petfood Industry since 2006. Welcome to IN CLEAR FOCUS, Debbie.
Debbie Philips-Donaldson: Thank you. Thank you for having me.
Adrian Tennant: Okay. Can you help us understand the industry and its economics? Who are the biggest players in the US pet food industry right now?
Debbie Philips-Donaldson: Well, the industry overall, globally and in the US is very top-heavy. So you have some very large companies dominating the market. Close to 50% market share combined, and then a lot of middle-sized companies and then a lot of smaller and newer companies, which happens to be where a lot of the innovation comes in honestly. Not that the other companies aren’t innovating, but not to the degree I would say as these smaller companies. So anyway, in the United States, Nestle, and Mars – that’s Purina and Mars Petcare – are by far the biggest, and then followed by JM Smucker, which has brands such as Big Heart and Rachel Ray and then Hill’s Pet Nutrition, and then Diamond Pet Food, and Blue Buffalo. Blue Buffalo might be overtaking one or two of those other ones, they’re now part of General Mills and continuing to grow. We actually have a resource on our website called the top pet food companies database and it’s global, and we track the revenue of companies from around the world and we update that once a year. That’s where I’m getting that information from.
Adrian Tennant: That sounds like it’s a great resource. Thank you for sharing. Are there any new or challenger brands that you see having an impact on the industry?
Debbie Philips-Donaldson: Well, I can’t really point to any specific brands. What I would do instead is talk about some categories, and these probably aren’t a surprise to you or any of the listeners. There’s all the quote-unquote newer formats. So traditionally pet food’s been dry kibble or wet canned pet food. But in the last several years, probably more five to 10 years, formats like raw, freeze-dried, fresh, egg, all of those have definitely caught the attention of pet owners and retailers and they’re some small parts of the market, but they’re growing pretty quickly. And I would also point to customized diets. Usually offered via subscription or direct to consumer models. That’s a new and upcoming category. Again, still small, but it seems like every time you turn around there’s a new company out there. And then you know, just the companies that are really innovating based on new types of ingredients and nutrition information. So one, for example, based on genomics or the microbiome. And you have products based around things like insect protein, which is not yet legal to use in the United States, but it’s definitely being studied and being tracked to become legal. And then you have culture products, there’s a brand out there called Wild Earth that bases its products on Koji, which is some kind of cultured fungus thing. I’m not describing it well, but it’s called Wild Earth and if you look it up, it’s a very interesting new concept.
Adrian Tennant: Wow. This whole area of pet food ingredients is really interesting. How has US consumer concerns about sustainable farming methods or organic produce kind of influenced how pet food ingredients are being sourced now?
Debbie Philips-Donaldson: It’s definitely influenced by that. Not a lot of data on it and what I do know, it’s still a small part of the market, but it’s just like with every other product category, consumers are starting to care a lot more with their food, or the pet food about where the ingredients come from, how it’s produced, how the animals producing are treated. For example, one claim that is tracked is made in the USA, which is sort of related and that’s very attractive. It’s about 30% of dog and cat food buyers in the US say that’s a draw for them. And organic, even though it’s not, the sales numbers don’t show it about six to 8% say that’s attractive to them. Locally sourced and humane or ethically raised. And they come in about three to 4%. And this is based on a consumer survey for package backs by the way.
Adrian Tennant: Great. Now I can’t leave it, you mentioned insect protein. What’s that about?
Debbie Philips-Donaldson: It’s a very interesting and growing part of at least as a focus and attention. Even though in the Western world most people think of eating insects as yucky, there are places all around the world where people, it’s part of their staple diet. South America, the Middle East, Asia, Africa. I mean, it’s really not a foreign concept everywhere. In the Western world, it’s starting to be looked at very carefully because insects can be raised at a scale to be processed and everything and they’re much more environmentally friendly in terms of how much land use, which is negligible compared to say livestock, traditional livestock. Use much less water, much less processing energy, et cetera, et cetera. Right now it’s not affordable at a scaled level because it’s still fairly new. Although in Europe it’s a little bit more advanced than here because it has been approved for use in a lot of different species. I think with all the innovation and development happening, it’s starting to become more … If you are in a place like Germany for example, there’s a large pet trade show every two years called Interzoo, and I’ve seen complete pet diets available that have insect protein. Here in the US, it’s okay to use in treats. And so you will see treats with cricket meal protein, the company that’s making that is called Jiminy’s. And they actually have developed the food and they’re trying to get it approved to sell in the different states.
Adrian Tennant: Fascinating. In the human food world, certainly lab-based or plant-based foods from Beyond Meat, the Impossible Burger for sure have captured the headlines, and I think the imagination of investors, it seems. Is there a similar kind of movement towards lab-based proteins in the pet food industry?
Debbie Philips-Donaldson: Very, very nascent. I’ve heard of one company for example called Beyond Animal that’s doing some, it does some cultural work with a probiotic and now they’re looking at something to do with mouse cells, and it’s very early on in the development, but that’s their end goal. I mean, dogs are technically omnivores. Some people say they are carnivores, but they’re really omnivores and so there actually are some vegan dog foods or vegetarian dog foods that are on the market that are safe. Cats have to have meat as a source because they just have a different physiology and they can’t force some essential amino acids from plants. They have to have it from meat sources. So none of that’s really been studied in terms of using all non-meat for pets overall, and especially it probably wouldn’t work for cats, I’m assuming. I don’t know that, but it’s not been studied at all.
Adrian Tennant: Interesting. Now you mentioned the lack of studies in this area. Cannabidiol or CBD – is that being embraced by large manufacturers or does that remain a niche only being exploited by smaller independent brands?
Debbie Philips-Donaldson: Well, if any large manufacturers are using it, they’re probably not talking about it yet, because it’s really not legal. I mean technically it’s not legal for humans, and it’s definitely not legal for pets. Even though you will see if you go to a pet trade show, you will see hundreds of products having CBD and including edibles like treats especially. But I think it’s because the FDA just hasn’t caught up yet. I have started hearing that some companies are getting warning letters for marketing products with CBD and claims around it. The sort of approved way to use them for pets is with supplements because there is a separate process, regulatory process and certification process with supplements that some companies are pursuing with CBD. But I’m sure companies are looking at it because it has so much interest and play in the market. But at this point, the large manufacturers, why would they take that risk? They would get all the attention from regulators that they took that kind of risk. I don’t think they’re doing it. Except probably studying it behind the scenes and waiting to see if the regulations catch up.
Adrian Tennant: Interesting point. We have been tracking CBD quite closely in this podcast and in our publications. We found in the 2019 US pet industry study, that 17% of our respondents were already administering CBD products to their pets, and 42% who are not currently using CBD are very open to its use. So it seems like there is some, more than consumer interest, but consumer demand there. So it’ll be interesting to see when the FDA and the FTC line up on what is and isn’t allowed.
Debbie Philips-Donaldson: Exactly. Yeah. Again, I think there’s so many out on the market that probably just couldn’t even keep up with it if they had an interest to try to crack down on people. That’s my guess. I know that there’s some things happening behind the scenes of trying to, the FDA especially trying to come to terms with it, but I don’t know where that process is. Regulatory bodies don’t tend to move very quickly.
Adrian Tennant: Now your publication reported that 34% of cats and 19% of dogs were a reported obese in 2018. How is the industry tackling this problem?
Debbie Philips-Donaldson: Honestly, and I probably will get myself in trouble saying this, but probably not as well or to the extent it should. There’s a lot of brands have weight control formulas of course, and for several years now regulations have mandated that pet foods will have calorie counts, but the problem is that the way that they’re posed, they don’t necessarily translate with pets the way they might when you see it on a human food package. And so it’s difficult for consumers to understand it. I mean, I don’t even understand to be quite honest. You have to do some math. And the thing about pets too is that they may be even more individual than we as humans are, and they can’t really tell you what’s working and what isn’t. So that is an issue and there actually is a very robust movement underway. Again, it’s within a regulatory body, so it’s not moving fast. But there is a movement to update pet food labels to make them more user-friendly for consumers. And I think that’s part of it, the calorie count aspect… the number of pets that are overweight or obese are coming from veterinarians, what they see in their practice. And if you combine overweight with the obesity, it’s over 50% for both cats and dogs. But when they survey pet owners to ask do you think your pet is overweight or obese, it’s much lower. It’s like 20%. So there’s a very big, they call it the fat gap. It’s a big misunderstanding about what the pet should look like and be at a healthy weight. What a healthy weight is. Or it’s a deniability. I think that’s part of the problem is that it’s really difficult for anyone to tackle this if you have this perception that’s just so off base. And it’s something that I think that the pet food industry could do more about probably concerted effort with veterinarians, but it hasn’t happened yet. It’s just not there yet.
Adrian Tennant: So how far away are we from having personalized pet diets, maybe based on DNA testing, to maintain an optimal weight?
Debbie Philips-Donaldson: Pretty close, I think. Probably similarly close as to what it is in humans and my guess is five to 10 years at most. I mean some of the companies that are doing the subscription direct to consumer models are doing what they’re saying are customized and personalized diets, they’re not specifically … There’s one for example called Nom Nom Now, but from what I understand, a pet owner registers, they answer some questions about their pet and then they would get a recommendation for a diet. But it’s probably one of four or five that the company offers. They are, however, doing all kinds of research behind the scenes to get to the point of recommending and selling a very specific diet for a specific pet. They have a separate group of parents that they’ve incentivized to provide even more information plus the DNA samples of this test and they’re taking that and doing just all kinds of interesting things to learn more about not only pets, about pets in general, and their microbiome and genomes and everything. It’s fascinating stuff. And I don’t understand most of it because I’m not really a scientist, I’ve spoken to the scientists behind this and spoken at one of our conferences this past year and it’s really fascinating. And I’m sure they’re not the only ones doing it. I mean I know there’s some research evidence on the universities too, so I think it’s pretty close, much closer than you might imagine.
Adrian Tennant: And that service you mentioned, that’s a subscription or direct to consumer model, is that correct?
Debbie Philips-Donaldson: Yes.
Adrian Tennant: Do you think that’s where most innovation is happening kind of in the direct to consumer world right now?
Debbie Philips-Donaldson: That’s one area I would say yes, because honestly if you look at the products themselves, you know there’s really not a whole lot of truly innovative new pet foods out there. We talked about some of the newer formats, but those aren’t really all that new. So I think the whole personalized, even if at this point is just a, hey, tell us about your pet and do one of our diets that seems most appropriate for it. I think that is an area of innovation. But you know, we live in a world of Amazon, and Chewy.com. Maybe people like the subscription model and the direct to consumer. I think it’s very convenient. If you have a big dog, it’s really hard to go out and buy a huge bag of dog food and lug it home. Having it delivered right to your door helps a lot. So, I mean that’s a big growing distribution area too.
Adrian Tennant: What’s missing? You have a unique perspective into the pet food industry. Where do you see untapped opportunities for new product development?
Debbie Philips-Donaldson: That’s probably the million-dollar question that everyone in the industry is asking. And I’m sure there’s lots of very smart people doing research and work at looking at that. From what I know, I definitely think that the whole microbiome and genome thing offers all kinds of promise. And that’s true for people too. You know, it’s just fascinating what they’re learning every day or every year about what our microbiome, how much it influences every part of our body and anatomy. That’s one. I think the whole ingredients, you mentioned and asked about the cultured meat, lab-grown meat, we talked about insect protein. I mean I think that’s really where a lot of the new stuff is coming on because it ties into the sustainability issue, which is becoming more important to consumers and I think they’re getting to a point where they’re willing to pay more for things they think are more sustainable and that means ingredients that can come from sources that don’t take as much land or water to raise.
Adrian Tennant: Okay. Let’s change gears a little bit. What are some of the most novel pet food packaging solutions that you’ve seen?
Debbie Philips-Donaldson: You know Tetra Pak, which is not really new, but it’s somewhat newer to the petfood industry. So it’s the carton type things and you’re seeing more and more of those being used for different kinds of products. Often wet products, but also treats. You see at least one of the bigger categories and growing categories, I should say bigger growth categories in the industry, is toppers and mixers and things so that you can spice up your dog’s normal kibble or feel like you’re doing a little bit more for your dog or cat if you add something to their regular diet. And a lot of those liquid ones especially come in different kinds of packages like Tetra Pak. We’re also seen for canned products and things like that instead of being cans, you’re seeing a lot more of the smaller plastic containers that are a little bit more unique and interesting and a little bit more convenient to use and also to store. In cans if you don’t use the whole one at once. That’s where I’m seeing it. I’m sure there are other things out there being looked at that I’m not aware of.
Adrian Tennant: I did not know that we had pet condiments. So toppers are condiments on pet food, is that correct?
Debbie Philips-Donaldson: Essentially. I mean that’s one way to look at it. They’re usually, sometimes they actually can be complete and balanced meals, but they’re usually not. They’re usually, it’s sort of like a treat only instead of you feeding separately out of your hand, you would pour it on top of their food. Yeah, it’s a rising category.
Adrian Tennant: So what are some of the biggest changes that you’ve observed in the way that pet food is either retailed or marketed in the last decade or so?
Debbie Philips-Donaldson: Well, definitely online, of course. I mean that’s having a huge impact on every aspect of our lives and every kind of product that we buy, and it’s certainly true in pet food too. And in fact in the US, according to sources like Packaged Facts, online growth is what’s keeping the industry growing, overall. Because the other channels, if you look at sales just you know, breaking down by channel, the other ones are flat to declining, and so online growth is really fueling it. Then the other thing I would say is that just in general, and again this is true, I think in a lot of categories, human food and everything is that you seeing all kinds of shifting and blurring of channel lines. So in pet food or pet products, it used to be that the more premium, higher-end products were sold in pet stores. And then you had in your more mass outlets, grocery stores and discount stores and things, you had the lower price things and stuff. I mean that’s really no longer true. There’s this phenomenon that’s been called mass premiumization in pet food where companies have figured out how to take a lot of those higher-end ingredients and different more specialized label claims like natural and grain-free, et cetera, and sell them at a price point that works at a grocery store or Walmart. And it’s changed things dramatically. And that’s even aside from what’s happening online, you know. So of course that also plays into product development for the industry and how brands segment their different product lines.
Adrian Tennant: So I’m interested to know more about your role as editor in chief of Petfood Industry Magazine. How did you come to be in your current position?
Debbie Philips-Donaldson: Well, I’m a journalist by education and training and I have a background in both publishing and business publishing. I used to work in a previous life years ago for some consumer pet magazines. And then before I came to Watt, I was with an association that was geared toward business. And so it just kind of was a nice marriage of those two things.
Adrian Tennant: So what’s the most outrageous, amusing or just extraordinary pet food industry story that you’ve covered?
Debbie Philips-Donaldson: There’s been a lot over 13 years. I’m not sure I’d know where to start. Some of the ones I said I probably would get in trouble talking about publicly. But I think one thing that’s interesting to mention is like I was saying, business to business media, but we do get readers, consumers reading our content because it’s online. We do use social media. A lot of our content you have to register to use, but it’s free. So we will get consumers reading and commenting on our content. So what’s interesting to me is that there are certain types of articles or topics that we know are always going to get a huge reaction. So for example, raw pet food. Not so much, we report on recalls and things like that, but if someone writes a blog post or a column about here’s why raw pet food is … You need to be careful with it. It just blows up. It’s unbelievable. And I mentioned earlier the fact that some people believe dogs are carnivores and they’re really physiologically omnivores. And we have a guest blogger who one of his very first blogs, it was a couple years ago, said your dog is not a wolf and that got by far, the most traffic we’ve ever received for any piece of content. And the most comments. I mean the comments just went on for days and miles. And a lot of the consumers, you know, you can usually kind of tell if it’s someone from the industry or not. It’s just to me, very interesting. And sometimes amusing, but you know, people feel very passionate about the pets and about certain ways to feed them. Some people have very strong beliefs about, I believe this is the best way to feed my dog or dogs in general. And they are not afraid to express that passion.
Adrian Tennant: I mean, exactly. In our 2019 US pet industry study, 95% of respondents said that they consider a pet a part of their family. So not too surprising to see that passion and the engagement that you’ve received online. So it sounds like you see a lot of press releases. How can PR professionals capture your attention as the editor in chief?
Debbie Philips-Donaldson: Well I would yes, I receive dozens a day to be quite honest. And I’ve gotten on some lists that are not at all relevant, but I also get on a lot of lists that are not relevant specifically to us. I would just say, and I don’t know how much time PR professionals have to devote to this, but spend some time to target your list. We are very focused on pet food and treats so we don’t cover all the pet products. And I get press releases about every single pet product you can think of. Every book about pets that comes out and most of them are just delete, delete, delete. Plus we’re not a consumer. Even though as I just said, we do get consumers who are in our content army and our target audience is business to business and if you know, someone would bother to even look at the name of our website or magazine, Petfood Industry is pretty clear, at least to me. So you know, just spend some time to target who you’re sending these press releases out to.
Adrian Tennant: So it’s been very enlightening. Thank you so much for your time today, Debbie. If listeners want more information about your publication, where can they find you?
Debbie Philips-Donaldson: Petfoodindustry.com is our website. We also do have a group page on LinkedIn called, if you just search under groups for pet food industry community. We have a page on Facebook, which I believe is again, using the search for “petfood industry” and the same on Twitter.
Adrian Tennant: Excellent. Thank you very much indeed. It’s been a pleasure having you on Debbie, thank you so much for your time.
Debbie Philips-Donaldson: Thank you.
Adrian Tennant: Some of the things that stood out to me from the conversation with Debbie. Firstly we heard about the development of insect-based pet foods already available in Europe and possibly coming to the US soon. We learned about new formats in pet food packaging, especially the re-imagination of what’s possible with Tetra Paks. And high tech personalized diets for your pet based on DNA testing possibly here within five to 10 years. And finally what engages audiences the most? Controversy around pets and raw foods. Thank you to our guest this week, Debbie Phillips Donaldson, editor-in-chief of Petfood Industry magazine. You’ve been listening to IN CLEAR FOCUS, a unique perspective on the business of advertising produced by Bigeye. If you have questions or comments about the content of today’s show or have ideas for topics that you’d like us to cover, please email us at firstname.lastname@example.org. You’ll also find a transcript of today’s show on our website at bigeyeagency.com under “Insights.” To make sure you never miss an episode, subscribe to IN CLEAR FOCUS on Apple Podcasts, Google Podcasts, Spotify, SoundCloud, TuneIn, Stitcher, and other top podcast players. And if you like what you hear, please give us a rating. For IN CLEAR FOCUS, I’ve been your host, Adrian Tennant. Thank you for listening and until next week, goodbye.