Pet food—typically one of the last places animal owners look for savings—may no longer be sacrosanct.
When dog and cat owners cut back on spending for themselves, pet items, especially food, are among the last areas where changes are made. But with inflation straining wallets, pet parents have already been cutting their spending, particularly when it comes to discretionary products such as toys.
Now things are getting more serious.
As the Wall Street Journal (WSJ) reports, with the cost of pet food up nearly 11% from a year ago, according to the July consumer-price index, animal owners are trading down from more expensive gourmet brands or shifting to smaller pack sizes, finance chiefs and analysts said.
Premium dry dog food, for instance, is losing share at an accelerating rate—down 2.9 percentage points in the three-month period ended in July compared with a year earlier—and across all income groups, suggesting that the desire for savings is broadly felt, said Max Gumport, a U.S. packaged foods analyst at BNP Paribas.
“In times of recession or economic stress, first you trade down on your own food, then your kid’s food and then your dog’s food. That’s what history would suggest,” he said. “This time is appearing to be different.”
Part of the shift has to do with supply-chain challenges that disrupted the pet-food industry during the pandemic, which forced consumers to consider alternative pet-food options, says General Mills Chief Financial Officer Kofi Bruce (owner of Blue Buffalo). Moreover, he added, pet owners are dealing with rising costs for pet items due to inflation. “It’s very clear we’re going through an environment where pet households and pet parents are seeking value, in everything from pack sizes to where they shop for pet food.”
But people often treat their pets like children, the CFO said, which drives them toward premium offerings for their animals. “That is still likely, and we believe the dominant driver of growth in the pet segment, even if right now there is a shift in the short term toward value and maybe a readjustment as the consumer settles into maybe a more cautious state.”
Pet food and product retailers Petco Health & Wellness and Chewy are similarly seeing a shift among some consumers toward value-driven spending. Consumers are more discerning, Chewy Chief Executive Sumit Singh told analysts last month, noting a shift to dry food over wet food in July, along with cuts to pet treats.
“The commitment that a parent has to the animal is pretty meaningful and so they will continue to feed and treat their animal even in times of maybe less discretionary income,” says finance chief Tucker Mashall of J.M. Smucker (owner of Meow Mix and Milk Bone brands). This might mean trading down from premium products, he added, “but they’re still supporting their pet through any perceived troubled times.”
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