As the Canadian pet food marketplace faces the prospect of slowing volume growth in the coming years, manufacturers and retailers are continuing to seek opportunities in the premium dog and cat food segment. Premium pet food products are sought after by many Canadian pet owners, especially those with higher disposable incomes, thus enabling this otherwise mature industry to achieve value growth.
Within premium pet food, sales of fresh and frozen products remain relatively low. However, consumer interest in these products, driven by the perception of high-quality fresh ingredients, has been on the rise. Consumers are treating their pets as members of the family, and this trend is driving a preference for more natural products and better ingredients. Many pet owners feel more comfortable with familiar ingredients, ie ingredients which are similar to those they eat themselves.
Traditionally, fresh/frozen products have been sold mainly in specialist pet stores. However, banking on a consumer shift towards mass-market channels in search of high-quality products at a better price, Freshpet began marketing its line of fresh/frozen dog and cat food through leading grocery and mass chains in Canada, including Wal-Mart and Loblaws operated stores and other grocery retailers. The move, while not without its risks to brand equity, is supporting the brand’s expansion and is attracting more consumer attention, with retailers so far reporting good sales.
Freshpet cabinets are well-placed in stores and offer competitive pricing
In an era of SKU rationalisation and strong attention to private label to drive growth and profit margins in Canadian retail, Freshpet has been able to get large retailers like Loblaws and bargain “drivers” like Wal-Mart Canada to stock its products and position them well, in the middle of pet food aisles. Incorporating Freshpet products is no small task as its products require refrigeration and the branded cabinets carrying the products require significant space. The willingness of mass retailers to take on the brand attests to the former’s strategy to focus on high-quality products, thereby potentially attracting more customers to their pet food aisles, customers who traditionally shop at specialist retailers and are able and willing to spend more on high-quality pet food.
The new refrigerated pet food sections in mass grocery retailers are drawing considerable consumer attention and can be regularly seen with half empty shelves, demonstrating the significant demand for this type of high-quality pet food.
Further fuelling Freshpet’s success is its strategy to sell smaller quantities of food in each serving, thereby making it more affordable on a per purchase basis as well as emphasising its freshness as the food is recommended to be eaten within seven days. Additionally, the products and cabinet displays clearly showcase ingredients that are well-known and easy for the 
consumer to understand - meat, eggs, fruits, vegetables, brown rice, vitamins and minerals.
Last but not least, while positioned and perceived as premium, the products are competitively priced relative to other premium foods. For instance, in Loblaws stores, a 794g pack of Freshpet Chicken Recipe with Carrots and Spinach dog food retails at C$7.69 (or C$9.67 per kg). Additonally, at Walmart a 2.7 kg packagie of soft Freshpet dog food retails for an average of C$14.48 (or C$5.4 per kg). In comparison, a 283g pack of Beneful wet dog food retails at C$2.79 (or C$9.85 per kg). Industry sources indicate that consumers who typically buy wet food and especially those who buy fresh/frozen pet food are well aware of the cost per serving. Therefore, competitive pricing can go a long way towards attracting pet owners who are seeking a balance between premium and well-priced products for daily feeding.
What is next?
Freshpet’s expansion into grocery stores has so far been successful. Strong placement in stores, well-displayed cabinets and competitive pricing, coupled with much wider retail distribution through a large number of popular grocery banners, have certainly helped to draw the attention of pet owners and add to Freshpet’s strengthening position in the Canadian pet 
food marketplace. While not likely to capture a leading share in the overall pet food industry, the brand is expected to grow beyond a small niche of more affluent consumers, contributing to the expected healthy growth of pet food retail. Expansion of the brand into mass retail might also help to further boost the share of the grocery channel in the retail distribution of pet food at the expense of pet specialists as consumers who prefer specialist retailers for their wider and more elaborate selection of premium products and fresh food are likely to be attracted to the idea of one-stop shopping at grocery stores for their own groceries as well as pet food due to the advantageous pricing of the same brands.
This move into mass-market retail is not without its risks when it comes to brand perception as well as the ability of mass retailers to provide sufficient support for the brand in terms of product knowledge and customer service. Exclusive distribution via pet specialists is often used to reinforce the perception of quality, this being one of the reasons why many premium and super-premium brands shy away from mass-market grocery retail. Additionally, the very same customers of pet specialist retailers mentioned above, while potentially in favour of one-stop shopping and better prices, might also seek advice about the products – not something grocery retailers can typically offer. It will be important therefore for Freshpet to ensure that displays remain well-positioned within retailers’ planograms, while all the necessary product information is also readily available to customers.