Inflation Surge: Pet Care

December 2022

Pet food volume sales surged over the pandemic, with premiumisation fostering even higher value sales growth. Surges in commodity prices continued generating sharp unit price increases and forced online portfolio reductions. The recessionary environment may cause many consumers to trade down, or increasingly seek convenience by switching to pet specialist retailers, where price increases were more controlled. As high inflation is likely to persist, pet care faces considerable challenges in 2023.

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This report comes in PPT.

Key Findings

Pet care market resilient but not resistant to inflation

The sharp volume sales climb within pet care through 2020 and 2021, exemplifies the market’s resilience. However, as inflationary pressures remain high in 2022 and are expected to continue into 2023, consumers face shrinking disposable incomes and spikes in unit prices. In this context, the recessionary environment will prove challenging for many; encouraging downtrading and which could benefit the growing mid-priced pet food range.

Commodity prices create price pressures

2022 has seen many commodities reach never before seen prices. While many market players tried to absorb energy and packaging price increases, agricultural commodity prices, such as wheat, chicken and beef, have become the breaking point for pet food manufacturers to follow through with price increases for consumers. We expect to see even further unit price increases well into 2023 challenging pet owners’ purchases.

Pet population growth is set to slow down

Pet food price increases forced many pet owners to look closely at their food budget including spending on their pets. Lower-income pet families have seen their disposable income diminish forcing them to supplement food with scraps or in worst case scenarios - give up their pets. Those still considering pet adoption are expected to either delay or completely refrain from becoming pet parents.

Retail distribution is expected to shift in favour of pet specialists

Wide assortment, a quick reaction to the changing market environment, promotional activities and professional consultations on site allow pet specialists to maintain and attract pet owners even when the whole market is facing rising costs. Consultations have become crucial for new pet parents who are choosing the best feed or accessory option but can also guide pet owners to more affordable but still optimal choice when spending is cut.

Key findings
Industry impact: Peak commodity prices and rising energy costs pressure pet food market
The many layers of inflation
Company and consumer impact
Peak commodity prices reflected in retail with delay
Investments grow to manage surge in pet food demand over the pandemic period
Inflation raises price sensitivity as consumers see quality pet food at affordable prices
Turbulent market environment pressures pet care players to revise assortments
Nestlé SA ’s Purina continues driving organic sales growth despite inflation strategy
Unit price analysis: By category
Double-digit unit price growth shifts business practice and shopping habits
Hill’s Pet Nutrition reduces portfolio as operating profit margins continue declining
Active price monitoring crucial for maintaining market positions
Pet specialists are taking a different approach to price increases
Conclusion: Consumer impact
About Via from Euromonitor International

Pet Care

This is the aggregation of pet food and pet products.

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