THE RISING POWER OF PETS IN PANDEMIC BRITAIN - ISSUE ONE 2020 - A Better ...
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ISSUE ONE 2020 THE RISING POWER OF PETS IN PANDEMIC BRITAIN
Foreword
Welcome to the inaugural Mars Petcare ‘State of the Pet Nation’ report,
our first in-depth review of the UK petcare market which we hope will
become a valuable tool for grocery, convenience and specialist retailers
looking to maximise the potential of their petcare offering.
Petcare is a hugely valuable market. With 50% of the population
owning at least one pet and petcare category shoppers having a 26%
higher basket spend than average, these consumers are a valuable
group to attract. What is more, as our pets live longer, retailers have
the chance to capitalise on a lifetime of loyalty; think of the space and
promotional effort afforded to the baby and toddler market, worth
a third of the value of petcare and only bought into for a couple of
years of a child’s life, and you can see the opportunity.
Petcare has proven its importance and continued resilience during
the last tumultuous year, growing 2.2% in the 12 months to July
2020, with treating occasions growing an even more impressive
12% as lockdown tightened, consistently outperforming many
other FMCG categories. As premiumisation continues to drive value
growth, pet parents are seemingly more eager than ever to treat
their furry friends as extensions of the family – a trend we only see
growing as pet owners enjoyed the considerable emotional and
psychological benefits of animal companionship during the height
of the Covid-19 pandemic.
Throughout this report we explore the last 12 months for the
category, delving deeper into the last few extraordinary months and
the growing trends that have emerged, and look to what the future
holds for petcare. The good news is that, out of the recent adversity,
our category is emerging even stronger – supported by our nation
of animal lovers, who represent a fantastic opportunity for retailers.
At Mars Petcare, we are dedicated to creating a better world for
pets. Throughout all we do this mission rings true. As we look
forward to 2021, yet more innovation and investment into our pets’
nutrition lies ahead. The future is bright for our category!
I hope you enjoy the report, and find it a valuable resource.
Nick Foster
Category and Marketing Director, Mars Petcare UK
2 3
PART ONE Size of the Prize:
2020: Brits turn to PETCARE £2.9bn
pets for comfort in BABY & TODDLER £920m
lockdown TOILET TISSUE £1.1bn
Pets hold real power. And in pandemic Britain, that power is
rising. People are spending more than ever on feeding and
CHOC CONFECTIONERY £2.4bn
treating their pets. Increasingly, they view their pets as equal
members of the family with dietary, physical and emotional
needs that are just as important as their own. They want to keep
them fit, healthy and happy for as long as possible.
Now, growing numbers are turning to pets for comfort (see
Part IV). When Covid-19 turned the world upside down in the
in the first few months of 2020, breeders and rescue centres
reported a boom in enquiries from people looking for new
pets. In the week before Britain went into lockdown, Battersea
Dogs and Cats Home rehomed more than double the number
72%
of pets it did in the same week in 2019¹. Pets charity Dogs Trust
said in May that demand for puppies was outstripping supply².
It’s clear why. Pets’ power lies in their ability to ease the stress
and isolation their owners can feel. It’s likely that most of us Petcare shoppers spend 26% more than non- Pets are part of the family, with 72% of
have felt more stressed and/or isolated in 2020, with the pet owners pet owners referring to themselves as
uncertainty caused by the pandemic, lockdown and closure their pet’s mummy or daddy
of large parts of the economy. Faced with growing social
isolation and economic hardship, many are now looking to
make new four-legged friends.
So, as we enter this new, post-pandemic age, pet food
(and the wider pet care sector) is poised to become one of
FMCG’s winning categories. In this report, we’ll explore the
opportunities that lie ahead for a category that tends to
2.5%
outperform others during times of economic hardship, and
what retailers need to do to capitalise on them.
1.9% Petcare is
9.9
experiencing 2.5%
cumulative growth,
10.9 outperforming FMCG
at 1.9% growth
million dogs million cats
8% 6%
1 in 3
by 2025 one in three pet owners will Biggest growth areas. Wet Single Serve for
be millennials both cat (8% growth) and dog (6%)
¹ The Independent, 26 March 2020
² Financial Times, 22 May 2020
4 5
The extraordinary spending
power of pet ‘parents’
The relationship between pets and their owners is greater than the amount they spent on chocolate, toilet
reciprocal. We heap love and care on our pets; in paper or breakfast cereals, and represents growth that
return, we develop a deeper bond with them (as we will significantly outperformed the wider FMCG category
explore in Part II). Few view things in such transactional between 2011 and 2019; +2.5% versus FMCG’s 1.9%⁵.
terms, of course, but it is the nature of this relationship
with our cats, dogs and other four-legged friends that is This growth is driven by the ongoing humanisation
driving significant value growth in the market. of our pets. Today, few people who keep animals
see themselves merely as pet owners: 72% refer to
UK shoppers spent £2.9bn³ on pet food and litter in themselves as their pets’ ‘mummy’ or ‘daddy’⁶. And
2019 as a part of the £6.3bn⁴ industry dedicated to these pet ‘parents’ pack real punch in terms of spending
looking after our pets’ needs (this includes healthcare, power (see the below graphic).
services and accessories as well as food and litter). That’s
SPENDING POWER INDEX
24.5
50.9
20.9
15.8
11.2
4.7
WASHING UP TOILET CEREAL BABY & CHOCOLATE PET CARE
PRODUCTS PAPER INFANT
* The spending power index has been calculated by dividing total FMCG value (in millions) by household penetration for each
category. It reflects the spend of each household that buys into a given category. For example, 44% of UK households bought
baby and infant products in 2019⁷, spending a total of £920m, while 57% bought pet food and litter, spending a total of £2,900m;
this gives baby and infant care a score of 20.9 and pet food and litter a score of 50.9.
On average, households that have pets spend 26% more is more, the number of units sold has fallen by 2.3%10,
on groceries. Even if you take pet food and litter out of indicating that shoppers are now trading up in their
the equation, their spend is still 15% higher⁸, a fact that pet food and litter purchases.
reveals higher levels of affluence among pet owners.
Typically, they also shop more categories. Therefore, Myriad factors are at play here, which will be explored
retailers that attract pet parents through their doors can in depth in this report, but let’s start with one of the
expect to realise larger shopping baskets. most important.
In spite of the challenges of 2020, British supermarkets
have seen a 2.2% year on year increase in value sales of
pet food and litter in the latest 12-month period⁹. What
³ Nielsen MAT January 2020 ⁷ Nielsen MAT January 2020
⁴ Combined Read - Nielsen – Petfood, Mintel – Petcare, Stratista Grooming ⁸ Nielsen MAT January 2020
and Vet Services ⁹ Nielsen MAT 11 July 2020
⁵ Nielsen Household panel data MAT December 2019 10
Nielsen MAT 16 May 2020
⁶ Mars Pet ownership study, 2017, UK Market
6 7
Smaller pets live Britain’s pets are living longer.
The life expectancy of cats and
dogs has doubled in the past 40
‘What’s good for me
longer lives years, with the average canine
lifespan now standing at 12 years is good for my pet’
and felines living for an average
of 15 years11. This, in part, is down
to great leaps in understanding As the profile of the British pet population evolves, their That’s why pet food trends are following those in human
of the nutritional needs of owners are becoming more demanding. Smaller animals food and drink, such as growth in indulgent or natural
animals and the development of may need fewer calories, but because well over half of propositions (see Part II). This is reflected by the runaway
products that provide complete British households now view their pets as part of the growth of pet food’s star performing sub-categories:
and balanced diets. family14, pet food has been elevated in shoppers’ minds. single serve wet dog food and treats for dogs and cats,
Pet parents’ philosophy is simple: ‘What’s good for me is which have delivered respective value gains of 7.1%, 4.3%
Pet food manufacturers can’t take good for my pet.’ and 3.9%15 (see below).
all the credit for this, however.
People, as well as their pets, are
living longer. Younger people are
getting married later in life, while BEST IN SHOW: PET FOOD’S FASTEST
more people aged 65 or over are GROWING SUB CATEGORIES
divorced or separated than in the
past. These factors, combined
with growing urbanisation, have 8.0%
driven a 16% rise in the number
of people living alone in the 6.0%
past 20 years12. Smaller breeds
are more suited to these smaller
households, and can live twice as
4.0%
long as larger breeds.
2.0%
Fifty one per cent of the UK dog
population now weighs 10kg 0.0%
or less. Yorkshire Terriers and
Chihuahuas, for example, can live
for 20 years, while Great Danes
-2.0%
have a life expectancy of no more
than eight. Smaller breeds also -4.0%
spend longer in the ‘senior’ life
stage, a period often defined by -6.0%
greater need for products that
address specific health needs13.
-8.0%
-10.0%
-12.0% Single Dog treats Cat treats Dry dog Cat litter Multi Dry cat Luxury cat Cat milk Everyday Multi
serve wet food serve wet food food single serve wet
dog food dog food serve cat cat food
food
Great Dane life
expectancy 6-8 years
Compare the category leading growth in single serve
wet dog food to the performances of dog and cat food
in multi serve formats (cans mostly). Multi serve cat food
represents a small part of the category (2.9%) and is
focused on value. Its 10.3% loss is proof of the ongoing
premiumisation of pet food.
Yorkshire Terrier
life expectancy up
to 20 years
Canine Journal, July 2018
11
ONS 2019
12
Mars Pet ownership study, 2017, UK Market
14
Waltham Nutritional Research Group
13
Nielsen Audit Report MAT 16 May 2020
15
8 9
The rise of pet Pet food’s
gastronomy greatest prize: a
For the pet parents who are driving growth lifetime of loyalty
in single serve wet dog and cat food,
luxurious dishes that resemble the sort of Half of pet owners question what they should be feeding
meals they might rustle up at home for their pets every year16. These moments of reckoning
themselves are the order of the day. In (prompted by new life stages, specific health concerns,
human food, luxury no longer necessarily the latest research or just our pets’ whims about what they
means decadent or unhealthy. It’s defined will or won’t eat) present a key opportunity to influence
by natural, fresh or functional ingredients shoppers in store.
and rich variety.
Single serve formats provide that variety £920m
(and help avoid fussy felines getting BABY &
bored), while giving portion control and TODDLER
greater convenience. See the range of
soups, creamy snacks and complete meals
£
promising Prime Cuts and Select Slices
under the Sheba brand (page 13), or the
luxury meals and snacks with carefully
selected vegetables and prime ingredients
in the Cesar range.
Just as foodies look for familiar cues in the
dishes they select for their pets, health-
conscious pet parents are looking for
reassurances from nature and science when £2.9bn
PET CARE
they’re shopping the pet food aisle. As we
will explore in Part II, this is driving growth The prize for brands and retailers that can appeal with the
in products that mirror trends in human right products for the right stage of a pet’s life is a lifetime
food and drink. of loyalty. Compare this with the baby and toddler care
category (see above); it is worth about a third of pet food
Brands marketed on their use of ‘natural’ and litter’s value at the tills (£920m17) and is shopped for
raw materials or the absence of additives, only the first few years of a child’s life. Therefore, pet food
grains or ingredients perceived as ‘artificial’ and litter offers a far bigger opportunity.
are some of the market’s fastest growers
(Crave, page 14) as are those that take a Whoever wins best in show in shoppers’ eyes could be
science-based approach in formulating rewarded with 20 years of repeat sales. But that requires
their products to meet the individual needs fresh thinking. Just as consumers are demanding food
of each cat and dog (Royal Canin, page 14). and drink offerings that have functional health benefits
for themselves, pet parents are increasingly looking
for products that can help keep their animals healthy
throughout their later years.
The importance of premium offerings is set to rise, as the
next generation of pet parents comes of age. By 2025, one
in three will be millennials18. And the Instagram generation
has a propensity to spend more on its pets19.
By serving this consumer group and responding to growing
demand for more premium products, Mars Petcare is
looking to tap into the projected £340m category growth
in the next five years, which would equate to total category
compound annual growth of 2.4%.
Read on to discover how you can unleash that growth too…
16
Pet Ownership Trends 2017/Banfield State of Health Report Statistics
17
Nielsen MAT Jan 2020
18
Mars Pet ownership study, 2017, UK Market
19
Combined Read - Nielsen – Petfood, Mintel – Petcare, Stratista Grooming & Vet Services
10 11
PART TWO Growth sectors
What do pet parents need in PROJECTED GROWTH SECTORS
2020 and beyond?
22% 2020
In FMCG, trends can come and go... The trick lies in with premium offerings is crucial for the long-term 21% 2025
being able to identify the genuine game changers. health of the category. And it’s the job of brands to do
To do that, you need to understand how shoppers’ just that. 39%
priorities are evolving, how the lines between trends 45%
can become blurred and how larger, structural changes Mars Petcare has risen to that challenge. Despite 12% Everyday enjoyment
are shaping market dynamics. falling volumes, the supermarkets have realised a 13%
Nature inspired diet
cumulative 7% rise in pet food value sales over the
Supermarket pet food sales have been in volume past decade (see below). Mars Petcare has achieved 10% Science led diet
decline for every full year since 201320 as pet numbers this by developing products that meet the demands 12%
10% Luxury moments
have remained static21 and owners have gravitated of a new generation of pet parents who give as much
16% Treat my pet
towards smaller breeds (see Part I). So adding value consideration to their pets’ needs as they do their own.
PETCARE SPEND Need 1: Luxury moments
If you need more proof of how humanised Britain’s pets have
1,800.00 become, consider this: 78% of pet parents say the quality of the Brand spotlight: Sheba
food they give their animals is as important as the food they eat Sheba was Britain’s fastest
1,780.00 themselves22. They will pay more for products that are inspired growing mainstream luxury cat
by human culinary trends while striking the right balance food brand in 201925, thanks
1,760.00 between luxury and health. to its wide range of recipes
inspired by human gastronomy.
1,740.00 Take cat food. Overall sales have struggled in the latest
12 months, driven partly by a slight decline in the feline The range includes sumptuous
1,720.00 population23. But products that help provide moments of luxury dishes served in jelly, gravy
are bucking this trend. Sheba – with its range of soups, meals or sauces, classics inspired by
1,700.00 in gravy and sauce and creamy snacks – has delivered the traditional pâté recipes, treats
strongest growth in single serve wet cat food, for example24. and the UK’s first range of
soups for cats.
1,680.00
The success of products offering luxury moments is reliant on a
number of factors. As we will explore in greater depth in Part III, Whatever the Sheba offering,
1,660.00 the purpose is always the
pet food purchases are highly planned; often shoppers visit the
fixture on ‘autopilot’, pick up their usual product and move on. same: to strengthen the bond
1,640.00 Disrupting that journey is key. between pets and their parents
with dishes that looks good
1,620.00 Sparking interest with innovative products is essential. enough to eat yourself.
This should be done with a variety of formats, recipes and
1,600.00 products that take cues from human food trends. Wholesome
2011 2012 2013 2014 2015 2016 2017 2018 2019 ingredients should be visible on pack, demonstrating
nutritional balance and health credentials, alongside that touch
of luxury shoppers want for their pets.
Pets are viewed as people by this new generation. But they’ll only do that if those products are based on Effective merchandising is also essential. Everyday products
And they are prepared to pay more for products that a strong understanding of shoppers’ needs. should be at the final part of the fixture shoppers reach on their
help keep their beloved pets healthy and happy, while Here’s our rundown of the key tends shaping pet journey. Premium segments should make a big impact with
strengthening the bond they have with them. food in 2020 and beyond… high visibility, clear blocking and strong ranging in order to
maximise the chances of shoppers trading up.
22
Mars Pet ownership study, 2017, UK Market
23
PDSA Animal Welfare Paw Report 2019
The Grocer’s annual Top Products Survey/Nielsen
20 24
Nielsen MAT 16 May 2020
PDSA Animal Welfare Paw Report 2019
21 25
The Grocer’s Top Products 2019
12 13
Need 2: Natural nutrition Need 4: Everyday enjoyment
Food and drink is going back to nature. ‘Natural’ claims You might be asking why we’ve waited until now to discuss
are the number one motivator for human food choices Brand spotlight: Crave the biggest part of the UK pet food category. After all, Brand spotlight: Whiskas
globally, having achieved compound annual growth of 6% Crave first leapt onto mainstream products that satisfy pets’ need for food they Here’s proof of how movements
in recent years26. Anything artificial is eyed with suspicion. supermarket shelves back enjoy every day (if they don’t enjoy it, they won’t eat it) that began at the premium end
And when it comes to ingredients, less is more; 52% of in 2019. Since then, it’s hit currently account for 45% of the British pet food category. of pet food are influencing the
consumers agree that a product is healthier if it contains annual sales of £4.3m29 (and That’s worth more than £1.3bn a year at the tills30. mainstream: the Whiskas range
fewer of them27. counting) and is winning a now comprises meals tailored
growing share of space in The answer is simple: more and more, mainstream pet food for kittens, cats aged one to
This trend is having a huge influence on pet nutrition. Pet retailers. The proposition is influenced by the trends we’ve already discussed, and six, seven to 10 and 11 plus, dry
food products carrying claims relating to nature-inspired is clear: to satisfy the true products that don’t meet the demands of an increasingly food, wet food, treats and milk.
diets currently account for 12% of the market, having achieved nature of dogs and cats with discerning set of consumers are losing share. Indeed,
14.8% growth in the latest 12 months. We forecast compound nature-inspired, high protein we expect mainstream pet food’s share of the pet food This proliferation is paying
annual growth of 8% between now and 2024, delivering food and treats that contain category to have slipped to 39% by 2024. That’s a 0.7% off. Whiskas has achieved the
£166m in incremental sales and a 16% slice of the category28. a minimum of 60% animal compound annual decline31. greatest growth in cat food in
derivatives and zero grains. the past six months , and its
These forecasts won’t become reality without decisive Even so, everyday enjoyment will still make up the lion’s recently launched, premiumised
action from brands and retailers. The world of diets and The range comprises dry and share of the category in 2024 and beyond. In many range, ‘Pure Delight’, was
nutrition is prone to confusion, with movements often wet foods for dogs and cats, instances, shoppers plan what they buy for their pets more awarded Product of the Year in
making claims that appear contrary to each other. Brands as well as a line-up of Protein than they do for themselves, and one in five will leave the the cat food category for 202034.
therefore need to bring clarity with messaging on pack Chews, Chunks and Strips for store if what they’re looking for is not available32. Therefore,
and in marketing about the nutritional philosophy that dogs. While the central role of maintaining availability of these mainstream lines is crucial. Whiskas’ marketing also reflects
underpins their formulation. Crave is to provide a complete, the trends of the day. Online
natural diet that helps feed the Of course, mainstream shoppers still want access to the (a channel that’s of growing
Visibility in store and online is also vital. More shelf space inner animal in our pets, there’s latest trends. They just need to be able to do so within a importance in pet food, as we’ll
is needed to accommodate a greater breadth of range, also an overt nod to growing limited budget. That’s why it’s crucial that brands continue explore in Part III), shoppers
which caters for health-conscious pet parents and animals demand for more luxurious pet to innovate and renovate their mainstream product can have their questions on
with specific dietary needs while suiting a wide range of food with a range of pâté for offerings. Equally so, retailers need to keep their ranges feline behaviour and nutrition
budgets and encouraging shoppers to trade up. dogs and cats. fluid in order to accommodate new arrivals and offer that answered by the bods at K.I.T
all important variety. (Kat Institute of Technology),
while Kitten College gives tips
to new pet parents on caring for
Need 3: Science-led diets 30
Nielsen MAT January 2020 their furry arrivals.
31
Mars Petcare internal projections, Nielsen Avg 3 yr projected 5 yr CAGR, IGD Channel Forecasts
Shoppers who identify as pet parents are more likely to take
32
Mars Pet ownership study, 2017, UK Market
33
Nielsen 26 w/e 16 May 2020
a proactive approach to their pets’ health. With more of us Brand spotlight: Royal Canin 34
Winner Cat Food Category. Survey of 10,601 people by Kantar
living in cities with limited access to open space, obesity and Every pet is unique. That’s the
the ills associated with it are a growing problem – for us, and basis of Royal Canin’s approach
our pets. What’s more, our pets are living longer, so the need to helping the world’s dogs and
for nutrition that addresses specific health issues is rising. cats live their best lives with
its range of tailored nutritional
Enter, a new breed of science-led products, tailored to satisfy products. The brand boasts
health needs that were far less of a problem for cats and lines sold exclusively through
dogs a few (human) generations ago. Food formulated for veterinary practices as well as a
puppies, kittens, adults and older animals, or aimed at helping retail range, catering for a wide
to reduce problems such as obesity, diabetes or urinary tract range of needs including those
problems (conditions more prevalent among Britain’s growing relating to specific life stages
population of house cats) are in growth. and health conditions.
Take Perfect Fit, our range of wet and dry food designed Skin conditions, food sensitivities,
to keep cats feeling their best whatever their age, or Royal diabetes and oral, kidney,
Canin’s tailored approach to pet nutrition (see right/left), as urinary tract and digestive health
examples. Both brands carry significant premiums over market problems are all covered, as well
average prices, because they satisfy the health needs of as the particular needs of dozens
modern pets, while helping their parents sleep more easily. of pedigree breeds. It’s not just
about making pets feel their best
But, as we’ll see in the brand spotlight in our exploration of for as long as possible. It’s also
the Every Day Enjoyment need state (page 15), it’s not just about looking good. Royal Canin’s
super premium products that are making progress by taking a line-up includes the Intense
more scientific approach… Beauty Care wet cat food range
formulated to promote healthy
26
Euromonitor 2016 skin and glossy coats.
27
Mintel 2020
28
Mars Petcare internal projections
29
Nielsen MAT 16 May 2020
14 15
Need 5: Treat my pet
PART THREE
What do pet parents need in
So far, we’ve learned that ‘cat people’ and ‘dog people’ aren’t
that different after all. Many are motivated by a desire to Brand spotlight: Pedigree
indulge their pets with food products influenced by human Pedigree is the leader of the
2020 and beyond?
culinary trends, while keeping a close eye on their health. Treats pack when it comes to the
are what really divide the two: sales of treats for dogs outsell UK’s canine food category.
those for cats by more than four to one35. Sales hit £271.5m in the latest
12-month period, with the
Not only are dogs treated more often (more than half brand’s range of treats driving They say you can’t teach old dogs new tricks.
of Britain’s dogs are treated at least once a day!) but the growth of 4.5%, worth a cool Maybe so, but their owners are proving that they Grocery
£8.4m at the tills42.
9%
motivations for doing so also depend on the species. Most dog respond to change quickly when it comes to
owners have a wide range of reasons for treating their pooches. making sure their pooches get everything they 11% Specialists
These include rewarding good behaviour, promoting better Offering a wide range of need to keep them fed, healthy and happy. The
dental health and building a bond. Cats are most often treated treats to suit a variety of same applies to cat owners. Since the beginning
as a way of showing affection36. needs has been crucial to of 2020, there’s been a dramatic shift to online
this growth. The range falls purchasing of pet food.
Therein lies the opportunity. One in three pet treat shoppers into two sub-categories: care 29% Discounters
currently only buy functional treats for their pets, such as and treats. Within each is a Of course, the exodus online mirrors the response
oral care chews for dogs or hair ball products for cats; by veritable buffet of choice, of shoppers to Covid-19 more generally (more on
persuading these people to buy a wider repertoire of treats for from Dentastix lines for oral that in Part IV), but there’s plenty to suggest that
a greater number of uses (to show love, to train, etc) we can care – including the recently the greater proportion of sales taking place online
unlock further growth. launched Chewy Chunx range will become the new normal. Indeed, we expect
– to Tasty Minis and Ranchos, growing numbers to make the switch online as the
Smarter merchandising and more effective education are key. which contain 95% meat and demands of Britain’s pet parents continue to grow.
Contrary to the planned nature of most pet food purchases, animal derivatives to tap the
44% of pet treat purchases are made on impulse37, so stronger natural nutrition trend. Bricks and mortar can still achieve growth, of 50% Online
visibility in store and online, clearer segmentation and course. As we explore below, retailers can do this by
increased shelf space will help disrupt shopper journey and changing their approach to the category – it should
ultimately drive growth in the segment. no longer be viewed as an aisle that simply provides
pet food; it should become a pet care destination,
Seasonal events such as Christmas or birthdays also represent answering the needs of Britain’s pet parents.
an opportunity, with 40% of millennial pet parents saying they
spend as much on treating their animals as they do friends on There are three key approaches: encouraging bigger
special occasions38. Seasonal events and promotions in store shopping baskets with bulk deals and a wider
and online will help retailers capitalise on this. range of products, increasing spend with premium
products that meet the needs we discussed in Part II;
Driving greater understanding of canine oral care will also pay and attracting more shoppers with a wider range of
dividends as only 5% of dog owners feed their pets an oral goods and services.
care treat on a daily basis40. Convincing the other 95% of dog
owners to do so would unlock a £500m sales opportunity41.
Now that would be a treat!
Need 6: Inspiring pet companionship
There’s another meaty growth opportunity for retailers of these people would rather cut back on spending on
who want to realise the full potential of Britain’s pet themselves than their pet, suggesting that products that
parents: pet toys, grooming products and accessories. As promote companionship have a degree of insulation from
we’ve seen, these consumers have significant spending economic influences.
power and are looking to form stronger bonds with their
pets. Food is not the only way to fulfil the need for closer Of course, space is at a premium in store, but there are
companionship. opportunities for retailers to widen their ranges and
become the destination of choice for pet parents. Retailers
Fifty seven per cent of these shoppers buy accessories looking to drive value back into larger, out of town stores
for their pets, with toys being the number one product could use excess space to this end, for example.
on the shopping list43. And, as we’ll see in Part IV, most
35
Nielsen MAT 16 May 2020
36
Mars Pet ownership study, 2017, UK Market 41
Mars Petcare internal projections
37
Nielsen Path to Purchase study 2015 42
Nielsen MAT 16 May 2020
38
Mars Pet ownership study, 2017, UK Market 43
Mars Pet ownership study, 2017, UK Market
40
Globaldata Top trends petfood 2017
16 17
Online shines bright in pet food Specialists evolve into ‘one stop shops’
Online will be the cat that gets the cream This stresses the importance of compelling Pet specialists do exactly what you’d expect: they feline and aquatic pet populations). The retailer
over the course of the next five years. We’re promotions, broad ranges and generally good offer a wide range of specialist nutrition lines, health has also bought a 12% stake in online dog walking
forecasting annual compound growth of 2.4% for housekeeping of online stores. Images need to products and pet accessories. Increasingly, they are service Tailster, enabling it to offer the service to its
the pet food category between now and 2024. be tagged correctly and shoppers need to be evolving into one stop shops for our four-legged 4.4 million loyalty card members.
That will be worth more than £364m. Online given all the information they need to make a friends, providing a growing array pet services, from
channels (pureplay, grocery and specialists) will considered purchase for their pet. If they don’t veterinary clinics to grooming salons. It’s also worth remembering that one in three
take £182m (50%) of that, representing annual get that, they may well go elsewhere. pet care shoppers will be millennial by 202550.
compound growth of 7.4%44. The provision of pet services certainly represents a This generation shows a greater propensity to
Shoppers are increasingly spoilt for choice. tasty treat for retailers. Seventeen per cent of pet spend on pet services and accessories with 30%
There are several factors that suggest online The multiple grocers are driving growing parents currently pay for health check-ups for their saying they like to keep up with the latest trends
will take the lion’s share of the growth in sales through their online operations, as are animals, 16% use grooming salons, 10% of dog in pet grooming, clothes, etc, versus a category
coming years. Of course, there’s the onward specialists such as Pets at Home and online only owners have paid for dog walking services and 7% average of 19%.
march of technology, the near ubiquity of operations Zooplus, Ocado’s Fetch and Amazon. have paid for a pet sitter to look after their four-
high-speed internet connections and mass Then there are branded direct to consumer legged friends49. This age group also tends to spend more on
smart phone use – 79% of UK adults own a operations such as the newly developed James their pets at Christmas and other seasonal gifting
smart phone, rising to 100% of 16 to 24 year Wellbeloved website (see below). This helps explain Pets at Home’s ongoing occasions (see Part II). By offering a wider range
olds45 – but that’s not all. expansion into pet services, such as dog grooming of goods and services that will appeal to the new
It should also be noted that our projections and in-store veterinary clinics, while tailoring generation of pet parents, specialist pet retailers
Seventy three per cent of pet food shoppers were made before the full impact of the ranging at its more than 450 stores to reflect local can future proof their businesses.
research what’s best for their pet before pandemic was known. Covid-19 drove many, demographics (cities, for example, have larger
making a purchase and, of course, the majority particularly the elderly and vulnerable, to shop
of that research is carried out online. It’s also online for the first time. It’s unlikely they will
worth noting that almost a third of these return to stores for the bulk of their shopping Trade ups and treats; opportunity knocks for multiple grocers
shoppers will do their research in one channel now that restrictions are easing.
(say, online, in a pet specialist store or at the Pet care presents the multiple grocers with an available, while maintaining enough flexibility
vets) before going elsewhere to buy46. opportunity to raise profits per square inch of to allow for new products and a broad enough
shelf space in larger stores by attracting more range to create excitement around the fixture.
affluent pet parents, growing average basket size
and raising the average price paid per unit. The Clear segmentation and blocking are vital, as is
multiples’ estimated share of growth may look sign posting to disrupt the shopper journey and
small when presented as a percentage, but that encourage them trading up. Driving sales of treats
still represents an extra £32.9m. will help elevate average spend, but clarity is
crucial here; 19% of shoppers say they’re confused
Of course, that doesn’t include the huge prize on by the treats fixture51. Treats are highly impulsive,
offer online (see above). Given the strength of so secondary and featured space can pay off.
Tesco and its peers in e-commerce, in reality the
supermarkets’ spoils will be much greater than It’s worth noting that pet food purchases in
our estimate for physical stores. What’s more, this c-stores are usually made because an owner
growth can be achieved through relatively small has run out. This helps explain why, prior to the
steps relating to ranging and merchandising. pandemic, the convenience channel (including
outlets operated by the mults) accounted for a
Discounters diversify their offering to maintain growth As we’ve discussed, 91% of pet food shoppers small part of the market. But, as we explore in
plan their purchases before entering a store or Part III, Covid-19 has presented the channel with
Aldi and Lidl have been the key disruptive forces They have driven much of the growth in own label going online to buy. It’s therefore crucial that opportunity to increase share.
of the grocery market over the past decade. In over the past year by developing more premium retailers ensure core mainstream offerings are
2019, the German discounters drove their share lines aimed at satisfying demand for luxury and
of the category up to more than 6%, with Aldi products that cater for specific health needs. Lidl is
Brand spotlight: James Wellbeloved James Wellbeloved. The brand’s website, wellbeloved.com,
growing by 11% and Lidl up 5%47. We expect them also increasing its branded offerings. What happens when your shoppers can’t get to you? You go was adapted from one that purely showcased the brand as an
to achieve growth worth £107.3m in the next five to them, of course. That was the thinking behind specialist pet expert in natural pet nutrition, to one that streamlined visitors
years. That’s 29.5% of the total48. Some may well argue that the discounters’ lack of nutrition brand James Wellbeloved’s launch of an ecommerce towards buying products direct from the brand.
online presence presents a considerable barrier platform in just four weeks in response to Covid-19.
As Aldi and Lidl’s growth continues, their model to future growth. After all, e-commerce is a costly The website is now fully functioning as a direct to consumer
is evolving. With greater market share comes the business. The capex needed to develop the The brand was facing significant challenges: the supply chain sales platform whilst continuing to serve retail customers.
consumer expectation of greater product choice infrastructure a viable online business requires was being squeezed as growing numbers were struck down The platform is a direct answer to consumer needs to have
and more premium and specialist offerings. For is huge. But the discounters are forever the with the virus, while retailers were cutting opening hours in continuous access to the full range of JWB products and
the most part, the discounters are obliging in their innovators; if the rumoured partnerships with response to staff shortages. while it is not aiming to replace traditional routes to market,
own tried and tested way. players such as Deliveroo are realised, Aldi and Lidl it is evidence of Mars Petcare’s ability to quickly respond to
could take a hefty slice of online growth too. These factors, combined with the effect of shoppers stocking emerging consumer trends.
up in anticipation of lockdown, led to decisive action for
44
Mars Petcare internal projections, Nielsen Avg 3 yr projected 5 yr CAGR, IGD Channel Forecasts
45
ONS 2019
46
Ominchannel P2P Study December 2018 Stratista Grooming and Vet Services
49
47
Kantar MAT 14 July 2019 Mars Pet ownership study, 2017, UK Market
50
48
Mars Petcare internal projections, Nielsen Avg 3 yr projected 5 yr CAGR, IGD Channel Forecasts Mars Pet ownership study, 2017, UK Market
51
18 19PART FOUR In the weeks after lockdown was announced in late March, we witnessed a 12% rise in
pet treating occasions53. This is also reflected in the sales figures: combined sales of cat
and dog treats grew by 6.5% in the 12 weeks between 22 February and 16 May 2020,
The impact of Covid-19 bringing sales to £98.6m54. Total pet food and litter sales grew by 3.4% over this period.
on pet food TREATS GROWTH ACCELERATES
INTO LOCKDOWN
26 w/e 11 July
12 w/e 11 July
4 w/e 11 July
Both cats and dogs have been used as a form
of therapy in establishments such as hospitals,
14
care homes and schools for more than 40 years. 12
Interacting with them can help raise levels of the ‘feel 10
good’ hormone oxytocin and lower levels of the stress
hormone cortisol, promoting feelings of wellbeing
8
and relaxation52. 6
4
Therefore, it stands to reason that pet owners have
been treating their pets more since the Covid-19
2
pandemic turned life upside down. After all, treating 0
one’s pets is a way of strengthening the bond with -2
them, rewarding good behaviour and looking after
pets’ needs.
-4
TOTAL PET TOTAL DOG TOTAL CAT TOTAL DOG TOTAL CAT
FOOD & LITTER FOOD FOOD TREATS TREATS
But total sales of pet food and litter then fell into decline, with value sales down 5%
year on year in the four weeks to 16 May. Unit sales fell 12.1% in those final four weeks,
suggesting that shoppers had stockpiled pet food as they had other grocery items in
order to minimise the need to visit stores.
Treats buck this trend. In fact, sales of cat treats continued to grow throughout
lockdown, with sales up 7.2% for the full 12 weeks and 7.7% in the final four. Positive dog
treats grew by 9% for the full 12 weeks and 8.8% in the final four. Both categories saw
growth in unit sales too.
This proves how expandable the pet treats category is. Treating is discretionary. The
more people are around their pets, the more they do it. As we’ve explored, more people
are living on their own in 21st century Britain. With experts warning of a second, ‘mental
health pandemic’, it seems many sought to ease the loneliness and worry caused by
Covid-19 by indulging their pets.
There’s historical evidence to support the argument that treats will continue to benefit.
After the financial crash of 2008, sales of many categories experienced what has been
termed the ‘lipstick effect’ – growing demand for affordable luxuries that help raise the
spirits during times of hardship. Malt whisky saw a spike of 4%, nail polish grew 5.9% and
pet care sales rose by 3.9%55.
As the world emerges from the pandemic with the worst economic hangover it’s had in
at least a century, it’s worth pointing out that 51% of UK shoppers who own pets say they
would sooner reduce the amount of money they spend on themselves than on their
pets56. Pet food and the wider category is recession proof. Now that’s power.
52
Frontiers in Psychology, October 2017: Oxytocin and Cortisol Levels in Dog Owners and Their Dogs Are Associated with
Behavioral Patterns: An Exploratory Study
53
Mars Pet Engine for Growth panel (PEGGY)
54
Nielsen 12 w/e 16 May
55
Euromonitor, 2016
56
Mars Pet ownership study, 2017, UK Market
20 21Convenience retail: GROWTH OF CONVENIENCE AND ONLINE 26 weeks
12 weeks
Lockdown’s top dog
4 weeks
35
Convenience retail conventionally plays a small but crucial role in pet food, providing 30
a limited range, mostly for top-up shoppers who find themselves unexpectedly short
on supplies for their four-legged friends. Covid-19 has turned convention on its head. 25
Convenience has emerged from lockdown as one of the category’s surprise top dogs.
20
Impulse retailers such as Spar, Budgens, Premier, Costcutter, One Stop and McColl’s saw pet
Sales grew by 3.1%, 15
food sales grow at nearly twice the rate of the total UK grocery market over the most recent
12-month period. Sales grew by 3.1%, versus total category growth of 2.2%. This, largely, was
versus total category
the result of a sharp sales spike following the imposition of lockdown (see below). growth of 2.2% 10
5
GROWTH BY CHANNEL Total 0
Impulse GROCERY TOTAL TESCO SAINSBURY’S CO-OP OCADO
MULTIPLES IMPULSE EXPRESS LOCAL
Total Co-ops
20
15 As the above graph shows, pet food sales through either by shopping online more often or visiting local
smaller impulse stores, Co-ops and online remained neighbourhood stores.
10 elevated in the final four weeks to 11 July, outstripping
the performance of the multiple grocers. Fears over a second wave are rising too. All this
5 presents convenience retailers with an opportunity
With social distancing guidelines still in place and to attract greater numbers of affluent pet parents by
0 shoppers now required by law to wear masks when stocking a wider range of pet food and treats and
they enter stores, it’s likely that a significant proportion establishing themselves as a destination for Petcare
-5 of shoppers will continue to avoid larger outlets within their communities.
-10
TOTAL PET FOOD TOTAL DOG TOTAL CAT TOTAL DOG
& LITTER FOOD FOOD TREATS
Between 29 February and 16 May 2020, these retailers experienced a 16.2% sales increase.
Co-operative Group and regional Co-op outlets – largely smaller neighbourhood c-stores
– saw a similar increase, growing by 14.3% during lockdown and by 3.6% over the full year
ending 16 May 2020.
The 12 weeks in question begin five days before the tragic news of the first UK death from
16.2%
Covid-19 was announced and covers the Prime Minister’s 16 March announcement that the Sales increase
public should avoid all ‘non-essential’ social contact and travel and, on 23 March, the closure
of schools, pubs and all non-essential retailers.
Lockdown, of course, had a profound effect on the nation’s shopping habits. The ‘little and
often’ pattern that had been driving growth in convenience retail for a number of years
was replaced by less frequent store visits with far larger basket sizes as shoppers sought to
minimise social contact. The big weekly shop was back with a bang.
But with one key difference: many shoppers were actively avoiding larger stores and seeking
to get what they (and their pets) needed from local convenience stores, presumably as
a way of minimising travel and the number of people they came into contact with while
stocking up on essential groceries.
The 5% decline in the total market during the final four weeks to 16 May is telling, also. This
is evidence of pet owners stockpiling provisions in order to reduce the number of shopping
trips they had to make during the height of the pandemic. Whether shoppers will continue
to frequent c-stores instead of larger outlets remains to be seen, and largely depends on
Britain’s progress in tackling Covid-19.
22 23Deep dive:
Covid-19
inspires a spike
in puppy sales
Eighty two per cent of people who have Age matters
pets say they suffer less with problems such New puppies and kittens can have boundless energy
as loneliness and depression thanks to the and a hearty appetite for mischief. Would-be owners
companionship pet ownership brings. should first ask themselves if they are ready to take
on the responsibility and expense of a young animal
This helps explain why the UK was that requires vaccinations and training.
reported to be facing a ‘puppy shortage’
as the country entered its third month of If the answer is no, adopting a pet from an
lockdown in May, 202057. animal shelter is a good option. They are a
great place to find vaccinated, housetrained
With millions working from home or on animals of all ages. More senior pets are often
furlough, many households used the extra more placid, used to being around humans and,
time at home as an opportunity to get the crucially, in need of companionship.
family pet they’d always dreamed of.
Breed can be just as important as age
Breeders reported ‘unprecedented Data gathered by the Pet Insight Project (more on
demand’ for puppies, with some claiming that in Part V) reveals that the breed of dog new
the length of waiting lists quadrupled owners choose can have just as much of an impact
following the imposition of lockdown. on how much a handful they are as what age they
are when they join a new family.
The Kennel Club said that its online puppy
portal saw a 140% year on year increase in For example, German Shepherds can be three times
traffic in April. The RSPCA noted a 600% as energetic when they are puppies, compared to
rise in visits to its dog fostering pages. when they reach their later years. Conversely, Jack
Russell Terriers tend to expend the same amount of
The news inspired Mars Petcare’s Global energy throughout their lives59.
Scientific Advocacy Relations Senior
Manager Angela Hughes to put together Activity is essential (for pets and owners)
a four-point guide58 for those looking for a Daily routines were changed beyond all recognition
new pet… during lockdown, with most of us restricted to one
outing outside the home a day to exercise from the
end of March to the beginning of May.
Of course, that exercise is essential for our canine
friends. It is also crucial for the physical and emotional
wellbeing of their owners. For less active pooches or
cats, Hughes suggests setting using balls, mazes and
other activities at home to keep pets engaged.
Stay safe
This, of course, should go without saying. Pet owners
should keep up with preventative care regimes,
cleaning routines and trips to vet. And, with lockdown
easing and many returning to work, it is important
new pets are eased into new routines slowly.
As the Dogs Trust put it in its advertising
campaign during the pandemic: ‘A dog is for life,
not just for lockdown.’
The Financial Times, 22 May 2020
57
Mars Petcare
58
Pet Insight Project
59
24 25PART FIVE
The future of pet care
Our pets’ future is bright. By harnessing the trends There are currently 143 collection points across the The benefits will eventually go far beyond individual employers to adopt a more flexible approach to home
and approaches we’ve outlined in this report, the UK and more than £32k has been awarded to good animals. By signing up to the Pet Insight Project, working suggest retailers may be needing to dedicate
value of the category for pet food and litter in the UK causes through the TerraCycle Rewards Scheme61. users of Whistle can share data with researchers and more space to pets in the future.
is on course to have passed £3.2 billion by 2025. That increase global knowledge about man’s best friend62.
will be a staggering 13% increase in just five years60. Things are also looking up for our pets. In the US, we These insights can then be used in the development Perhaps our pets will end up being the biggest
But there are still challenges to be overcome. have launched cutting edge technological solutions of the next generation of pet food products. beneficiaries of lockdown?
to ensure the world’s pets live the best lives possible.
Sustainability, rightly, is of growing concern to Take Whistle, a wearable collar-mounted device that There’s lower hanging fruit that retailers can pick
consumers and businesses alike. At Mars Petcare we allow parents to track the location and monitor the here before such high-tech solutions land on these
are pioneering new approaches to ensure we give health of their pets via their smart phones. shores, however. Our research suggests simple steps
back more to the planet more than we take. Many like increasing space dedicated to luxury products
plastic pet food pouches are currently not recycled The device takes up to 50 readings a second of an and treats and ensuring brands are at eye level to aid
by local authorities in Britain because of the way the animal’s movements and helps give families peace navigation can deliver growth of 11.3% in dog food
materials they are made of are manufactured. of mind by effectively working as an early warning and 1.6% for cats.
system. If an animal’s behaviour changes (say, how
That’s not stopped us from sending more than 2.6 often it is drinking, eating or urinating or how much it The rise in pet ownership driven by the higher
million kg of wet pet food pouches and flexible pet is sleeping), it can allow pet parents to address this at number of people who were working from home
treat and dry food plastic packaging to be recycled an early stage. during lockdown (see Part IV) and the fact that 45% of
since setting up our nationwide recycling scheme. respondents to a recent survey say they expect their
Combined Read - Nielsen – Petfood, Mintel – Petcare, Stratista Grooming and Vet Services
60
Terracycle/Mars Petcare
61
Pet Insight Project
62
26 27You can also read
