Lifestyle Approach Goes to the Dogs

Discussion
Sep 26, 2006

By George Anderson


It is a common feature of the dog food category. Manufacturers have created products to meet the nutritional needs of dogs based on a number of factors, such as life-stage, size of dog/breed, and health concerns, such as weight issues.


Now, the specialization is going even further to include lifestyle factors such as breeding, bite strength and activity levels.


Royal Canin has recently launched Indoor Adult 21, a food created for small dogs who live indoors.


Company spokesperson Ann Hudson told USA Today, Adult 21 is lower in fat to fight weight gain in small dogs living indoors and it has ingredients to reduce the smell of the animal’s waste.


Royal Canin has developed nine breed-specific dog foods for Boxers, Bulldogs, Chihuahuas, Dachsunds, German Shepherds, Labrador Retrievers, Poodles, Shih Tzus and Yorkshire Terriers.


Amy Dicke, veterinarian at Iams, sees more targeted nutritional approaches being developed to promote pet health.


“Just as in human nutrition, we find something new on a regular basis,” she said.


Developing foods that better meet the health needs of dogs appears to be a sure winner in today’s market. Premium dog food is expected to account for half of U.S. dog food revenue this year, up from 35 percent in 1998, according to Euromonitor International. In total, dog food and treat sales will grow to $10 billion this year.


Discussion Questions: How will breed-specific foods impact the pet food category? With increased specialization comes a larger number of skus. What will
the increase in product choice mean to how stores (excluding pet specialty) manage the category and available space?

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14 Comments on "Lifestyle Approach Goes to the Dogs"


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Ed Dennis
Guest
Ed Dennis
15 years 8 months ago

Any chance we can get these guys to work on combating hunger in the third world? Big Hint – the number one selling dog food in the USA is the Wal-Mart private label and I believe its share of market is increasing every year. I wish someone would start a campaign to divert the money spent on designer dog and cat food to a more compassionate purpose. PS: I own dogs and cats. They are healthy and get by on “regular” pet chow.

Kai Clarke
Guest
15 years 8 months ago

This trend reflects the industry’s ability to differentiate their products based upon target market segmentation. Combine this with increased education, and the propensity for pet owners to increase their spending dollars on their pets and we have created a knowledgeable, demanding consumer. This requires differentiating features found in foods from their product ingredients to kibble size to impact the purchaser. Further differentiation becomes important in order for each producer to gain market share or better communicate with their target market. Unfortunately, there will be too much uniqueness at some point, and the consumer will become confused by all of the differentiated claims. When this happens, we will see a trend to basic Dog Chow. Until then, we will continue to see manufacturers branding their products for specific segments in order to leverage their brands and product extensions.

Warren Thayer
Guest
15 years 8 months ago

Nice little niche. I don’t see it ever getting beyond niche, but it’s differentiation and there are people who will pay extra for this stuff, at a nice margin. In the world of fast nickels vs. slow dimes, this is probably a very slow dime — but worth bothering with if you have the right customer mix. BTW, wanna know what the fastest-growing category is, in all of frozen foods in supermarkets? Dog food!

Bernice Hurst
Guest
15 years 8 months ago

What a wonderful way to build loyalty. Far be it from me to imply that pet owners might be the teensiest little bit fanatic about their animals but I think there is some evidence in support of such a hypothesis. People who love their pets will spend extra to feed them (although I thought they frequently give them the most expensive human food they could find?) and will love any store that caters to them. Some of ye olde market research could delve into which pets customers have in order to manage the number of SKUs and select those most likely to be in demand.

Mark Lilien
Guest
15 years 8 months ago

Most dogs aren’t purebred and the fight for supermarket shelf space is fierce. Unless Royal Canin has a powerful marketing campaign creating huge demand, they either (1) won’t get meaningful shelf space or (2) will lose the shelf space they get when the sale figures disappoint the supermarkets. Frozen dog food may be a fast growing category percentage-wise because the sales numbers are so low to begin with. Canned and dry dog food are very mature categories.

Robert Leppan
Guest
Robert Leppan
15 years 8 months ago
The advent of targeted nutritional approaches to pets follows right along with the trend to greater awareness of health and nutrition amongst their owners. The pet food category has been undergoing segmentation for years as marketers realized that owners treat their pets like their children (sometimes better). Owners want to do anything & everything for their pets, sometimes to a ridiculous degree — witness the rise of doggy day care establishments, deluxe boarding kennels, on-line and bricks & mortar pet boutiques, even pet cemeteries. Smart marketers are tapping into this category dynamic but the proliferation of choices is already getting confusing to consumers. Further segmentation will appeal to obsessive owners who worry about bite strength or want a food formulated specifically for their Labradoodle. I can see specialty pet stores (like PetSmart, Petco) that have more space, attempting to carry a limited number of SKU’s for whatever new lifestyle brand is there first, with the best marketing. But mainstream grocery retailers will have a big issue finding and justifying space for these “designer” premium pet… Read more »
Brett Williams
Guest
Brett Williams
15 years 8 months ago
As long as there are still people out there that think that the cheapest bag of dog food, usually the private label from Wal-Mart, is good enough, there will always be the possibility of growth in the pet food/nutrition market. Sure, there are some very expensive, exotic pet foods available but there are also very affordable pet foods that are nutritionally and economically superior to these low-priced bags of feed. Sure, a pet can get by on cheap stuff, especially when supplemented with table scraps and leftovers but I have seen firsthand that going from the cheap stuff for $13 a bag to premium food for $18 can actually save you money by feeding less. Instead of comparing prices compare the suggested feeding for your size pet. But a lot of the trend that I am seeing is to buy the cheap grocery store dog food until the pet becomes unhealthy then buy whatever the vet suggests (usually “prescription” pet food) which usually costs more than good pet food would cost initially. Plus you can… Read more »
Anna Murray
Guest
Anna Murray
15 years 8 months ago

Yesterday’s New York Times had a story on the change in pet boarding facilities. Dog owners are willing to pay $30, $50, even $150 a night to board their dog in a place where they have activities, play groups, swimming, grooming and training. Sure, it may sound ridiculous at the extreme end of the spectrum (doggie bedtime stories). But one owner of a boarding facility told this story: One Christmas he decided to hire high school students to come in and pet the dogs. He didn’t charge extra (a move he regretted) and his customers LOVED it. They felt so much better, he said. Dropping your couch-lounging pooch off at a place where the dog-run looks like doggie-jail can be hard. Knowing that the dog would receive attention, won the kennel operator more business and his customers’ loyalty.

In this context, it certainly seems reasonable that people would spend money on a breed-specific food.

MARK DECKARD
Guest
MARK DECKARD
15 years 8 months ago

The 80/20 Rule rules. 80% of the volume will be done in 20% of the SKUs. However, in a market of this size, the 20% of volume left to be done in the other 80% of the SKUs is a pretty sizable space.

Niche yes, but a solid competitive effort to gain as much of that remaining 20% of market share as possible.

And niche also means you won’t find it in the grocery store.

However, I see an opportunity for small independents by offering high touch customization for their customers. (i.e. How-to-beat-the -big-boxes-in -customer-service-and-selection) Why not offer a customized diet plan for pet owners and special-breed orders delivered monthly to the store for the owners of a Turkish Akbash, or Rottweiler?

This would be a great opportunity for small operators to specialize and to ensure regular high-touch contact with their clientele.

Joel Rubinson
Guest
15 years 8 months ago

If this bred-specific effort succeeds, which it very well might, it is interesting to consider how the market might evolve. It is likely, for example, that success in the specialty outlets will lead to the “big dogs” (Purina, Mars) coming out with the same concept. Expect retailers to ask vendor partners for market structure studies that will confirm the need for breed-specific varieties. If the case is made, expect supermarket retailers to stock these items from the big boys which will make this segment grow tremendously. One big dynamic will be the reaction of vets.

Connie Kski
Guest
Connie Kski
15 years 8 months ago
1. If Royal Canin decides to go to the supermarket, there will be no shelf space for them in my independent pet store. Period. they can go join the P&G dog foods. 2. They need to show ME, the store owner, exactly and precisely why we should go beyond life stage and dog size. Why do they deserve this shelf space; what’s so special and essential about umpteen different formulations? I currently carry six different brands of dog food. Each one has earned a place in my shop by virtue of quality of food, service by sales reps, potential margin, and demand by customers. Is there going to be enough demand for each of those various formulae? And do I have to carry each formula in three sizes and three life stages? I’m just a small retailer in the metro NYC area — but I know dogs and nutrition. My customers shop here because of our dog food consults and purchase the foods we recommend. What’s Royal Canin got besides yet another differentiation?
M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
15 years 8 months ago
Finally! …food that allows schnauzers to be all that they can be! Breed-specific dogs, otherwise known as designer canines, are all hybrids (mutts, really, just like you and me). If owners of crystal-pure breeds lined up, everyone would be first – and last. In other words, there are no pure breeds and no one would be in line. Every breed-specific pooch was developed by humans using selective (often wildly random) breeding techniques. There are no pure breeds, and thus no need for foods that cater to them. While Gregor Mendel was the first to chronicle the science of genetics and selective breeding in the mid-1800s (it was peas, dude), the practice of interbreeding canines for various features was already centuries old. On the backside, as they say, are so-called “breed nuts.” These are the folks who sticker their cars’ (and other conveyances’) bumpers with breed-specific messages. You’ve seen them, you know them, and they might be your neighbors. Heck, they might be you. They’re good people – just a little off kilter – and they’ll… Read more »
Dustin Stinett
Guest
Dustin Stinett
15 years 8 months ago

I suspect that this might be more than just a niche. A few weeks ago, the Wall Street Journal ran a piece on how, even in hard times, cost is no object when it comes to people and their pets. I have personal experience in this: I was just informed by my wife that our dog will be going through allergy testing. It seems he scratches too much. My argument that “He’s a dog” fell on deaf ears. And the allergy he is suspected to have is a food allergy. It appears that the ridiculously high-priced food she has been buying makes the dog itch. So now she will probably need to buy a different high-end food. Of course, my argument that the dog I had as a kid lived for 17 happy years on nothing but Kal-Kan “MPS Chunk” and Alpo “Meat Flavored” dog food also fell on deaf ears. I’m sure she’ll be looking at the breed specific stuff when she finds out about it; but that won’t be from me.

Stephan Kouzomis
Guest
Stephan Kouzomis
15 years 7 months ago

My dog is my baby…whether small, medium or large; one, eight or 15 years old.

My dog is like a member of my family, and treated better than you can believe.

When I worked at Ralston Purina, these were key points in the minds of marketing and sales personnel.

And you know the rest of the story…explosion of foods to care for my baby from infancy to old age!

Huge business and profitable. Drives retailers nuts. Can’t carry all items. And some aren’t offered to the grocery industry.

Some of the niche brands sold through vets are doing extremely well; and consumers are willing to stop and buy what they need.

It’s a dog’s world; and they are the kings! Hmmmmm

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