Organic Pet Food by Wal-Mart Stores, Inc.

The pet food industry continues to evolve at a fast pace. Just two months after Target Corp. (NYSE:TGT) introduced a private label premium pet food, Wal-Mart Stores Inc. (NYSE:WMT) launched a private label, all natural, organic pet food called Natural Life.

Moving further upscale, Wal-Mart is also stepping up competition in the $14 billion market for pet food. It already sells Ol' Roy dog food in the non-premium dry segment, and has now entered the organic pet food market, which is growing at high double digit rates annually.

Ol' Roy is a Wal-Mart private label manufactured by Doane Pet Care Co., a leading supplier of private label food to many companies. Doane announced today that it is being acquired by privately held Mars, Inc., owner of Pedigree, Sheba and Whiskas pet foods.

So Mars now owns the company that makes Wal-Mart's top-selling dry dog food. Mars launched a $200 million advertising campaign for Pedigree in '05, which is not sold at Wal-Mart and does not directly compete with Ol' Roy, but Wal-Mart's new entry into the premium space should be interesting to watch. I would assume (but don't really know), that Doane's also manufactures brands that compete directly with Pedigree.

Del Monte Foods Co. (NYSE:DLM) recently bought the Meow Mix and Milk-Bone brands for over $1 billion.

The Proctor & Gamble Company (NYSE:PG) bought Iams in 1999 and brought it out of veterinarian offices and into 25,000 retail outlets, developed a tartar control coating using processes from Crest toothpaste, and turned Iams into the nations top pet food brand by dollar sales according to AC Neilsen with 10% of retail sales in Sep 2005. In 2006 P&G will debut a tartar control pet treat and possibly pet shampoos and odor removers as well ('Pets are People Too, You Know,' Businessweek Online, Nov 28 2005).

Colgate-Palmolive Company (NYSE:CL) owns Hill's Science Diet, which was sold primarily in the vet channel until last year when it became available in PetSmart, Inc. (NASDAQ:PETM) retailers with in-store Banfield hospitals. Similar to Procter & Gamble, it seems Colgate-Palmolive is well positioned to use existing processes and technologies to produce odor control products from pet shampoos to fabric cleaners.

Colgate today announced first quarter 2006 results. Sales rose 5 percent to $2.87 billion from $2.74 billion, with the oral, personal and home care segment up 4.3 percent to $2.49 billion and the pet nutrition segment up 7 percent to $385.3 million. Hill's sales accounted for 13 percent of the company's total sales.

Nestle Purina PetCare owns many brands including Alpo, Beneful, Pro Plan, Purina One, Puppy Chow, Fancy Feast, and Friskies. Headquartered in St. Louis, Missouri, where Ralston Purina Company was founded more than a century ago, the company is part of the Swiss-based Nestle S.A. - the world's largest food company.

Marketing to Pet Owners?
Check out the Pet Industry Strategic Outlook by Dillon Media.