Pet Owner Spending Trends in the U.S.

A new report has just been published on nationwide pet owner spending trends.

The aging population, childless consumers and the ascendancy of high-income baby boomers are analyzed by their pet spending habits. Charts and tables are included using data from the Department of Labor, Bureau of Labor Statistics that highlight core trends in U.S. consumer spending by income, age, general region, and family composition.

The Pet Industry 2008 Strategic Outlook is our annual report, written for businesses marketing to pet owners.
 

Looking Toward 2008

The pet industry has been called recession-resistant by many people, myself included, as it stood up to economic shocks in 2002 and again in 2005 after hurricane Katrina.

This year may test that theory, however. A decade of strong growth has created some fluff in an industry that has been growing like a balloon, in every direction at once. Balloon, bubble...we think slowing growth or contraction in certain segments is inevitable in 2008.

Sure, pet owners will continue to spend money on their companions in tough times, but on what? The latest available data from the Department of Labor show spending on pet purchases and supplies declined 20% in 2006 from the year before, while the other segments of food, services and veterinary services grew but at a much slower pace.

Just like humans, spending constraints will probably result in cutting out non-essential products and services, but with some interesting twists. Higher income demographics are supporting more and more of the industry each year.

Two new reports on U.S. pet owner spending are out.

Pet Food Consumer Spending Data Tables

How much money Americans spend on pet food by age, income, region and family composition.

Veterinary Services Consumer Spending Data Tables

How much we spend at the vet each year.

Pet Food Recall: Week 7 Update

Seven weeks later, the pet food recall keeps growing. It's already exposed massive holes in the US food chain, including intentional contamination overseas that apparently has been going on for years, and a stunning lack of inspection procedures on both food and nonfood imports at US ports.

The only reason melamine was detected at all may be due to its chemical reaction with another contaminant in the pet food, cyanuric acid. Each of these falsely raises the protein content of wheat gluten and rice protein concentrate. Each chemical alone may not kill a dog or cat, but the combination of the two apparently does, forming crystalline structures that block kidney function.

Leftover bad pet food was sold to farms. Health officials at FDA and USDA say a minimum of 2.5 million chickens ate contaminated feed and entered the human food chain in February.

I believe that means we ate them.

While acknowledging they have no idea how this combo-contaminant impacts human health, with or without 'dilution' factors, they refuse to recall any chicken or pork that may be left on shelves or in freezers around the country.

Forget trying to stay up to date on FDA's website. They are too slow adding newly recalled brands in a timely fashion, which is frankly pathetic for a health issue. It takes one web monkey 5 minutes to update a webpage, not 5 hours or 5 days. In fact, I am training monkeys to type right now, and will send them off to help the FDA with this task in the morning.
Itchmo's List of All Recalled Cat and Dog Food
The Pet Food List

U.S. Senator Dick Durbin (D-IL) introduced an amendment to the FDA Reauthorization Bill strengthening human and pet food monitoring, labeling and inspection standards. The Reauthorization Bill, S.1082, is now on the Senate floor.

Bad Pet Food Kills Thousands of Cats and Dogs

Two groups presented data confirming a sharp spike in kidney failure from December through March. Dr. Paul Pion of the Veterinary Information Network conducted a survey of veterinarians and estimates 5,000 to 10,000 affected pets, with 1,000 to 2,000 dead. Banfield hospitals saw a 30% rise in kidney failure over the 1 million pets it treated during the same time, mostly in cats, and estimates 39,000 pets to be affected overall. Read the article here

The FDA indicated it will rely on these numbers moving forward.

In a separate development, Pet Connection points to the Marin Independent Journal reporting a top UC Davis lab identified melamine in three Nutro products not on the recall list.

And a Forbes commentary on PR damage control by pet food companies.
 

Senate Hearing on Pet Food Recall

United States Senator Dick Durbin (D-Ill.) announced a Senate oversight hearing on pet food regulations, stressing the need for stronger FDA involvement and better modes of communication between consumers, manufacturers and the government.

Here's the official announcement.
 

Three Weeks Later, Recall Still Growing

The pet tragedy continues to unfold three weeks after the first public announcement on March 16. Menu Foods, the first of six companies to recall product, and after several attempts to reassure the public of its safety, today expanded the date range of its original recall.

Sunshine Mills today announced a recall of its products but failed to mention brand names. Sound familiar? Yes, that is exactly what Menu Foods did on March 16, prompting retailers to pull too many products and consumers to panic.

Tracing just one of the supply chains: the tainted wheat gluten came from unknown sources, through a known middleman in China, to a distributer in the US named ChemNutra, then to Menu Foods' two processing plants. There are other routes, possibilities and companies involved. So the difficulty in finding exactly where the contaminant entered the supply chain is obvious.

Listen to a discussion on pet food manufacturing and animal nutrition with a vet, a food safety expert and a pet food maker, from KQED Forum.

The damage to established brands is yet to be determined, but it seems clear from the news that consumer confidence has been shaken.

I can't keep up anymore.

Pet Connection can.

[update: Sunshine Mills recalled brands have been posted on their website and include Wal-Mart's (WMT) Ol' Roy Puppy Biscuit and Peanut Butter Biscuit.]
 

Pet Food Recall: More Questions Than Answers

What's next? After finding traces of rat poison and large amounts of a chemical used to make plastic in over 100 brands of dog and cat food, the FDA has not ruled out finding yet more contaminants. And I imagine they will, submitting dog food to such a massive battery of tests.

USA Today has an interesting article on the pet food recall, discussing food inspection standards and recent announcements by the FDA.

To stay updated on the recall go to Pet Connection.
 

Pet Food Recall: Supplier Identified

Thanks to Pet Connection and Itchmo for digging this bone out of the media junkyard.

The FDA issued an import alert that names the supplier of tainted wheat gluten as Xuzhou Anying Biologic Technology.

Itchmo has the details and points out that other companies using this importer should contact the FDA immediately.

The implications from all this bring into question the current standards for food quality, testing, importing and labeling. In a global marketplace, maybe the U.S. needs to tighten screening procedures, using data from the supplier country as the least common denominator in determining standards.
 

Pet Food Recall: 2nd Chemical Found

The FDA cannot confirm the presence of aminopterin in the recalled pet foods, but announced today it found a second chemical possibly responsible for kidney failure. Melamine is a chemical used in the manufacturing of plastics, and was found in the affected wet food, in the kidneys of animals, and in the wheat gluten imported from China.

It is not clear exactly which of these chemicals, if any, is causing kidney failure in cats and dogs. The FDA also announced that a maker of dry pet food potentially received a shipment of contaminated wheat gluten. Obviously that referred to Purina and Hills, who expanded the recall to certain Alpo and Science Diet products.

CNN has an update.
 

Kidney Treatment Centers for Pets

The Washington Post reports on the differences between acute and chronic kidney failure, concluding "if your pet ate any of the tainted foods recalled by Menu Foods and is not showing symptoms, that does not necessarily mean your pet is safe."

Newsweek offers an interview with an expert with an interesting perspective on issues about pet food safety and feeding dogs and cats in general.

As noted in an earlier post, the UC Veterinary Medical Center-San Diego's unit for treating acute and chronic kidney failure is one of only two veterinary clinics in California and five in the nation equipped to provide dialysis for cats and dogs.

Another source of advanced veterinary care is the University of Pennsylvania, School of Veterinary Medicine feline renal transplantation program. A cat kidney transplant costs $8,000.
 

Pet Food Contaminated by Rat Poison

ABC News reports on the pet food recall:

"A source close to the investigation tells ABC News that the rodenticide, which the source says is illegal to use in the United States, was on wheat that was imported from China and used by Menu Foods in nearly 100 brands of dog and cat food."

The name of the chemical is aminopterin. A press conference is scheduled for later today by experts in New York, whose food laboratory found the contaminant.

[Update] New York State officials confirmed in a news conference that the name of the chemical is aminopterin. Menu Foods confirmed they do not know where or how it entered the supply chain to contaminate its wet foods products (see complete list at www.menufoods.com/recall. The company said it will take responsibility for pet owner bills for cases they determine are related to the recall.

Officials continue to investigate and expect the number of affected pets to increase.

The New York State Food Laboratory equipped to discover the toxin is a member of the food emergency response network setup by the Department of Homeland Security after 9/11. Aminopterin and other chemicals like Aluminum Phosphide and Ammonia are on a DHS list of extremeley hazardous substances.

 

Expect More Bad News From Pet Food Recall

Read the latest on the recall here.

March 22, 2007 - A pet food recall almost one week old continues to grow in scope. Menu Foods, the largest supplier of wet pet food in North America and private label manufacturer for widely used brands and retailers including Iams and Wal-Mart, still has not figured out the cause.

Official statements by the FDA refer to 16 pets dead, but the true number will most likely be much higher. Cat and dog owners who used the recalled brands are advised to stop immediately and go to the vet for tests. Menu Foods says it fielded 47,000 phone calls over the weekend, but most news reports tell of people unable to contact the company due to overloaded phone lines.

Sixty million packages of wet dog and cat food were recalled, representing 1% of all pet food sold in the United States. Menu Foods own tests showed an alarming mortality rate of 1 in 7, meaning 7 out of 50 animals that ate their food died. Using highly conservative numbers, Dillon Media LLC estimates a minimum number of total deaths that still has three zeros after it, as reported in The Economist. That said, it is important to remember that the vast majority of pets in America are safe.

Anecdotal evidence is beginning to back this up, with six lawsuits already reported in four US states and Canada, Petconnection.com reports over 800 pet deaths in their self-reported database, and news organizations around the country have no problem finding affected people to interview. Many pet owners lost a cat or dog weeks ago, only realizing the cause after the recall was announced.

The San Francisco Chronicle reported this morning that the FDA is not asking vets to report suspected cases of recall-related deaths. This is a mistake. In the lightly regulated industry of pet food manufacturing, official documentation of the toll of this pet disaster will help craft the regulations and legislation that will inevitably follow. The last pet disaster - hurricane Katrina - resulted in new federal and state laws incorporating pets into disaster planning. [Update Mar 23: this FDA FAQ encourages vets to file cases]

This one exposes the manufacturer as a weak link in the chain. Few people probably knew just how many brands Menu Foods produced until they were forced to post the affected labels on their website. Private label pet food manufacturers tend not to name their customers. In fact, Doane Pet Care, who manufacturer's Wal-Mart's Ol' Roy dry dog food, does not even mention on its website that it is owned by Mars Inc. Doane is not involved in this recall.

Read the latest post on this topic here.

Click on a Label to learn more about the topic:

Pet Food Recall Update: Affected Brands

Menu Foods fixed their website and posted the affected brands at http://www.menufoods.com/recall.

Thirty-eight different cat food labels and 46 brands of dog food are listed.

The FDA has posted additional information.

 

PR Strategy Needs a Recall

Menu Foods, one of the largest pet food manufacturers in North America, announced a recall this morning but failed to name affected brands, saying they will be available tomorrow morning on their website that currently doesn't function. Since they make pet food for Wal-Mart (WMT), Safeway (SWY), Kroger (KR), and many more, people were left understandably confused.

So far, Proctor & Gamble Pet Care (PG) and Safeway have taken the proactive move of recalling their labels possibly affected by their manufacturer, possibly compelled by Menu Foods vague press release that resulted in Friday night newscasts in major cities across the nation asking questions but getting no answers.

[update]
Purina (Nestle), Hills (CL), Petco and PetSmart (PETM) also made proactive moves before the affected brands were announced.

Pet Industry News

PetSmart, Inc., the nations largest retailer of pet supplies, announced 2006 fiscal year results. Net sales in 2006 grew 11% from the previous year, to $4.23 billion. Pet services sales and revenue continue quarterly growth above 20%, generating $376 million in revenue in 2006.

The company will close all 180 State Line Tack departments, exiting the equine business to make room for higher margin pet supplies or PetsHotels.

Earlier this month, PetSmart increased its number of stores in Canada by 58% to 42 with the acquisition of 19 Super Pet stores.

One current advertising campaign directs users to the Nutrition Selector on the website, featuring highly differentiated premium dog and cat foods. Pet food is the largest segment of the industry - American's spend about $14 billion each year on pet food - and a primary driver of the consumer into the store.

Petco, the nation's second largest pet specialty retailer, went private last year but refuses to sit, expanding on services and pampering themes. The company announced a nationwide fashion show marketing campaign, and was reported to be exploring the mobile grooming business in Las Vegas.

Central Garden & Pet, the largest supplier of pet items to PetSmart, Petco, Wal-Mart, Target and many others, has been impacted recently by rising grain prices and Wal-Mart's decision to stop selling live fish. But it continues to innovate and grow across many segments of the industry, winning nine New Product awards at the 2007 Global Pet Expo.

Nestle, the world's largest food company, will open its first pet food factory in China this year as it tries to take a bite out of Mars Inc's Chinese market share. Mars has been in China for 10 years, and sells a lot of Pedigree and Whiskas to the local market through an alliance with a Chinese company, in this case Effem Foods (Beijing) Co. Ltd. Nestle may benefit from newer foreign ownership regulations.

.

Disney Expands into Pet Market

Reuters reports that The Walt Disney Company (NYSE:DIS) plans to expand its range of pet products globally, producing collars, clothing and bedding for pets by licensing its valuable portfolio of characters.

Current lines include a Pirates of the Caribbean aquarium and an Old Yeller private label dog food. Details on the expansion plans were not provided.

Licensing arrangements generate about 70% margins for Disney, and consumers worldwide bought $21 billion of products branded by Disney last year ("Disney barking up a new tree with pet products," by Jeffrey Goldfarb, Reuters, June 7, 2006).

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.

Pet Care in the 21st Century

Advances in veterinary medicine, new screening and treatment options, and consumers more educated than ever about pet diseases continue to drive the market for pet health care products and services.

Dog and cat owners in San Diego, California now have access to top-quality care at the new clinical facilities for the UC Veterinary Medical Center-San Diego.

The unit for treating acute and chronic kidney failure is one of only two veterinary clinics in California and five in the nation equipped to provide dialysis for cats and dogs. Other services includes behavioral, pharmaceutical, and nutritional specialty care.

The center was established in 1998 by UC Davis and UC San Diego to collaborate on teaching and research and to promote emerging specialty services in Southern California.

Related links:
UC Davis School of Veterinary Medicine
Marketing veterinary services? - Charts of vet spending by age, income and family makeup. Purchase online.
Pet Health Reference Search - A customized search engine for symptoms, conditions and treatments.

Target Launches Premium Pet Food Label

Target Corporation (NYSE:TGT) announced today the launch of a 'super-premium' private label pet food, firmly placing itself as a competitor to PetSmart and Petco in the pet food and supplies category.

According to the company press release, 'The LIFELong line of pet food features five scientific formulas, each offering high-quality protein such as real lamb and chicken; antioxidants such as vitamins E and C and selenium; omega fatty acids such as linoleic acid, and other premium ingredients. Designed to provide unconditional pet nutrition, LIFELong pet foods help to support healthy immune systems and cardiovascular health, promote strong muscles, bones and teeth, freshen breath and maintain visibly healthy coats' (source: target.com).

Related posts:
Jun 2005: Target Pets TV Ad Campaign
Apr 2005: Target Unleashes Pet Website

Organic pet food industry

The USDA reversed an earlier decision and will continue to certify 'USDA Organic' labels for pet food. Although organic food - made without pesticides, chemicals or hormones - represents only $14 million out of the $14 billion pet food segment, sales increased 63 percent last year, according to the Organic Trade Association.