Health Food Is Going To The Dogs -- Literally
[Rachel's Introduction: The American Pet Products Manufacturers Association expects Americans to spend about $43.4 billion on their pets in 2008, up from $41.2 billion in 2007. About $16.9 billion of that is expected to be spent on food.]
Cott Corp., a maker of private-label sodas for human consumption, is one of the latest companies taking the health-and-wellness craze to the animal kingdom. Cott is rolling out a line of vitamin-infused beverages for dogs, not unlike the enhanced juices and drinks for humans lining grocery and convenience-store shelves.
"This is our first foray into the pet industry," Cott spokeswoman Lucia Ross said. "The same way the trend is healthier food and beverages for people, we believe that healthy beverages for pets are the next step."
Cott's move displays how companies are trying to grab a share of the U.S. pet industry. The American Pet Products Manufacturers Association expects Americans to spend about $43.4 billion on their pets in 2008, up from $41.2 billion in 2007. About $16.9 billion of that is expected to be spent on food. The emphasis on health and wellness products could entice more companies to try for a share of the pie.
Mainstream brands such as Procter & Gamble Co.'s Iams, Colgate- Palmolive Co.'s Hills brand and Nestle's Purina dominate the U.S. market for pet food and pet-care products, and a host of smaller, lesser-known brands are regularly introducing products for pets.
Cott says it spent nearly 18 months on research and development with veterinarians and food scientists to come up with the products designed to meet the specific nutritional needs of dogs. Its "Fortifido" line of fortified waters for dogs includes a peanut-butter flavored water that is fortified with calcium for healthy bones. Another is fortified with zinc for healthy skin, and there is even one pumped with spearmint for fresh breath.
Cott recently launched the products in some specialty stores and is trying for a wider national rollout. It also plans to make the products available online.
Cott has plenty of competition. Retailer PetSmart Inc.'s newer offerings include OVN, or Optimum Vitamin Nutrition, tablets that can be added to dog water. They come in three flavors -- chicken, chicken liver and bacon jerky -- and can be used to make gravy for dry food.
"The biggest thing in pet food at the moment is natural and organic, because it's been that way a couple years for humans," said Jim D'Aquila, managing director at financial advisory concern Mercanti Group, which specializes in consumer and wellness products. "They are adopting for their pets what they are adopting for themselves."
A recall of tainted pet food last year helped boost interest in organic and natural pet-food products, Mr. D'Aquila says. He says he believes that, ultimately, these trends in specialty products could lead to some consolidation in the pet-food industry, with private- equity players and mainstream companies buying niche brands.
Colgate-Palmolive, which makes toothpaste and soap, also has a flourishing pet-food business. Among its offerings is Science Diet Nature's Best, which includes real fruits, vegetables and grains, besides meat. Procter & Gamble sells Healthy Naturals, which include ingredients such as peas and carrots, many of which aren't traditional pet-food ingredients, a spokesman said.
The big question will be how higher-end pet products will fare in a weaker economy.
"The high-end food will continue to grow, [but] it won't grow at the same rate as it would in a healthy economy," Mr. D'Aquila said. "There is a subset of people there who are seeing this as an essential part of their pet's life." He says although owners might cut spending on accessories like fancy leashes, they are unlikely to crimp spending on food.
In the fourth quarter, Pet-Smart's earnings were hurt by weaker consumer spending, but the company said pet "parents" weren't trading down on food, despite economic pressures.
Write to Anjali Cordeiro at firstname.lastname@example.org
Copyright 2008 Dow Jones & Company, Inc.