// . //  Insights //  5 Strategies For Success In The Changing Pet Food Market

For the pet food industry, recent years were a boom time. Consumers just couldn’t get enough pets, and seemingly everyone wanted a furry companion while they were stuck at home.

Today, the pet industry remains a great place to be. However, growth has started to normalize and is expected to be more difficult to come by in the future, as tailwinds from the pandemic recede and other conditions in the sector change. Moving forward, pet food brands and retailers are facing increasing market challenges on three fronts.

Three key market challenges in the pet food industry

1. Increased competition and new entrants

The market has become increasingly competitive with new players and online platforms marketing a range of options, claims, and price points.

2. Premiumization is weakening in an inflationary environment

Pet food is a category that has historically shown growth at the premium end of the market and has been resilient to economic downturns (such as the 2007-09 financial crisis), but this trend has started to wane with continued inflation and consumer pushback in the last year (Exhibit 1).

Exhibit 1: After historically strong growth, the premium mix has remained flat recently, while the mid-priced offering has grown

3. Pet ownership rates have started to return to normal, from the COVID peak

In addition to increased market competition, pet ownership has started to decline from the COVID peak. According to the American Pet Products Association (APPA), the ownership rate went from 67% in 2019, to 70% in 2021, and back down to 66% in 2023 with the main drivers of the recent trend being 1) employees returning to office and 2) previous pet owners not replacing their pets due to emotional loss, rather than lifestyle or financial reasons.

Exhibit 2: Pet ownership has returned to pre-COVID levels
Pet ownership as a percentage of U.S. households over time

Five strategies for pet retailers and brands to win in the current market

1. Enhance product differentiation and innovation

To stand out among a sea of competitors, pet food brands should clearly articulate their unique philosophy on pet health and wellness as well as continue to highlight premium ingredients and recipes. When thinking about new product launches, innovators should be sure to deeply investigate how pet parents are caring for their pets, what they are hoping to achieve with their pet food selection, and how they make product decisions. Using a Jobs to be Done approach can be helpful in uncovering the aspirations and desires that pet parents have for their pets.

2. Leverage digital marketing and e-commerce

As consumer spend continues to shift toward e-commerce, it is important that brands and retailers appropriately leverage online platforms to engage with pet owners. According to market research firm Euromonitor, US online channel penetration for pet food has increased to 34% in 2024 from 18% in 2018 with the rapid growth of online pet marketplaces and D2C fresh pet food brands. With this backdrop, it is critical to drive social media campaigns, influencer partnerships, as well as digital marketing and search engine optimization that help raise awareness about the value and benefits of quality pet food options in a cost-effective way in tomorrow’s digital environment.

3. Enhance customer experience through personalization

With the increasing power of loyalty data and generative AI, retailers can provide recommendations and content at scale in an omnichannel environment. According to Salesforce, 73% of consumers expect brands to understand their unique needs and expectations, while 56% expect all offers to be personalized. We are finding retailers increasingly investing in personalization to win for the future, such as developing a personalized digital flyer with tailored product recommendations, offers, and promotions.

4. Optimize variable and fixed costs

Given the increased pricing pressure in the market, it is important that brands ensure their cost structure is appropriate to provide fuel for growth. One avenue for this is procurement, such as renegotiating with suppliers given decreases in commodity costs. Other key initiatives include optimizing labor and store operating models and reviewing formulation to ensure it meets buyer needs while minimizing costs and optimizing manufacturing and supply chain operations.

5. Manage revenue initiatives

With an inflationary environment, revenue management strategies around price, promotion, and trade spending become more important to attract price-conscious buyers while maintaining margin profiles. In particular, minimizing channel conflict through price pack architecture strategies will be crucial for brands, while managing value perception between price and promo will be crucial for retailers.

Anticipating changes in the pet market

Overall pet remains a great business and will continue to see healthy growth, but brands and retailers must proactively position themselves for the changing market landscape. That means bringing their strategies “back to the basics,” rather than relying on market growth to drive their business to win relative to competitors.