Grain-Free Pet Food: Game Changer or Just a Flash in the Pan?

A growing number of manufacturers are catering for rising consumer demand for grain-free dog and cat food. How is this likely to impact the wider marketplace?

The ghost of Atkins

Remember the Atkins Diet, with its emphasis on losing weight by reducing carbohydrate consumption? Around 2003/2004, it was hardly possible to pick up a newspaper without reading about it. Packaged food and soft drinks manufacturers scrambled to jump on the “low-carb” bandwagon (licensing the Atkins brand in some cases), some restaurants adapted their menus, while sales of carbohydrate-rich foods like potatoes suffered.

Raw pet foods turn away from grains

Fast forward to 2011 and the carbohydrate conundrum is fast becoming an issue in dog and cat food. This is part of a trend among some owners to feed their pets so-called raw pet food. Although still very much a niche product, the appeal of raw pet food has grown in leaps and bounds in recent years. A growing number of pet owners are becoming interested in BARF (biologically appropriate raw food) as an alternative to “processed” dog and cat food.

“Back to nature”

This “back to nature” line of argument is a common one among those marketing grain-free pet food. Dry dog food has come under particular attack, with Dynamite Specialty Products’ Callie Novak saying that using kibble to add energy to a dog’s diet in the form of carbohydrates “is a human concept that does not apply to dogs”. She goes on to argue that, “It would be better to increase the amount of raw food rather than to introduce cereal as a high-calorie filler. Think about what a dog would do in the wild if it needed more calories. It would hunt more small animals to increase its intake of fat and protein, not go find a field of wheat”. Dynamite Specialty Products manufactures Ultimate Dog Food, which was launched in 2008 and saw its sales grow by 112% in 2010, according to the company.

Grain-free message percolates into the mainstream media

Naturally, makers of dry dog food would dispute these opinions. Some in the pet food industry argue that critics of their products are merely isolated bloggers whose importance is exaggerated by the echo-chamber of the internet. However, their line of argument has also received a significant degree of high-profile online media coverage.

Throughout 2010, the Daily Mail newspaper in the UK, which has a readership of 4.7 million, mounted attacks on the mainstream pet food industry, with high levels of grain being one of its targets. Under the headline “Are we poisoning our pets through the food we give them?”, one piece claimed that feeding a pet processed food could permanently damage its health. According to the piece, which was written by vet Peter Coleshaw, “Many processed foods are high in carbohydrates, which can predispose a dog to serious dental, bladder and skin problems. Because they are stuffed with cheap grain, they often do not contain enough meat. Don’t be fooled by clever marketing. Foods promoted as ‘premium’, ‘natural’ or ‘holistic’ might be anything but”.

Similarly, in a piece published in the New York Post during November 2010, canine nutrition consultant Stacy Alldredge commented, “If you’re only feeding your dog packaged food — even if it’s the best of the best — it’s still just grains. That’s like us only ever having cereal”.

Canidae seeks a middle way

Some are attempting to find a middle way. San Luis Obispo, Californian-based Canidae Pet Foods launched Single Grain Protein Plus, a super-premium dog food, onto the North American market during late 2010. According to the company, the nutritional focus of Canidae Single Grain Protein Plus is “29% total protein, restrict the grain source to rice exclusively using a wholesome combination of both brown and white rice”. The company also offers a grain-free formula called Pure Essentials, dubbing it “the modern answer to primal nutrition”.

How should incumbents react?

Larger manufacturers eying this trend might be tempted to venture down the M&A route (following the strategies adopted by Mars and Procter & Gamble in their acquisitions of Nutro Products in 2007 and Natura Pet Products in 2010, respectively). However, this could leave them vulnerable to charges of “greenwashing”, which is cynically acquiring a small manufacturer with the intention of gaining a foothold in a rapidly expanding niche without altering the business practices of their core operations in the mainstream pet food market. They could also follow Canidae’s strategy of offering reduced-grain and grain-free products, rather like packaged food manufacturers offer low-fat and fat-free versions of some of their offerings, while keeping them under the same brand umbrella.

In spite of all the media noise, sales of dry dog and cat food remain vigorous

It should not be forgotten that the market performances of both dry dog and cat food remain vigorous. According to Euromonitor International data, global value sales of dry dog and cat food expanded by 5.6% and 5.7%, respectively, in 2010. Moreover, even in North America, the epicentre of the backlash against grains in pet food, dry products continue to account for over half of all dog food sales and around a third of those of cat food.

Overall, grain-free pet food remains the preserve of small operators that lack economies of scale in marketing. One solution to this might be the creation of some sort of trade group that would enable them to make even more of a splash in the media. Nonetheless, the wider super-premium segment is expanding rapidly, particularly in the US, where value sales rose by nearly 38% over the 2005-2010 period to just over US$1.5 billion (accounting for just over 8% of the overall dog and cat food market in value terms).

Ultimately, grain-free pet food is a high-margin, high-growth market, but its mass-market appeal is likely to be limited by affordability issues, particularly in an economic environment characterised by accelerating consumer price inflation and uncertain consumer sentiment.

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