Natural Supermarket Pet Department Close-Up: Multi-category Sales, Brand Share, Retailer and Consumer Trends

SUMMARY

Pet product marketers ignoring the natural supermarket channel do so at their own peril. For several years the leading natural supermarket chains have been outperforming mainstream grocers as consumers embrace natural and organic products of all kinds. What's more, as disastrous as the spring 2007 pet food recalls were for many pet owners and pet food industry participants, the product safety scare had a strong beneficial effect in the natural supermarket channel. Natural supermarket sales of pet products rose 18% in the first week of April vs. the last week of March 2007, with sales surging by 22% during full-year 2007.

This all-new "channel close-up" report from Packaged Facts homes in on the fast-growing pet departments of natural supermarkets, providing detailed SPINSscan-based data for the channel overall as well as seven product categories of natural and organic products-Dog Food, Cat Food, Pet Treats & Snacks, Pet Supplies, Pet Supplements, Pet Personal & Body Care and Other Pet Food-for three full years (2005-2007) and for the 52-week period ending March 22, 2008. The report also quantifies and profiles leading brands in the natural supermarket channel, with a particular focus on the top five: Pet Promise (Natural Pet Nutrition), PetGuard, Newman's Own Organics, Wellness (Old Mother Hubbard) and Castor & Pollux.

Also examined in much detail are the top two natural supermarket chains-Whole Foods and Trader Joe's-including original photographs of these stores' pet departments based on field visits to stores by Packaged Facts. In addition, using Simmons Market Research Bureau's Spring 2008 Study of Media and Markets, and BIGresearch's February 2008 Consumer Intentions and Actions Survey and Simultaneous Media Study, Packaged Facts profiles pet owners as natural supermarket and organic product shoppers. Rounding out this report's cutting edge examination of the natural supermarket channel's explosive growth as a pet product sales venue are primary interviews with industry experts, regular participation in pet industry trade events, and extensive Internet canvassing.

TABLE OF CONTENTS

Introduction

• Scope of Report
• Report Methodology
• Retailer Profile: Whole Foods Market, Inc
  • Company Overview
• Photograph #1: Checkout Lanes and Signage at Whole Foods
  • Whole Foods and Pet Products
• Figure 1: Percentage of U.S. Adults Who Shopped at Whole Foods in Last 4 Weeks: Overall vs. Dog or Cat Owners, 2006-2008
• Figure 2: Selected High-Index Pet Owner Demographics for
• Shopping at Whole Foods, 2008
• Photograph #2: Pet Department in Whole Foods
• Photograph #3: Pegboard Display of Pet Treats in Whole Foods
• Photograph #4: Whole Foods 365 Dry Dog Food Display
• Figure 3: Price Comparison of Selected Dog and Cat Food Products: Manufacturer Brands vs. Whole Foods Store Brands, Summer 2008
• Retailer Profile: Trader Joe's
  • Company Overview
• Photograph #5: Checkout Lanes at Trader Joe's
  • Trader Joe's and Pet Products
• Figure 4: Percentage of U.S. Adults Who Shopped at Trader Joe's in Last 4 Weeks: Overall vs. Dog or Cat Owners, 2006-2008
• Figure 5: Selected High-Index Pet Owner Demographics for Shopping at Trader Joe's, 2008
• Photograph #6: Trader Joe's "Gondola" Pet Display
• Photograph #7: Trader Joe's Tuna for Cats
• Photograph #8: Trader Joe's Mint-a-Breath Bones
• Figure 6: Pet Owner Demographics for Shopping at Whole Foods, 2008 (percent, number and index of U.S. dog or cat owners)
• Figure 7: Pet Owner Demographics for Shopping at Trader Joe's, 2008 (percent, number and index of U.S. dog or cat owners)

Sales Trends

• Pet Products Charting Double-Digit Growth
• Figure 8: Pet Product Sales in Natural Supermarkets: 2005-2007 (in millions of dollars)
• Figure 9: Pet Product Sales in Natural Supermarkets: By Category, 2005-2007 (in millions of dollars)
• Figure 10: Pet Product Sales in Natural Supermarkets: By Category, YTD 2007 vs. 2008 (in millions of dollars)
• Mass-Market Sales Sluggish by Comparison
• Figure 11: IRI-Tracked Sales of Pet Products: Overall and by Category, 2007 vs. 2008 (in millions of dollars)
• Dog Food Accounts for Largest Category Share
• Figure 12: Share of Pet Product Sales in Natural Supermarkets: By Category, 2005-2007 (percent)
• Pet Food Is Largest Classification
• Figure 13: Share of Pet Product Sales in Natural Supermarkets: By Classification, 2005-2007 (percent)
• Figure 14: Sales of Pet Products in Natural Supermarkets by Classification, 2005-2007 (in millions of dollars)
• Figure 15: Sales of Pet Products in Natural Supermarkets by Classification, YTD 2007 vs. 2008 (in millions of dollars)
• Dog Food Leads Pet Food Classification
• Figure 16: Share of Pet Food Sales in Natural Supermarkets: By Type, 2005-2008 (percent)
• Pet Supplies Category Leads Nonfood Classification
• Figure 17: Share of Nonfood Pet Product Sales in Natural Supermarkets: By Type, 2005-2008 (percent)
• Weekly Sales Trends Reflect Impact of 2007 Pet Food Recalls Happy Holidays
• Figure 18: Seasonal Pattern of Pet Product Sales in the Natural Supermarket Channel: January 2005-December 2007
• Figure 19: Seasonal Pattern of Pet Food Sales in the Natural Supermarket Channel: January 2005-December 2007
• Figure 20: Seasonal Pattern of Nonfood Pet Product Sales in the Natural Supermarket Channel: January 2005-December 2007
• Figure 21: Seasonal Pattern of Pet Treats & Snacks Sales in the Natural Supermarket Channel: January 2005-December 2007

Brand Shares and Sales Performance

• Overview
• Top Five Brands Taking Bigger Bite of Sales
• Figure 22: Combined Market Shares of Pet Product Brands in the Natural Supermarket Channel: Top Five vs. All Other, 2005-2008 (percent)
• Pet Promise the No. 1 Natural Brand
• Figure 23: Share of Sales of Pet Products in Natural Supermarkets by Marketer/Brand: YTD 2007 vs. 2008 (percent)
• Figure 24: Share of Sales of Pet Products in Natural Supermarkets by Marketer/Brand: 2005-2007 (percent)
• Top Brands Post Double-Digit Percentage Growth
• Figure 25: Sales of Pet Products in Natural Supermarkets by Marketer/Brand: YTD 2007 vs. 2008 (in millions of dollars)
• Figure 26: Sales of Pet Products in Natural Supermarkets by Marketer/Brand: 2005-2007 (in millions of dollars)
• Figure 27: Sales of Pet Products in Natural Supermarkets by Marketer/Brand: YTD 2007 vs. 2008 (in millions of dollars)
• Pet Promise (Natural Pet Products)
• Figure 28: Pet Promise Sales in Natural Supermarkets, 2005-2008 (in millions of dollars)
• Photograph #9: Pet Promise "Product Purity" Comparison Chart
• Pet Guard (Pet Guard Co.)
• Figure 29: Retail Sales Growth Rates in Natural Supermarkets: Pet Guard vs. Pet Department Overall, 2005-2008 (percent)
• Photograph #10: Pet Guard Mr. Barky's Vegetarian Dog Biscuits
• Newman's Own Organics
• Figure 30: Newman's Own Organics Sales in Natural Supermarkets, 2005-2008 (in millions of dollars)
• Photograph #11: Newman's Own Organics 95% Organic Wet Pet Food
• Wellness (Old Mother Hubbard)
• Figure 31: Wellness (Old Mother Hubbard) Market Share in Natural Supermarkets, 2005-2008 (in millions of dollars)
• Castor & Pollux
• Figure 32: Castor & Pollux Sales in Natural Supermarkets, 2005- 2008 (in millions of dollars)
• Photograph #12: Castor & Pollux's Organix Dog Kit
• Other Natural Channel Brands
• Figure 33: Retail Sales Growth Rates in Natural Supermarkets: Combined Other Brands vs. Pet Department Overall, 2005-2008 (percent) Halo, Purely for Pets
• Photograph #13: Halo, Purely for Pets New Packaging Dogswell
• Photograph #14: Dogswell All Natural Chicken Jerky Treats CANZ (Country Pet)
• Photograph #15: Country Pet Freezer Case in Whole Foods Other Brands

Market Summary

• Natural Supermarket Channel Advantages
• Figure 34: U.S. Retail Sales of Natural Pet Products, 2003-2012 (in millions of dollars)
• Figure 35: Percentage of Pet Owners Shopping at Whole Foods and/or Trader Joe's, 2008 (percent of U.S. dog or cat owners)
• Figure 36: Where Organic Groceries Are Most Often Purchased by Selected Retailer Type: Organic Product Shoppers Overall vs. Organic Pet Food Purchasers, 2008 (percentage of U.S. adults)
• Figure 37: Where Organic Groceries Are Most Often Purchased by Selected Retail Chain: Organic Grocery Shoppers Overall vs. Organic Pet Food Purchasers, 2008 (percentage of U.S. adults)