FRESHPET, INC. Market Overview
The pet food industry has undergone significant evolution over the years, driven by changing consumer preferences, advances in nutrition science, and a growing awareness of the importance of pet health and wellness. Historically, pet food was predominantly composed of processed ingredients such as meat by-products, grains, and fillers. However, pet owners are becoming more discerning about the ingredients that go into their pets' diets, looking for options that mirror their own preferences for whole, recognizable ingredients. This trend has led to the emergence of innovative brands that prioritize the use of high-quality, human-grade ingredients and employ gentle processing techniques to preserve nutritional integrity.
As a result, the premium pet food sector has experienced significant growth and innovation in recent years, leading to increased competition among brands vying for market share. As consumer demand for natural, high-quality pet food options continues to rise, new entrants are emerging, and existing players are expanding their product offerings to meet evolving consumer preferences.
Premium pet food grew to
Source: IBISWorld
Significant innovation has occurred in the refrigerated and frozen pet food sector where revenue has grown to
Source: PET Food Processing, Circana
Brands like
Source: PET Food Processing, Circana
Price Points by Pet Food Type
As consumer preferences have evolved, so has their willingness to pay significantly more for wet, fresh, and raw pet food. This trend of trading up to more expensive products brings the opportunity for manufacturers and retailers to increase their average sale prices and drive margin.
Source:
Innovations in Premium and Fresh Pet Food
The trend toward premium and fresh pet food has encouraged brands to innovate and introduce high-end products featuring exotic proteins, organic ingredients, and specialized formulations targeting specific health concerns.
High Pressure Processing (HPP) is a non-thermal food preservation technique that utilizes high pressure to inactivate harmful bacteria, molds, and yeasts while preserving the sensory and nutritional qualities of food.
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HPP offers several advantages for fresh pet food manufacturers, including extended shelf life without the need for preservatives, improved food safety, and retention of vitamins, enzymes, and flavor. Brands that are using HPP include
- A growing number of pet food brands are committed to sustainability and environmental stewardship, incorporating sustainable sourcing, manufacturing, and packaging practices into their operations. Examples of these brands include The Farmer's Dog, Nature's Recipe, Pet Plate,
Open Farm ,The Honest Kitchen , Wild Earth, and Wellness Pet. - Frequent product rotation to guarantee the selling of dated products with limited shelf-life.
- Regular maintenance of coolers and freezers so that equipment functions properly.
- Effective signage and pricing options to provide enticing customer communication.
- Operational excellence to ensure high product quality standards are upheld.
- Manufacturing and distribution capabilities to product mix.
- Demand planning, production planning, and inventory management guided by effective Sales, Inventory, and Operations Planning (SIOP) processes to gain market share.
- Assortment Management
- Pricing Optimization
- Demand and Production Planning
- Inventory Management
- Manufacturing Capacity and Productivity Optimization
- Supply Chain Operations
- Labor Planning and Optimization
Freeze-drying, also known as lyophilization, is a dehydration process that involves freezing the product and then removing the ice crystals through sublimation, resulting in a dry and shelf-stable product.
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Freeze-drying offers numerous benefits for fresh pet food, including the preservation of nutrients, texture, and flavor, as well as increased convenience and a longer shelf life. Brands that are offering freeze-dried options include
Human-grade pet food refers to products that are formulated using ingredients and processes that meet the same safety and quality standards as food intended for human consumption. Brands that use human-grade ingredients include The Farmer's Dog,
Personalized nutrition for pets involves tailoring their diet to meet their individual nutritional requirements, considering factors such as age, breed, activity level, and health conditions.
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Advances in technology, such as mobile apps and online platforms, have made it easier for pet owners to access personalized nutrition services and customized meal plans for their pets. Brands that are offering personalized nutrition include The Farmer's Dog, Freshpet Custom Meals, Ollie, and Nom Nom.
Sustainable and Eco-Friendly Practices
With growing concerns about environmental sustainability, pet food manufacturers are increasingly adopting eco-friendly practices to reduce their environmental footprint.
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Sustainable packaging solutions, such as biodegradable materials, recyclable packaging, and compostable options, are becoming more prevalent in the pet food industry.
Refrigerated and Frozen Pet Food Requirements
Pet specialty retailers dedicate the most space to the category and generally have up to four refrigerated and/or frozen coolers located within the pet food section of their stores. This currently provides up to 16 linear feet of space and as the category grows this space will need to be expanded. Retailers are generally merchandising between 16 to 24 SKUs per cooler/freezer, for a range of 64 to 96 SKUs carried in the largest physical assortments.
There are several requirements that retailers must consider to achieve an impactful shopping experience while delivering the highest quality pet food.
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Reliable cold chain distribution capability to ensure high quality.
Challenges and Considerations
Pet food manufacturers must navigate a complex regulatory landscape, ensuring compliance with food safety regulations, labeling requirements, and quality standards. Fresh and natural pet food products may come at a higher price point compared to traditional pet food options, posing challenges for budget-conscious pet owners.
There is a need to educate consumers about the benefits of fresh pet food, including its nutritional advantages, ingredient transparency, and positive impact on pet health and well-being. Many consumers may be unaware of the differences between conventional pet food and fresh alternatives, making education a crucial component of market growth and consumer adoption.
Conclusion and Actions
The premium and fresh pet food sector is poised for continued growth and innovation, driven by consumer demand for natural, high-quality pet food options. As competition intensifies, brands will need to continue differentiating themselves.
Look for ways to stand out from the competitive set through focus on:
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Product innovation, brand storytelling, and customer-centric strategies.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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