Pets in catbird seat of household spending priority

By Robert Wheatley

While the earth-shaking intensity of COVID-19 and a global pandemic has upended lives, businesses and careers, it has elevated the importance of family pets as important companions in a rocky and uncertain life journey. Witness the stampede to shelters and pet rescue centers as people have swept up stray dogs and cats to join the family during stay-at-home orders.

Even now the pet industry is forecasted to grow by 4 to 7% this year despite lock downs and recessionary trends. Pet food is a strong, maybe recession-proof, business that is likely to retain its momentum for the very reason pets are meaningful players in the health and wellbeing, and possibly sanity, of their owners.

The marketing game plan for pet brands may shift towards the emotional dynamic of the human/animal bond more so than nutritional specsmanship, a fact-based common feature of brand communication during the last 10 years. Now more than ever, there is a concerted need for insight and understanding of how pet parent attitudes and needs are changing as a result of the pandemic.

History shows pet food to be a unique industry forever grounded in a growing, visceral enthusiasm for furry creatures who over time have moved from the barnyard to the backyard, to the living room and now are often found at night in the bedroom cozying up with their owners. The genesis story of this cultural evolution is fascinating and was set in motion by an unexpected world-class crisis event.

Who is making the pet food?

It was 2007 when the pet food world was turned on its head, disrupted and capsized with news of surging pet fatalities traced to tainted Melamine ingredients from China. Remarkably, it wasn’t the poisoned food or pet deaths that caused a complete industry shake-up. As the crisis unfolded, media working to trace the Melamine source determined that one company in Canada, Menu Foods, was manufacturing more than 100 different brands of pet food.

Instantly the tens of millions spent in brand advertising and equity building for some of the largest industry players was rendered inert. Brand reputations, constructed on years of claims about carefully formulated, created foods, were upended as the perceptions of food-making craftsmanship took the torpedo of outsourced – and apparently unsafe – production.

Almost immediately web sites sprang up around the “truth about pet food” as attention turned to deconstructing what exactly was inside the little brown nugget known as kibble. The largest and most popular foods were primarily grain-based products, a relatively inexpensive ingredient that flew against the marketing imagery of meat being the top nutritional anchor.

A new theme emerged as smaller boutique pet food brands making higher-quality pet foods suddenly got their day in the sun. Pet parents everywhere learned that dogs and cats are primarily carnivores, and their ancestral diets were closely linked to consumption of meat and fish proteins.

The definition of a high-quality pet food was restaged to a new recipe paradigm. The idea of ‘dogs-descended-from-wolves’ made intuitive sense to consumers as they resonated to the idea that pets aren’t grain (corn) eaters.

Dawn of the grain-free juggernaut

Sales of emerging premium brands like Wellness, Nature’s Variety, Merrick and Champion Petfoods’ Orijen brand shot up as pet parents began to upgrade the food they served to Fido. They started to pay closer attention to product labels, ingredient statements and sources. Orijen became the first brand to telegraph the percentage of meat protein in their formulation, under the story that more meat protein was indeed better and compatible with the nutritional needs and eating anatomy of dogs and cats.

The race was on to embrace grain-free as a category with marketing activity now devoted to focus on higher quality and so-called ‘human grade’ meat, poultry and fish ingredients inside the bag. Driving the grain-free momentum was a continued premiumization of the entire pet food industry. Pets were increasingly valued family members and food quality emerged as a symbol of investing in the health and wellness of four-legged, furry children – mirroring the healthy eating trend at the human dinner table.

As a business segment, grain-free pet foods emerged as the top volume growth producer at retail. Not lost on brands in every segment of the market, most companies joined the rush to create their versions of grain-free foods given the nomenclature had become a reference standard for healthier diet.

As evidence mounted that growth was to be had in the grain-free segment, Petco became the first big box retailer to fully re-set their stores, shifting prime in-store real estate to featuring the growing high quality brand players, while mass brands were pushed to the back of the shelving bus.

Investment followed to play in the quality end of the pool

The volume business ‘cheese’ was moving in pet food and naturally, investment followed as equity capital got involved among emerging brands such as the Catterton Partners acquisition of raw food category leader Nature’s Variety.

Large cap strategic players made their moves when grain-free superstar Blue Buffalo was snapped up by General Mills; JM Smucker bought Big Heart Brands gaining the Natural Balance business in the deal; and Nestlé landed Merrick Petcare to operate alongside their established Purina Petcare business. Testimony to the vast changes in consumer behavior and brand preference, Proctor & Gamble got out of the pet food business entirely, selling their limping Iams business to Mars Petcare, makers of Pedigree.

Super premium pet foods were once the exclusive province of independent pet retail. However, premiumization trends are now impacting the channel traditions as higher-quality brands show up in mass and grocery retail to meet the demand for better quality pet foods. There’s ample evidence that consumers are undeterred at higher average price points. General Mills made quick moves to use their clout in moving Blue Buffalo to supermarkets. While the Blue Buffalo business has suffered declines as independent retailers reacted negatively to the channel move, the grocery volume has more than offset the losses. Pet food has become a balance sheet darling for General Mills to tout during their quarterly reports to the Street.

Growth of pet food sales in e-commerce has been nothing short of phenomenal as people cut down on shopping trips and show interest in no-contact purchasing via online stores like Chewy and Amazon. Industry watchers anticipate there will be more consolidation as pet food continues to show its resilience in an otherwise shaky business and retail environment.

What lies ahead in pet

One key area of vulnerability in pet food is supply chain as the meat processing industry was felled by hyper-spreading of the virus in employee-packed plants. Stability in the sourcing of protein ingredients will be vital to industry health in the coming months.

On another front, in July 2018 the industry was upset by a report from the FDA that implicated grain- free foods as a potential contributor to Dilated Cardiomyopathy (DCM), a potentially fatal heart disease in dogs associated with low Taurine intake, an important amino acid. The FDA felt persuaded to list brands that were under review in their research, and the media firestorm around it created a wave of consumer and veterinary concerns about safety and which foods could be served with confidence.

The industry responded first by working collaboratively with the FDA on their investigation, while also creating new “wholesome or ancient grain” versions of their foods for pet parents who wanted the option. More recently, peer-reviewed research from third-party sources has been published that concludes the onset of DCM conditions is not diet related but mostly hereditary.

While many brands have experienced real setbacks in their grain-free business, it is expected the new information on DCM, as it works its way to consumers and retailers, will help restore confidence and close the chapter on safety concerns.

Marveling at the human/animal bond

With pets front and center, playing an important role in family life while people spend more time at home, it will be interesting to observe if pet brands make the emotional relationship a centerpiece of their marketing efforts. More insight research is needed to understand the nuances of this significant pet / pet parent relationship and how it has changed during the pandemic.

Alvarez & Marsal, along with partners Emergent Healthy Living brand marketing firm, Brand Experience Group  (BXG) insight research company, and Starcount social media listening agency, are approaching legacy and emerging pet brands with an insight proposal.

The pandemic research project combines quantitative and qualitative methodologies to discover the changes delivered by COVID 19 to pet parent attitudes, concerns and purchase behaviors. It is the intent of the research to reveal a new understanding of where the pet food business should navigate over the coming months and the next few years.

For more information on the project, contact Wes Arens at Alvarez & Marsal, [email protected] or Mike Bambrick at BXG, [email protected].

About the author: Robert Wheatley is the CEO of Chicago-based Emergent, The Healthy Living Agency. Emergent helps CPG, retail and lifestyle brands erase ineffective self-promotion and replace it with clarity, honesty and deeper meaning in their customer relationships and brand communication. For more details on Emergent’s pet care experience and credentials, click here to view or download an overview.

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Avoid marketing misfires and create opportunities

The pet care business is dynamic, growing and vibrant, while also highly competitive with more new entrants arriving every year. Pet care is also unique in its aligned requirement for better, more strategic and consumer-centric marketing solutions.

What other food category is there where the most popular product form, kibble, is identical in appearance brand to brand. This alone requires significant leaps of faith from buyers to believe the assertions made about the quality of food ingredients inside the nugget.

It is a highly-emotional category where pet parents strive to provide the best diet they can afford for their furry family members as an active expression of their love. Yet the predominant pet food storytelling mechanism is analytical – not emotional – and based largely on protein wars “specsmanship” around percentages of real meat in the food.

Sameness on the hunt for uniqueness

One trip through the aisles and the similarity in messaging trumpets from the shelf. Meat to carb ratios, nutrition superiority, ancestral diet, grain-free, wholesome grains – offering snapshots of beautiful whole chicken, salmon filets, steaks, fresh vegetables and fruits. Human grade food images, often reminiscent of stock food photography, suggest pets are enjoying the same dinner-table fare people consume.

The similarity in brand messaging and imagery creates a blur of confusion for pet parents, who must turn to recommendations from others to get through the gauntlet of like-sounding food claims and complicated label terminology.

Messaging mayhem

At a Pet Food Forum convention, Emergent presented on marketing best practices. We created a chart showing random primary claims made at the shelf by 10 different pet brands on the left and a list of brand names on the right. We challenged the audience to match the message to the brand. In truth, they were all inter-changeable.

But more important, in every case a fundamental miscalculation was at work that embedded a disconnect in the communication.

With few exceptions, typical pet food storytelling casts the brand as the hero of the story rather than the pet parent and pet. Everyday people wake up believing they are the hero of their life story. When encountering messages that cast the brand as competing hero they continue on, still looking for an expert guide to help them solve the problems they face.

When the brand is presented as expert coach to the pet parent, dynamic changes and communication lines open up.

More often than not, pet brands focus on themselves. Understandable, given the enormous efforts to create a top quality, highly nutritious food, but inadvertently inoculating the marketing with a message that doesn’t allow the pet parent to see themselves and their profound pet relationship in the story.

The solution here is to put the pet parent at the center of strategic planning and work backwards from there. Insight to their lifestyle wants, aspirations, needs and the connection to their pet provides the grist for marketing and messaging that works.

Leap of faith?

If ever there were a product category where trust creation is paramount, pet food is it. There is significant marketing mileage to be had for brands that embrace and understand that today, people no longer accept at face value the assertions and claims made by pet brands.

People don’t trust companies – instead they trust other people.

This helps explain why year to year social media continues its upward trajectory as a key element in the marketing mix. Especially when it is respected as an independent forum for pet parents to share anecdotal stories of transformation and change for their pets.

• All too often social channels are viewed simply as another broadcast vehicle for self-promotion. The goal in pet brand marketing is to earn trust. This is where strategy lives, embracing the opportunities offered when the brand decides to be completely transparent, opening the door to the entire product creation process for people to see and experience.

When belief is an objective, then the voices and messages employed take on new and deeper meaning. Pet parent ambassadors and outside third-party experts like Veterinary physicians and breeders can be instrumental in helping ascend the credibility mountain. Videos with the journey to the farm and kitchens that are constructed around a documentary format (unscripted interviews) rather than ad-like, help elevate the story believably.

An often-overlooked aligned opportunity are the high standards pet brands create for food safety and ingredient quality. We often find these sacrosanct rules exist, but remain largely hidden away and not brought to life (in the context as consumer as hero) as another reason to believe.

Efficiency through integration

For the most part the pet food industry is populated with small and medium sized premium players amongst a smattering of big, legacy brands. Most cannot win the marketing battle on the basis of tonnage in paid media spending. Every dollar invested needs to work like 10, and this condition amplifies the importance of an integrated approach. Even big media budgets no longer guarantee victory (ad-like outreach is increasingly ignored).

The power and effectiveness of awareness building around the important “why” of heavy user re-purchasing, works optimally when all relevant channels are operating in concert from packaging and shelf promotion, to editorial media, to branded social channel posts and how user-generated content is curated and served. This reinforces why the messaging is mission critical.

When the messaging isn’t right, nothing works to greatest impact.

All too often we find complexity in pet brand messaging that runs squarely into a roadblock on the receiving end. Too many distinct brand messages competing for attention forces people to sort through too many claims. Humans will never tax their brains to find relevance, so they simply tune out and walk away. Clarity and simplicity are stronger.

The pet business also consists of thousands of independent retailers, alongside big box and grocery. Trade relationships are critical in this environment manifesting in share of retailer perceptions and resulting linear feet. Trade facing media presents an affordable opportunity to be a dominant voice and another venue where paid and earned can be integrated to maximum effect, especially around key periods such as Global and SuperZoo trade shows.

Earned media opportunities

Earned media is a unicorn non-paid channel, in that editorial sensibility is required to successfully leverage it. Ironically, when the brand casts itself as expert guide (focusing on the issues and concerns of pet care and strives to embrace transparent operation) earned media opportunities multiply. Why? Because it’s more relevant to the audience than self-promotional brand rhetoric.

Trying to leverage ad-like promotion and self-serving events, in a media channel based around what’s newsworthy, is a recipe for non-performance. That said, there’s never been a period in the pet business when news can be served more often, than at a time when virtually every media property out there has turned to lifestyle advice and guidance to enhance their own audience relevance. Just remember the story has to look, walk and talk like news.

What’s next

The winners and losers in pet brand marketing will be driven by those who optimize their messaging for pet parent resonance, making them the hero of the brand story, while working to align company behaviors and operations with the consumer’s demand to do business with brands that embrace similar values and truths.

• The most valued brands will prevail because they recognize ‘trusted by’ pet parents must be earned daily, and that actions speak just as loudly as words.

Previously we’ve mentioned a complimentary messaging audit as a no-risk way to have a conversation, one that provides added value. We offer it again here. If you would like a fresh perspective on your current messaging approach, let us know.

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When communication is intentionally blurry, muddled, cloudy and befogged

It’s not often I get to employ a $50 word in a story, but in this case obfuscate may be the perfect verb to characterize the occasional disconnect from a pet parent’s desire for more clarity and transparency in how pet food is presented, and the sometimes confounding and less straight-forward information actually served.

Is it crystal clear to you?

Dirty water makes it hard to see the bottom of the pond.

In the eyes of the consumer, pet food is a leap-of-faith business. Brands make assertions about the quality, origins and freshness of ingredients; the correct and superior combinations of real food ingredients that ultimately make a difference in the health and wellbeing of four-legged family members.

• What’s in the little brown kibble pellet? We’re required to believe it contains fresh, deboned chicken, wild-caught fish, grass-fed beef or vegetables, fruits and other human-friendly whole food ingredients. We also know that animals can’t talk and consumers aren’t food scientists. So trust and faith becomes the currency that defines brand relationships.

Transparency means transparent.

When at the butcher counter in your food store you can see the steak, its marbling, height and color. You can make judgments on its quality before buying. In contrast, kibble or canned pet food from brand to brand looks roughly the same and so verification of food quality by visual examination is not possible. Casting statements on ingredient decks can be confounding to many but the most ardent students of pet food ingredient terminology; those able to translate code for higher-quality proteins from something less than that.

Transparent behaviors in this industry couldn’t be more important. The frequency of pet food recalls serve as the reminder for vigilance…and can breed consumer skepticism. This uncertainty is amplified against an evolving food culture where people today want to know the backstory behind the foods they buy for themselves and for their pets. How did this new-found interest in ingredient transparency come to pass?

The desire for transparency is a cultural phenomenon that got traction when people fully connected the dots between the quality of the food they eat and the quality of their lives.

They expect no less of their pets’ diets.

If ingredients are sourced from local farms and ranches, brands should show and tell this story. If there are standards on the quality of ingredients to be used, they should be stated clearly and simply so it can be understood by anyone. The curtain raised on how manufacturing is done, what form ingredients take, how and why they are combined – the trail from farm to can or bag that helps belief materialize in a trusted, credible way.

• If belief is to be achieved in what is essentially a faith-based business, truth must be multiplied by transparency and clarity. People want to see all the way to the bottom of the supply chain pond, so to speak. The sum of these interactions and conversations is to validate, rather than obfuscate, what we want people to know and believe about pet food.

Wordplay vs. Openness

The core essence of trust creation is the deployment of words and what they mean. When honesty and integrity rule the relationship with pet parents, then parsing definitions to create more palatable descriptions – while obfuscating the truth – is at best misguided and not based in sound strategy…and at worst is disingenuous.

Pets are no longer owned assets to be maintained. They are family. The impact of quality nutrition of their health and welfare is a real thing. Moreover, when answering what the customer wants, it is this: “healthy, high quality food choices, just like I prefer for myself and my family.”

• So how are honesty and openness best served when the form the product takes leaves no trace of evidence on which to base judgments? Pull back the curtain and tell the story, fully, completely, in video where words and pictures combine to let everyone in to see for themselves.

Outside independent verification testing and deployment of Blockchain technology may close this loop fully to provide the assurance people want. But importantly, what’s embedded in your brand values and mission will inform how all this goes, and whether or not crystal clear is the true call to action for company behaviors.

What’s at stake?

Trust and brand reputation.

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The case for super transparency…

For all of the talk about a desire for greater transparency in the food system, much of the pet food world’s product creation work remains behind closed doors. Is it time to open up the curtain and shed more light on ingredients, sources, standards and processes in service of securing greater consumer trust?

Unrelenting premiumization of the pet food business is being driven by the continued humanization of furry family members. At the apex of this anthropomorphic trend is a near lockstep upgrading of pet nutrition formula and nutritional bona fides that closely follow the food culture preferences of people.

No surprise the primary fuel for all of this is a belief held by consumers that the quality of the food they consume impacts the quality of their lives. Therefore, the same rule applies to their pets and the perceived nutritional benefits they can receive in their diets. In sum, people want healthier food solutions for themselves. Pet foods now face the same evaluation.

Thus the current drivers of human food preferences quickly find their way into the pet nutrition business. Chief among them is an increasing demand for transparency. According to a recent study by Innova Market Insights, the number one priority in 2018 for both human and pet foods will be cleaner labels. Innova calls this the arrival of  “Mindful Choice.”

What is that? Health and wellness is the leading call to action. However embedded in this trend are the same concerns people have about the food they personally consume – interest in sustainability, visibility to ingredients and sourcing, ethical production and safety. The Innova research study reports, 70 percent of consumers want to know and understand (human) food ingredient lists. This can be challenging in pet food where historically ingredient decks expressed on kibble packages are lengthy, complicated and employ terminology foreign to most people.

Additionally, the rapid migration of grocery shopping from packaged food center aisles of the store to the fresh perimeter departments is evidence of preferences for real, fresh, simpler food that is less processed. ‘Real’ food ingredients on labels are wanted. According to a recap of Innova’s study published in Pet Food Industry magazine, the number of human food products launched this year with a healthier claim increased to 49 percent. It’s a reflection of the growing desire to address consumer demand for healthier foods.

So, how foods are made will matter. Right now clean label is center stage. It should be noted that ‘clean label’ itself is an outcome of efforts made during product development; work which includes standards for ingredient sourcing, optimizing nutritional benefits, and committing to higher integrity around recipe formulations.

A recent study on the topic by Kerry Health and Nutrition Institute found that:

• 73 percent of consumers read ingredient lists
• 66 percent examine the nutritional panel
• 94 percent say they would be loyal to a brand that adopts complete transparency
• 99 percent say they will also pay more for a product that is transparent

Pet diets are for the most part a highly processed food where the more popular delivery vehicle of dry kibble in varying shades of tan to brown, appears to be identical from brand to brand. Deconstructing the kibble is another matter and it is in this arena where differentiation (and consumer trust) can be found.

What’s needed in pet food: super transparency

The Hartman Group’s Sustainability Report for 2017 says consumers expect companies to “openly share sustainability practices” and 73 percent of consumers are aware of what transparency means with respect to business practices.

Pet food brands with a strong nutritional story to tell could benefit from a super transparency approach. Kibble can’t really telegraph any specific information one-way or other. The ingredients used to make it, on the other hand, present an educational opportunity.

Pet brands that tell stories about ingredient sources, suppliers and product creation can effectively address integrity questions in a meaningful way.  What’s really bubbling underneath: issues surrounding health and quality of life.

Traditionally the pet food industry has operated behind closed doors, but the consumer is asking that the door open more fully. Far enough for consumers to have improved access to knowing more about the ingredient standards and food quality that goes into their pet’s diet.

No question; pet food and people food are not the same thing, even though some brands would like you to believe that the steak you had for dinner is inside the kibble bag.

• When higher quality pet food makers take their commitments and standards on ingredients and bring them to life, they can improve their ability to secure trust and belief from the humans selecting foods for their four-legged family members.

Ultimately the desire for product transparency is a demand for validation and evidence of what most pet brands claim in their package messaging. The move to super transparency (which really means taking the consumer behind the product creation curtain) is a way to bring better understanding about what their pets are eating. And yes, pet parents truly care about this in the same way they care about how foods are made that they eat themselves.

Super transparency is now a furry business-building opportunity!

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