Pets integral to health and wellness, will drive the business

For several weeks we have predicted resilience for the pet food segment, and that is borne out in recent sales performance reports from Nielsen. Dog food was up 37.5% year over year for the week ending March 14, and up 54.7% for the week ending March 31.

While this may be attributed to some stocking up (and even hoarding) behaviors in and around the stay-at-home restrictions, the overall forecast for the remainder of 2020 continues to show modest growth, now projected at 4% for the pet food segment for the year, according to Packaged Facts.

Long term, the pet food business will not only weather the storm but will continue to grow despite the economic conditions impacting other business segments. Unlike the Great Recession of 2008 and ’09, the pandemic is a different threat, one that has served to greatly enhance the value proposition of pet ownership.

In a related story, Emergent has tracked a variety of reports from around the country showing pet adoptions are increasing as mandated stay-at-home conditions continue to favor the presence of dogs and cats in the household.

Human and pet food trends are intertwined

As many in the pet industry already know, the relationship between human food business trends and pet food are extremely close. According to a recent report from The Hartman Group on consumer response to COVID-19, stress and anxiety management have risen to the top as the fundamental driver for self-directed efforts to manage health and wellness.

Consumers are laser focused on developing ‘nurturing habits’ to help them feel well. Conversations about mental health have been de-stigmatized in recent years and consumers believe their wellbeing is tied not only to physical exercise and better eating, but also to their ability to manage stress in their lives.

Dogs and cats are known stress-reducers. Hartman goes on to report an uptick in physical activities among home-bound households, as people work to resolve their growing needs for physical and mental wellbeing. Dogs, especially, are part of this regimen as anecdotal reports continue to escalate about increased frequency for dog walking and outdoor activities involving them.

Emergent believes these trends form the basis of resilience for pet food, even as other sectors in pet care, including Veterinary services and pet boarding, face increasing headwinds.

Pet Food Processing survey underscores continued growth

A recent survey conducted by Pet Food Processing reports 63% of pet food manufacturers have seen an increase in demand fueled by novel coronavirus conditions.

Other relevant data useful for planning:

57% of pet food brands are seeing growth in the e-commerce channel, and 30% say distributor sales are up.

25% are experiencing growth in grocery, supercenter and club channels.

73% are reporting no current declines in any channel.

28% have reported no material changes in their business results.

20% have experienced disruptions in the supply chain, an area of vulnerability.

Rigid demand supported by value surge

Now is not the time for pet brands to go dark in the midst of economic uncertainty. Dogs and cats own a unique and special position in the home that will continue to elevate their value as part of the household budget. History shows repeatedly that brands which continue to invest in times of economic challenge show comparative growth and increased share of market, as a reward for their perseverance.

• Rather than focus on protein percentage wars that have been a familiar refrain for some time in pet food marketing, Emergent recommend brands become more focused on pet lifestyle relevance and the incredibly important bond between pets and their parents.

The pandemic has served as an ultimate reminder to people about why their pets matter and how much they derive personally from the relationship. Scientific studies that for decades have shown a positive relationship between pet ownership and the physical health and wellbeing of owners, is getting the biggest global real-world test in the history of the industry.

While the year on year growth will be more conservative than previously forecasted (pre-pandemic), it is nonetheless a viable condition to manage, unlike other businesses now struggling with relevance and priority.

We anticipate the demand for pet food to remain steadfast based on the growing evidence that pet ownership is irrevocably tied to human wellbeing.

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Pets Impact Your Health and Wellbeing

As families endure the uncertainty of pandemic conditions outside their homes, the value proposition of pet ownership is getting a boost. Most pet owners can easily attest to the emotional benefits of having that wagging tail or purring rub greet you each morning. Furry family members provide a calming, mood-enhancing effect in the face of adversity.

That said, moving beyond the stress-reducing benefits of spending more quality time around dogs and cats is emerging evidence that pets can contribute directly to owner health and well-being.

In Dr. Marty Becker’s landmark book, The Healing Power of Pets, this renowned Veterinarian brought to light tangible associations between pets and the health and wellbeing of their owners. Becker characterized dogs and cats as a “human life support system,” based on studies showing a link between the presence of pets and the prevention, detection and treatment of illnesses.

A literature search on pet-to-human health impacts, reveals studies and published reports that draw connections between pet ownership and –

• Lower blood pressure
• Improved recovery outcomes from cancer and strokes
• Reduced use of medications
• Lower risk of heart disease
• Reduced doctor visits and associated costs
• Early detection of cancer
• Enhanced self-esteem
• Improved mental health
• Relief from Post-Traumatic Stress Disorder (PTSD)
• Treatment of depression and loneliness
• Doctor recommended therapy in treatment of Autism, Alzheimer’s and spinal injury

According to the American Pet Products Association, 68 percent of U.S. households include a pet, with 90 million dogs and 94 million cats residing in homes.

The deep emotional bond between pets and pet parents has always been a source of motivation driving the continued premiumization of the pet care marketplace. Advancing sales of super premium pet foods, for example, is attributed to the growing desire to provide nutritional quality that is on a par with human-quality diets. Pets are now fully ensconced as card-carrying family members.

A connection between human health benefits and pet ownership may become more apparent while the pandemic turns lifestyles upside down, and the pet to pet-owner relationship helps measurably improve wellness and happiness in the midst of unprecedented upheaval.

If pet ownership makes people not only happier but also healthier, it is likely the relationship value will rise with it, and the increase in pet-owning households will grow alongside.

Marketing best practices trail behind the evidence of lifestyle benefits

Pet food is an interesting category due to the similarities in product form – kibble has essentially the same brown nugget appearance brand-to-brand. The continued growth of brands offering higher protein foods made from animal, poultry and fish proteins, has prompted brands to also similarly emphasize analytical messaging around ingredients and protein percentages inside the nugget.

However, the latest research in consumer attitude and behavior shows that people remain emotional creatures who make decisions led by their feelings more than facts. The correlation between pet ownership and improved owner health and wellbeing could fuel the continued growth of high-quality pet foods. This will occur for the very reason that people themselves have already connected the dots between what they ingest and their own quality of life.

However, the pet food industry is still stuck in analytical rather than lifestyle marketing practices.

It’s time that pet brands look more closely at the contributions pet ownership can make to family health and understand the emotional connectivity this fosters. While other business categories will undoubtedly suffer in the presence of COVID-19, it is clear pet owners feel strongly about feeding quality foods and have routinely shown they will make sacrifices in other areas of their life to do so.

It may very well be that dogs and cats will be the heroes that elevate family health and happiness during this trying time.

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Will shift feed further confusion?

If anyone has any questions about the power of editorial (earned) media to impact consumer behavior and swing marketplaces, look no further than the DCM crisis of 2019 and the FDA’s announcement stumble.

The FDA publicly announced an investigation into an asserted link between certain grain-free diets and the onset of a heart condition known as dilated cardiomyopathy (DCM) in dogs. They included brand names of pet foods fed to some dogs included in the study. Irrespective of the merits of the investigation, whether or not a tangible connection exists to dietary formulas, the assertion of DCM (allegedly instigated by grain free foods) sent shockwaves through the industry.

Consumer uncertainty quickly followed. Most brands made a concerted effort to investigate, analyze and educate users. At the same time, a number of industry players who had previously embraced the grain-free juggernaut that has defined category growth outcomes for nearly a decade, quickly formulated alternative diets that use ancient grains, wholesome grains or a version of this. The objective was to answer any pet parent who is worried and wanting to make a switch – and keep them in the brand family.

Like anything, when a business launches new products, efforts are made to distribute it, gain shelf placement and promote to buyers. This momentum generates a self-fulfilling prophecy by helping bifurcate the premium market and throw a cooling trend on the sales heat that has followed grain-free pet food for a long time.

On-set of grain-free march to fame

The real momentum driver of the grain-free phenomenon can be traced back to the Menu Foods crisis of 2007 as hundreds of pets perished when tainted melamine ingredients from China showed up in US pet food. The fracturing of the industry, however, really resulted from a revelation that one company, Menu Foods, was manufacturing more than 100 brands of pet food. This stunning surprise to the consumer marketplace reversed decades of brand building that implied pet brands themselves were carefully preparing unique food solutions in their own kitchen, while also refocusing pet parents on examining what’s really inside that bag of kibble.

Smaller boutique brands that had quietly made higher quality, more protein forward foods jumped into the spotlight and web sites sprang up right and left to weigh in on recipes, ingredients and a redefined view of what constitutes a healthy, quality pet food. The emergence of ancestral diet that connected wolves to dogs and what animals would eat in their natural habitat, fed the grain-free segment headline as use of corn and related low-cost ingredients was vilified.

Marketplace confusion

Universally, human beings have an unassailable quirk – they refuse to tax their brains when confronted with complicated or confusing messaging. People quickly opt out and refuse to engage if the story is too dense or requires a PhD in nutrition science to understand what’s going on.

The merits of grain-free food have been a foundational aspect of pet food communication for years. As is always the case, the story generally attempts to elevate grain-free solutions at the expense of grain-based diets that had been a hallmark of the pet food industry historically.

The march to protein specsmanship was on after 2007 and the pet food business category posted year to year volume and share gains for brands that removed grains while adding protein. The story of meat-based diets made intuitive sense to people if you buy the wolf connection and that dogs and cats are essentially carnivores.

Now grain-based solutions begin to come back as a response to the FDA moves on DCM, opening another industry chapter, while at the same time creating a potential stew for communication disconnects. The finer points to grain or not to grain aside, while this appears on the surface to simply be offering choice, another gambit opens when these two formulations compete for attention and potentially contribute to confusion on the merits of both.

The antidote to pet food marketing confusion

Simple. Clear. Short. Concise messaging will be necessary to navigate the re-graining of pet food. No taxing of brains allowed. If the pet diet is primarily protein based, and the source of those proteins are from animal, poultry and fish, then the role of grains or legumes isn’t a mission critical part of the nutritional delivery story.

That aside, this emerging condition offers pet brands an exciting opportunity to enhance engagement and relevance. The love pet parents have for their pet is an important area to mine for communication that resonates — without adding to confusion on the grain and re-grain debate. The human/animal bond steps outside the protein percentage messaging wars to provide a rich arena for relevant brand-to-consumer conversations.

Transparency in the supply chain is yet another pathway into the product quality story that doesn’t require stepping on the jargon landmines of formulation detail and nuance. Trust and belief are paramount and best served when consumers can see the openness and honesty manifest in how the brand behaves and what it communicates about product creation.

In sum, clarity and emotion are two fundamental anchors for pet food brand communication that can help steer wide of the potential confusion of grains vs. no grains.

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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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