From organic dry pet foods to meat snacks for animals, dehydrated pet treat products have increased in popularity around the world in recent years, especially in the United Kingdom (UK). As part of the broader pet food industry, the evolution of pet treats is tapping into consumer demand for high-quality, healthy food. The UK’s pet food market was worth USD4.8 billion in 2017, and it’s expected to grow at a compound annual growth rate (CAGR) of 2.60 per cent, equating to a USD5.3 billion industry by 2022. This article details how the UK’s pet treat industry has grown in recent years, industry growth drivers, analysis of the UK pet treat industry, and opportunities and threats that companies need to consider.
To understand the UK’s pet treat industry, it’s important to have context based on the broader pet food industry. This industry is expected to grow at a CAGR of 2.60% from 2019 to 2022. A large portion of this growth is driven by increasing product prices and growth in the number of dual-income families that have a pet, but no children. This segment of the market have high disposable incomes, and their pets are well looked after. Dual income pet owners also highly value quality and health, making them a key target market for companies that produce dehydrated pet treats.
It’s important to note that dehydrated pet treats, including dehydrated pet food and meat snacks for pets, make up a portion of the wider pet food industry. While dehydrated pet treats are a segment of the broader pet food industry, pet treats are growing at a faster rate than any other pet care category. According to market research firm Euromonitor International, pet treat sales, particularly for dogs and cats, has grown rapidly in recent years. On a global scale, dog treat sales are growing at a CAGR of 6 per cent, while cat treat sales are growing at a CAGR of 9 per cent.
The pet food industry, and in turn, the pet treat industry has evolved as pets have become increasingly well cared for and pampered by their owners. This shift has resulted in increased demand for healthy, high-quality pet treats that provide a range of health benefits, making dehydrated pet treats and ultra-premium pet food big business in the UK.
According to the Chief Executive of the UK Pet Food Manufacturing Association (PFMA), its members, who account for more than 90 per cent of the UK’s market, say the UK’s pet food market is at an “all-time high” with the largest growth drivers coming from specialist products with health benefits. The main distribution channels for pet food and treats in the UK were supermarkets and hypermarkets from 2013 to 2017; however, pet stores and ecommerce are expected to account for increased market share from 2018 to 2022.
Referred to as ‘pet humanisation,’ pets are being treated with more care and hygiene, which has increased consumer demand for high-quality pet treat products. The most common features and benefits on the labels of these products include grain-free, gluten-free, probiotics, vitamins and minerals, and the percentage of meat in a treat. These features and benefits align with consumer demand for high-quality products with as few ingredients as possible.
Using the dog treat segment as an example, ethical dog breeding information website Breeding Business summarised some of the most appealing characteristics of single-ingredient dog treats sold in the USA. These single-ingredient treats are common in the dehydrated pet treat segment as single ingredients can be flavoured and dehydrated to provide a healthy, high-quality treat that consumers feel good about feeding their dogs. The most common features listed on the packaging of these dog treats include local ingredients, no additives, low-fat protein sources, and Omega 3 fatty acids. Further, consumers have noted that the long shelf life and ease of handling with these products provide convenience without compromising on health benefits for their pets.
As consumers have become more aware of the importance of healthy, whole foods, this has sparked extra attention towards healthy pet food as well. This presents a significant opportunity for dehydrated pet treat producers to continue evolving their pet treat offerings and utilise dehydration technologies to reduce waste and increase revenue. For example, unlike humans where several parts of an animal aren’t seen as desirable for human consumption, pets enjoy the flavour and texture of less desirable parts of an animal. This can include items such as dehydrated pigs ears, beef liver, kangaroo heart and chicken necks for dogs. Not only does this reduce waste in meat production, but it offers companies throughout the meat and poultry supply chain an opportunity to expand their product base and increase revenue.
As consumers have become healthier and more aware of what foods are best for their health, they’ve focused on feeding their pets the same quality foods. Dog publication, Whole Dog Journal, for example, explains that the most important consideration should be ingredients when consumers buy pet treats. This is why consumers are opting to buy pet treats where they understand every ingredient, much like purchasing food for human consumption.
Beyond the pet treats and food itself, consumers also look to other elements of pet treat products that will influence their buying decision. These elements include recycled or recyclable packaging, minimal packaging, and small treats or treats that are easy to break into bite-sized pieces. Interestingly, consumers may also be more receptive to labelling that highlights that the product is free of artificial colours or preservatives, but may be less receptive to a label such as “no corn,” or “no wheat”. Consumers want to know what’s beneficial about a pet treat, so making this the focus of the label is more persuasive than stating if a particular ingredient isn’t in the product.
Similar to the UK’s meat snack industry for human consumption, the price of meat is a key factor in the profit margins companies can secure on their pet treats. As the price of meat fluctuates, price increases can’t always be passed down the supply chain, which results in diminished profit margins. This is a key risk that dehydrated pet food and treat producers need to keep top of mind and address in their business planning and strategy.
The high price of dehydrated pet treats compared to other types of pet treats is another potential threat to producers. According to Breeding Business, single-ingredient dog treats, a key segment of the dehydrated pet treat industry, can be up to five times more expensive than regular treats. For that reason, pet treat producers need to be creative about how they market their products, so consumers buy based on ingredients and the health benefits to their pets, not price.
Brexit should remain a key consideration for UK-based dehydrated pet treat producers, and businesses importing products to the European Union (EU) need to ensure they remain up to date with the latest trade rules. Fortunately, these rules have become clearer since the UK and EU agreed to a new trade deal on 24 December 2020. The new deal, which came into effect at 11pm GMT on 31 December 2020, outlines how trade across borders will be managed.
Prior to Brexit, UK companies could buy and sell goods across EU borders without tax implications. There also weren’t any limits on the number of goods that could be bought and sold. These two key enablers to free trade in the region remain in place under the new trade deal, which is good news for UK companies. While there won’t be any new taxes on goods moving across borders, there will be additional paperwork and checks at borders. These checks include safety checks and customs declarations. It’s important that companies are aware of the paperwork and procedures required, as incomplete paperwork could lead to significant delays at ports.
Under the new trade deal, some UK animal food products are subject to new restrictions. UK companies moving live animals or animal products between the UK and the EU will need to obtain an export health certificate (EHC). Full details and guidance about the process of obtaining an EHC are available through the UK’s Animal Plant and Health Agency and the Department of Environment, Food & Rural Affairs. Further checks also apply to animal feed and pet food exports, including the requirement to have goods checked at an EU border control post (BCP), Northern Ireland border, or the point of entry in the first country your products will enter.
It’s important to note that while the UK and EU have agreed to identical rules, including those around buying and selling goods across borders, it doesn’t mean these rules will be identical in the future. For example, if one side of the deal negotiates an exception to the trade deal, it could trigger a dispute and the potential for the introduction of tariffs on specific products. This means that the potential for a trade dispute and tariffs is a possibility and risk that all UK companies must continually consider and mitigate.
The big opportunity for pet treat producers stems from capitalising on how consumers have become more conscious of the ingredients in their food. Further, the humanisation of pets and desire to feed them high-quality, healthy food should be a key consideration as companies develop their dehydrated pet treat products. If a company is helping reduce waste in the meat production industry, a likely case if a company uses meat offcuts that humans don’t buy, this also provides a positive key message given people’s growing focus on sustainability and caring for the environment.
E-commerce is another key opportunity for UK companies looking to expand their reach. With the ability to reach consumers all over the world, e-commerce sales of pet food are an effective way to proactively control your company’s message and brand and reach more customers. A recent report published by e-commerce analytics platform Profitero detailed that pet food sales on Amazon grew to USD3.6 billion from June 2017 to June 2018, representing a growth rate of 53 per cent. To fully capitalise on the reach of e-commerce, however, companies need to implement an effective marketing and sales strategy as they would with any other sales channel.
Specialised, health-focused pet food products are popular in the UK, particularly with dog owners. Coupled with increasing consumer demand for healthy, high-quality food for their pets, there's a significant opportunity for companies to tap into these trends by offering high-quality dehydrated pet treats.
With a CAGR of 2.6 per cent in the UK’s pet food industry, pet treat producers in the UK can continue to grow their business by increasing their domestic consumer base and serving nearby international markets. Consumer demand for locally-sourced and produced foods and the power of ecommerce will also help to drive growth as consumers have become more conscious of the food products they buy for themselves and their pets.
Effectively marketing dehydrated pet treat products isn’t just about the ingredients and treat itself. As detailed by pet industry publications, consumers are attracted to clean, minimal packaging that clearly explains how their pet will benefit from consuming their product. This can also help to overcome price sensitivity amongst consumers by highlighting the quality of ingredients and health benefits to pets. For companies who can incorporate all of these elements in their dehydrated pet treat products, there's a significant opportunity to become an influential force in the UK’s growing pet treats industry.
