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Cat foods fuel department growth.

An analyst of the pet food industry recently explained the way to count the population of cats and dogs in the U.S. "Count the legs and divide by four." In other words, no one really knows.

Pressed, he estimated there are 46 million cats and 50 million dogs. "One thing is certain. Pet foods are big, almost a $5 billion industry. That's more than four times the amount the U.S. spends to feed its baby population. Cats and dogs are reigning."

Jokes come more easily to the pet people than many other suppliers because business last year was good and prospects are for more of the same this year.

National warehouse withdrawal trackings by SAMI show that pet food sales last year increased 6.3% to a new high of $4.89 billion, while tonnage was increasing 1.7%. The gains were a welcome rebuttal to analysts' predictions that pet foods would suffer a severe case of the blahs. Supermarkets, stores doing $2 million or more, did particularly well, undoubtedly helped by their ability to give pet foods the space they merit. And space they get: Most supermarkets devote more shelf feet to pet foods than to any other grocery department, including paper, which is notoriously bulky.

Pressure for space in pet foods has moderated somewhat over the past several years, however, as the number of new items slowed to a trickle compared to five or six years ago. New Product News traced only 28 new entries in 1983 and 33 and 24 the previous two years.

Weep not for Fido and Felix, however. They have everything that the most indulgent master could wish for-almost. In dog food alone there are more than 60 popular brands offering something for every segment of dogdom: puppies, adult dogs, dogs in their golden years; city dogs, suburban dogs; active dogs and sedentary ones; lean dogs and overweight dogs. Cats are equally pampered.

Currently, 62% of total pet food money goes for dog food and 38% for cat food. Increasingly, say the experts, more will go for cat food.

Hugh Chamberlin, manager of new products for Carnation Co., says, "We project population total from a sample marketing panel, and two years ago cats numbered about 44 million whereas in 1972 were only about 25.5 million." Among the reasons: more one and two person households, more apartment dwellers, and an increasing number of older people who find cats easier to keep than dogs.

Purchase patterns may already reflect the trend. Canned dog food tonnage declined 2.7% last year (although dollars rose about 1.5%), and semi-moist dog food lost 6.5% in tonnage and about 13% in dollars, the only one of the seven major pet food categories to suffer declines in both areas.

Says on pet food marketing man, "Semi-moist dog food is the 'sick man' market share and they and the other brands may find it a bit easier to compete. More than one supplier reports noticing a decline in generic pet foods, and to a lesser extent, in private label.

Says one, "Admittedly, we're talking about results of recent periods of about 16 weeks or so, but there is an overall leveling and even slight declines within many generic pet food categories. To a lesser degree the same is true of private label." The solidity of dry dog food's position is underscored by its 17% growth in tonnage over the past five years.

Canned dog food, the third largest pet food category after dry cat food, managed to boost sales despite a tonnage loss. "The lower price and higher convenience of dry has a lot to do with this lackluster performance by the canned product," says a supplier.

Alpo, Kal Kan and Mighty Dog are, respectively, one, two and three within canned dog food, accounting for half of sales among them. Like semi-moist they have been on a slide, having declined 12% in tonnage over the past five years. Generics represent only 2.8% of sales and that is expected to shrink a bit. Private label is holding at a 7.5% share.

A brighter spot last year was dog food snacks, up 11.1% in sales and 2.8% in tonnage. Given as a reward or treat, rather than as standard fare, these products command good margins. Milk Bone/Butcher Bones, Bonz, and Jerky Treat (resembling beef jerky) head this small but growing segment. Their 39% tonnage growth over the past five years has projected them ahead of semi-moist.

Among the three major cat food categories, canned is the largest, representing an $892 million business, most of it stemming from just eight brands. Last year, canned cat food sales rose 8.9% and tonnage 3.5%--thus continuing a trend that has seen dollar sales increase 71% and tonnage 19% over the past five years--in sharp contrast to canned dog food performance.

The leading brands in the category are 9-Lives, Friskies Buffet and Kal Kan, with a combined 61% share of dollar sales. Generics inroads here are minor, with only a 1.7% share of the category. Private label has 6.8% of volume.

Dry cat food, second most important among the segment and fourth largest contributor to department sales, has done better than canned cat food recently. Sales rose 6.3% in 1983 and tonnage was up 4.2%, capping a five-year upward trend that has seen dollar sales and tonnage rise a whopping 92% and 32% respectively.

Fully half of dry cat food volume is taken by the three top brands, Purina Cat Chow, Purina Meow Mix and Little Friskies. Generics and private label have shares of 3.4% each. Best of category

Although semi-moist cat foods are ranked sixth in sales contribution overall, they enjoyed the best year of any category in 1983, rising about 23% both in dollar sales and tonnage. Generics and private label together account for only 3.4% of sales.

Happy Cat is the new entry here and even competitors have good things to say about it. One, who understandably wants to remain anonymous, says, "Ralston Purina's Happy Cat has generated some real excitement in the category, with resealable waxed bags in contrast to the standard composite can. The 3-pound size has done very well. In fact, the brand has shot to almost 30% of the category, and although they have cannabilized their own number one, Tender Vittles, to a degree, the two brands now have better than three-quarters of the category." Combined with 9-Levis Soft Moist, the three have an overwhelming 87% of the volume.

Such a large share of market for three brands portends much activity in couponing, display and other allowances and plain old price cutting. "This will be true of the whole department," one supplier laments. "It used to be that 60% of the dollars spent in the industry went for promotion and 40% for deals. Now it's the other way around. Given a decent economy, business should be OK this year, but it won't come easy. They'll be lots of pushing and shoving by manufacturers."

New item activity is expected to pick up slightly, too. One of the most innovative pet foods ever may soon make it to market. Currently awaiting Food & Drug Administration approval, it is nothing less than a birth control dog food. In development by Carnation for more than eight years, the new product is called Extra Care and contains a drug similar to that used by humans, but without the side effects. Says Carnation's Chamberlin, "Extra Care will be a top of the line product like Mighty Dog. We see it as a major contributor to solving the problem of dog overpopulations as well as being more humane and less expensive than neutering male and female dogs."

"It's so safe," he adds, "that you could give a dog an overdose 1,000 times normal without toxicity. What's more, if the regular can-a-day routine is discontinued, the dog can have puppies in the normal fashion."

Actually, Carnation admits there is a side effect. For some reason, dogs who eat Extra Care develop silkier coats. In the works, reportedly: a similar product for cats.
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Publication:Progressive Grocer
Date:Jul 1, 1984
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