SPINS Pet Trends 2020

6SPINS Pet Trends 2020HOW POPULAR IS CBD WITH PET OWNERS?1 in 4 dog ownershave fed their dog aCBD/hemp seed oilproduct2 in 3 woulddo it again1 in 4 cat ownershave fed their cat aCBD/hemp seed oilproductNearly 3 in 4 woulddo it againSource: FINN CADYreducing seizures in dogs, althoughthey are still unsure of its specificlimitations.5That versatility is a large reasonwhy CBD pet product dollar growthhas been in the triple digits yearover year, and by 2022 its salesare expected to hit 125 million.6Today, SPINS data finds that 68% ofdollar growth in CBD is coming fromthe subcategory of treats and 32%of dollar growth is in vitamins andsupplements, a sign that pet ownerswant convenient ways to integrate itinto their pets’ diets. As the demandgrows and the industry innovates,expect CBD’s product lineup toexpand with treats and ediblesas well.TREND 2Customizing the Pet DietALL ABOUT THE ATTRIBUTESHumans are no strangers to evolvingdiets; some are trends that comeand go quickly, while others becomepart of our daily lifestyles. Today’spet diets are undergoing similarshifts. When shoppers head to thepet store, they aren’t just grabbingthe biggest bag of kibble they canfind. They’re doing research beforethey arrive and reading labels beforethey head to the checkout line. (Thismight become even more popular inlight of pets getting a little too manytreats during the pandemic andputting on a few extra pounds.)7When they’re reading labels fortheir pets, shoppers often look forthe same attributes that they lookfor in their own food. Pet ownersare interested in high protein foods,natural ingredients, and minimal orno preservatives or artificial flavors.That mindset is evident in salestrends for dog and cat food, whereattributes are attracting shoppersand influencing what lands in theirbaskets. Natural, specialty, andwellness-positioned products drivetwice the growth of conventionalproducts.SPINS finds that attributes are drivinggrowth throughout the market. Whenlooking at dollar growth: For cat food, approximately 75%comes from natural-positionedand grain-free labeledATTRIBUTES DRIVING GROWTHProductTypeAttributesCat Food natural-positioned grain-free labeled raw-positioned75%Cat Treats natural-positioned grain-free labeled67%Vitamins and CBDSupplements60%Dog Food natural-positioned raw positioned frozen35%Dog Treats grain-free gluten-free raw-positioned31%Source: SPINSCopyright @2020 SPINS LLC. All Rights Reserved.DollarGrowth

SPINS Pet Trends 20207“ Ultimately every petowner wants theirfurry friend to have thelongest, healthiest,and most comfortablelife possible.” For cat treats, 67% comes fromnatural-positioned, grain-freelabeled, and raw-positioned For vitamins and supplements,nearly 60% comes from CBD For dog food, approximately 35%comes from natural-positioned,raw-positioned, and frozen For dog treats, 31% comes fromgrain-free, gluten-free, andraw-positionedPETS ARE EATING CLEAN, TOO“Clean eating” does not have a strictdefinition, but most shoppers usethis term when they’re focusing onwhole (unprocessed) foods, avoidingartificial ingredients, and limiting oreliminating added salts and sugars.It’s a large umbrella term that caninclude a variety of additionalattributes and categories within it,such as natural, organic, andplant-based.Many of the pioneering brandsthat set the standard for naturaland organic began with a cleaningredients mindset. To them, cleanhas always been synonymous withnatural and organic. These brandsshould emphasize this messagingon their packaging and in theirmarketing strategies to attractcustomers who might not realize theyare already offering this latest trend.This move might also help naturaland organic brands stay competitiveas conventional retailers ban artificialingredients from their shelves andconventional brands roll out theirown natural and clean products.of ingredients in their pets’ diets.Limited ingredient diets favor foodsthat have a single source of proteinrather than a combination of variousproteins or meat byproducts. Thesefoods might contain byproducts, butall of the protein sources are fromthe same animal. Although limitedingredient diets are not new, theyhave become a common choice forpet owners who suspect their petshave an allergy or food sensitivity.Limited ingredient diets are oneway to strategically eliminate whatingredients your pet agrees with andwhat may cause a sensitivity.GRAIN-FREE: YAY OR NAYLIMITED INGREDIENTCONTINUES TO RISEWhile some pet owners are focusedon eliminating artificial ingredientsor ingredients they deem as lesserquality like by-products, others aresimply trying to narrow the numberWith consumers focusing on proteincontent, grain-free diets have gainedtraction and some controversy, similarto human diets such as paleo, keto,and Whole30. Because dog foodoften contains a high percentage ofcarbohydrates and low protein orCopyright @2020 SPINS LLC. All Rights Reserved.

8SPINS Pet Trends 2020ingredients in dog diets, whichmeans including ingredients thathaven’t historically been associatedwith dog diets but are known tooffer a specific health benefit. Forexample, a splash of goat milk ina bowl of kibble is not uncommonthese days because it’s easilydigestible and can prevent orhelp with kidney stones, diabetes,GI issues, and more.11 You mighteven find that your customers arelooking for fruits and vegetables—either in the ingredients list or as asupplement—since many of themprovide the same benefits for dogsthat they do for humans. Ultimatelyevery pet owner wants their furryfriend to have the longest, healthiest,and most comfortable life possible.mixed protein sources, pet ownersare gravitating toward grain-freechoices. Similar to limited ingredientdiets, grain-free is easily digestiblefor dogs and high in protein, whichcan help dogs stay fuller longer, shedless, and have shinier coats.8 Theyoften contain starchy alternativeslike peas, sweet potatoes, and lentilsthat are often viewed as “better-foryou” carbohydrates. And like limitedingredient diets, grain-free diets havethe potential to reduce food allergiesor sensitivities.pets dealing with diabetes orobesity. Two years later, the FDAand researchers agreed that theconnection, if one exists, is morecomplex than simply grain-freediets. Dilated cardiomyopathy couldbe a combination of many factors,such as breed, overall health, anddiet. As the Journal of AnimalScience concluded, “Therefore, itis impossible to draw any definitiveconclusions, in these cases, linkingspecific diets or specific ingredientsto [dilated cardiomyopathy].”10When it was revealed thatdogs diagnosed with dilatedcardiomyopathy (DCM) were on agrain-free diet, some medical expertswondered if there was a connection.In 2018, the FDA began investigatingpossible connections between theailment and various dog breeds andtheir diets.9 The publicity had anadverse effect on sales, and brandshurried to emphasize the presenceof certain grain in their products.Ancient grains became more popularas they were known for containinglow or no gluten, having high fiberand protein content, and having alow glycemic index that benefitsWith no definitive answer just yet,research will continue and somedog owners will remain wary ofgrain. Although there is no provenlink between the two matters,expect to see more packagingmessaging about ancient grainsor high protein content.Copyright @2020 SPINS LLC. All Rights Reserved.FUNCTIONAL INGREDIENTSFOR A LONGER LIFEFor discerning pet owners, foodisn’t just a daily ritual for their dogs.It’s an opportunity to help these4-legged friends live a little longerand stay healthier. That’s evident inthe growing popularity of functionalTREND 3The Struggle to AchieveSustainability Inside and OutWHAT DO CONSUMERS WANT?When consumers are reading labels,they’re not just thinking aboutwhat their pets are eating. Theycare about where that food wassourced from and what it means forthe environment. Sustainability hasbeen a growing focus for consumersacross the retail space, and thatincludes pet parents. FINN CADYfinds that sustainability is a topfactor for customers purchasingcat food and millennials are morelikely than other demographics toGEN ZMILLENNIALS73%68%73% of Gen Z and 68% ofmillennials are willingto spend more forsustainable products.Source: First Insight

SPINS Pet Trends 2020value sustainable proteins. A studyfrom First Insight finds that 73% ofGen Z and 68% of millennials arewilling to spend more for sustainableproducts. Today’s shoppers want tomake eco-friendly purchases thatwill leave a small carbon footprint onthe environment- but that can oftenget complicated.12When talking about sustainable foodfor humans, a common talking pointis how much waste goes into raisingcattle and producing beef. Theconversation also includes broadertopics like working conditions,pollution from the supply chain, andthe treatment of animals. Many ofthose concerns are the same forpet owners.Many pet brands are alreadymaking headway into producingsustainable foods to meet growingpublic interest. Based on SPINSdata, many pet food brands includeand promote their sustainableingredients: For example, TheHonest Kitchen’s cat food productsare protein-rich and sourced fromgrass-fed beef and sustainablefisheries. The company promotesits commitment to “environmental,financial, social and ethicalsustainability.” In dog food andtreats, Taste of the Wild highlightsits sustainably raised salmon witha greater focus on high-qualityprotein sources. Brands like theseare showing that sustainabilitycentric messaging is resonatingwith shoppers and could be adifferentiator in crowded markets.Trends like sustainability andclean diets can conflict when itcomes to the use of byproducts.Controversially, by-products arethe most commonly used animalingredient. They are the parts ofthe animal that are often discardedbecause they are not from muscletissue. The Association of AmericanFeed Control Officials explains thatthese lesser-used parts of the animal“ Almost all the top100 FMCG companies(in terms of revenue)have made bolddeclarations andcommitments to drivesustainability over thecoming years.”– Source: McKinseywould not be approved for humanconsumption but are perfectly finefor pets to eat.13 In fact, byproductsare popular in limited ingredientdiets because they come fromthe same animal as the rest of theprotein. However, they can havenegative connotations to consumerswho shop with a more human-gradementality and avoid ingredients thatthey consider to be of lower quality.The sustainability debate gets moreinteresting because foods with9byproducts use more or even all ofthe animal, producing less waste,which is a chief concern for manysustainability-centric shoppers. Keepan eye on which trend wins out or ifboth coexist with different audiences.For now, pet owners are caughtweighing which choice appealsmost to their values and pet brandsand retailers have to decide whichmessage resonates with consumers.SUSTAINABILITY ISN’T JUSTABOUT THE INGREDIENTSSustainability is about more than justthe ingredients in the product itself.According to the EPA, approximately80 million tons (or a third) of allmunicipal solid waste comes fromcontainers and packaging, withnearly half of that recycled. Publicawareness over the past severalyears has led to a move away fromsingle-use plastics and other lessenvironmentally friendly options,resulting in shifting consumer habitsand even local ordinances, such asbans on plastic straws and singleuse shopping bags.14This shift is already hitting the petindustry, but it’s far from solvedand the space for innovation andeventual outreach to consumersis great. Trade publication PetfoodIndustry points out that the troublewith pet food sustainable packagingis that the most popularly used typeis not readily recyclable in mostneighborhood recycling programs.15McKinsey notes that shifting publicopinion has also forced the handof many fast-moving consumergoods (FMCG) brands: “Almost allthe top 100 FMCG companies (interms of revenue) have made bolddeclarations and commitmentsto drive sustainability over thecoming years.”16 Even zero-wastegrocery stores are popping upthroughout the country with the aimof eliminating all plastic and foodpackaging from grocery outlets.Copyright @2020 SPINS LLC. All Rights Reserved.

10SPINS Pet Trends 2020Already we’ve seen non-food petproducts tap into this trend. Brandslike Cocokitty and Bark Pottyimplement sustainability and wastereduction into their philosophies.Cocokitty is an organic,biodegradable, compostable, plantbased kitty litter from coconut pith.Coconut pith is already a wasteproduct and can be reused as anatural garden fertilizer. For canineowners, Bark Potty is an all-natural,disposable pee pad made of realbark, and a single Bark Potty padreplaces up to 60 pee pads. Asbrands continue to do their partto minimize waste, expect moreconsumers to read packaginglabels for sustainably sourced foodingredients and recyclable oreco-friendly packaging.TREND 4Enriching the NeighborhoodStore ExperienceWHERE ARE PETOWNERS SHOPPING?For pet owners, and every otherconsumer, convenience is crucial,however, convenience does nothave a straight forward definitionand can mean something differentfor each person. Maybe that meansonline ordering and home delivery.It could mean curbside pickup.Maybe it means a knowledgeablestaff who can make sense of theconflicting information that’s foundonline. Or, it might be a combinationof all of the above. According toPackaged Facts, online shopping forpet owners is growing quickly yearover year. In 2012, 6% of pet ownersstrongly agreed that they werebuying more pet products onlinethan they used to; in just another6 years it was nearly a quarter ofshoppers.17 In other words, petowners are shopping everywhere.Copyright @2020 SPINS LLC. All Rights Reserved.“ Local pet stores are a morepersonable destination than a digitalretailer or non-specialty store.”Prior to COVID-19, Packaged Factsprojected that 23% of the pet marketwill be from online sales. Last year,estimated online revenue for petproducts was 11 billion. For theneighborhood pet store, this mightfeel daunting, especially againstsome of the eCommerce Goliathsout there. This year’s quick rise ineCommerce came from the effectsof the pandemic and is becoming amainstay for today’s shoppers, butthat doesn’t mean it’s the only way tosucceed in 2020. It’s just part of anoverall omnichannel approach thatreaches customers in the digital andbrick and mortar spaces.As shoppers consolidated theirtrips to the store during this year’spandemic lockdown, they alsoshifted to online purchasing. In Apriland May, according to data fromIRI All Outlet Panel, enhanced withSPINS Product Attribution, internetshopping reached its high, earningjust above 20% of share of wallet,clearly taking traffic from pet outlets.Internet purchases have subsided inrecent weeks but remain well aheadof pre-pandemic levels, while thevolume has not fully returned to petoutlets either.INDEPENDENT IS ADIFFERENTIATORAs we mentioned earlier, naturaland organic is growing more quicklythan conventional in several areas,and evolving trends are creatinga less transactional shoppingexperience for consumers. Thisis where independent retailersare providing unique value tocustomers. Local pet stores are amore personable destination than adigital retailer or non-specialty store,with the staff to answer questions,stay on top of emerging trends, andsuggest new products that mightnot be carried anywhere else yet.Shoppers will continue to go onlineand grab items at the grocery store,but they’re not forming relationshipswith those outlets.Independent retailers have theopportunity to connect withconsumers who see convenienceas having a knowledgeable staff toanswer questions and recommendproducts. Staying on top of thetrends and filling the shelves within-demand, high quality productscan go a long way for theindependent retailer.

SPINS Pet Trends 2020How to Focus On Quality and SucceedNow that you have a better view of how the industry has changed andwhere it’s going, you can build your strategy to succeed and grow. Withcustomers who care about providing the best quality of life to theirpets, you have several ways to appeal to their interests, whether you’rean emerging brand, a market leader, or a retailer. The key to successis bringing a personal connection to the customer experience anddifferentiating yourself.EMPHASIZE ATTRIBUTESShoppers are reading labels, doing research, and keeping upwith the trendiest options on the market. If you have productswith CBD, sustainable foods (and packaging), or natural andorganic treats, highlight those qualities. Don’t risk customersoverlooking what you have to offer. Get these attributes frontand center so you can attract customers who know whatthey want.11SOURCES1.Statista: “Pet Industry Expenditure in the UnitedStates From 1994 to 2020”, xpenditurein-the-us2. IRI, SPINS, and Statista. iriworldwide.com3. Packaged Facts: “1 in 3 U.S. Pet OwnersMillennials: What It Means for the Pet FoodMarket.” FoodMarket4. FINN CADY: Summer 2020 Survey. finncady.com5. Science Daily: “CBD Clinical TrialResults on Seizure Frequency in Dogs‘Encouraging.’” 6. New Frontier Data: “Hemp-derived Pet Suppliesin the Growing CBD Market.” -petsupplies-growing-cbd-market/?sscid a1k3 iogba7. Pet Business: “Have Pets Gained Weight DuringQuarantine?” antine8. Canine Journal: “Is Grain-Free Dog Food LISH A RELATIONSHIPNeighborhood retailers have the best opportunity to talk topet parents 1-on-1 and be the educational resource they’relooking for. By offering new-to-the-market products they can’tyet find anywhere else, you also show that you’re on top ofthe latest innovations. Show these customers you can provideguidance—especially in these highly stressful times—and thatyou have their pet’s best interest in mind.9. Petfood Industry: “Diet, Genetics Play Roles inCanine DCM; Mysteries Remain.” ay-roles-incanine-dcm-mysteries-remain10. Journal of Animal Science: “Review of CanineDilated Cardiomyopathy in the Wake of DietAssociated Concerns.” 1. Dogs Naturally: “Goat Milk For gs12. First Insight: “The State of Consumer Spending:Gen Z Shoppers Demand Sustainable zshoppers-demand-sustainabilityGET WELL-VERSED IN SUSTAINABILITYFrom ingredients to packaging to non-food products,sustainability is on the rise and still has room for innovation.Be prepared for consumers to seek out products that showresponsibility across all aspects of production, from raising thelivestock to sourcing the ingredients to packaging the product.As more retailers and brands pop up to meet the growingdemand, it’s not a trend you can afford to fall behind on.LEAN INTO OMNICHANNELConsumers like quick and efficient experiences that alleviateany stress from their busy lives. Find the right eComm partnerto help you create a strong omnichannel presence, whetherthat means online ordering and delivery, curbside pickup, ora strong online p

The reason is simple: Pet owners care about what they're putting in their pet's food bowl. FINN CADY finds that nearly 2 in 3 dog and cat owners believe natural pet foods are best, and approximately 60% of dog and cat owners are very or Those views are playing out in real time at the checkout line. Natural's strength is apparent when