Game Change For Petcare: Is Your Brand Unique Enough

By Andreas Schambeck

By Andreas Schambeck

The pet industry has undergone a massive transformation in recent years, evolving into a multi-faceted market that goes far beyond basic pet care. Today, the industry encompasses not only traditional products such as food and toys, but also reflects a broader lifestyle and hobby culture among pet owners. Consumer hobbies and preferences are central to the growth of the pet market, driving innovation and influencing industry trends.

Humanisation and its consequences
The expansion of the pet market is largely due to the changing relationship between pet owners and their pets. Pets are increasingly seen as members of the family, a change that has had a significant impact on consumer spending behaviour.

As people become better informed about pet health and nutrition, they are looking for products that match their values and lifestyle. This ranges from sometimes very specialised care services, wellness and health care to luxuriously designed homes for our furry friends. A lot has also improved in terms of technology, including; fitness trackers, automated feeding and interactive toys.

With growing environmental awareness, pet owners pay attention to the ecological pawprint of their pets and are increasingly looking for sustainable, environmentally friendly, and plant-based products.

The noticeable price increases across the pet industry hasn’t necessarily effected toys and accessories but is evident with pet food. According to Packaged Facts, 70% of pet owners consider the quality of their pet's diet to be as important as their own, which explains the trend towards high-quality and super-premium food products, healthy snacks, supplements and specialised and or personalised diets.

The “New Normal” means new challenges
According to the FEDIAF annual report, the European pet food market has continued to grow in 2022. This was mainly due to an increase in the pet population in Europe. However, according to a report by Cascadia Capital, current data indicates a slowdown in the pet population and a decline. Their pet industry overview indicates that 2024 could be challenging due to declining consumer sentiment and pressurised industry profits, noting that while the pet industry "remains visually attractive", it could face some fundamental challenges and issues within the industry. Cascadia Capital summaries "while we remain optimistic in the medium and long term, 2024 will be choppy and only well positioned companies will experience the benefits.”

The ongoing inflation of operating resources continues to put pressure on all players in the industry and their margins. As in other sectors and product groups, trade and industry are competing for prices and conditions. With all the effects that we have already become familiar with shelf gaps, discontinuations, an increase in products at entry-level prices and, above all, private labels. Future topics such as sustainability and digitalisation have been somewhat neglected in the past year.

It is worth noting that online retail, which was still one of the brightest winners during the coronavirus pandemic, has also recently suffered a decline in sales.

According to BEVH annual press conference, in Germany consumers' reduced willingness to spend was once again reflected in a significant drop in total sales in e-commerce in 2023. The pet supplies product group was not spared from this negative trend either.

High inflation rates had a negative impact on consumer sentiment in many countries in 2023. After the purchase prices of pet products have risen significantly in recent years, price has once again become a decisive sales criterion, as evidenced by the growth of private labels. among other things.

A development that is also confirmed by the latest Consumer Index from Consumer Panel Services GfK. It states " ... Sustainability is still in vogue. However, shoppers have switched to retail brands in droves, while manufacturer brands have been unable to win over people for whom sustainability is also important in FMCG consumption. In contrast to the other trends, people in the sustainability market are hardly prepared to pay a higher price for manufacturer brands. There may be several reasons for this: lack of trust in the sustainability promise, inadequate sustainability quality, unappealing communication. The manufacturer brands, especially the established brands, must be careful not to completely lose this market, which will move further into the centre of consumption in the coming years, to the retail brands and to young, positively future-oriented 'planetary health' brands."

According to Ralf Majer-Abele, Editor-in-Chief of pet, there is currently a lack of attractive new products on the market. He is eagerly awaiting the extent to which the next Interzoo will be able to initiate a new wave of innovation within the pet industry.



What's up?
The pet congress held last October under the motto "The pet industry is reinventing itself" sought to spread a spirit of optimism. As in other sectors, private labels and brands are increasingly competing on an equal footing. The overall range and offering of the pet industry has expanded. Service offerings have diversified, sales channels and the reach of these have been optimized, all resulting in improved customer loyalty. With increased customer loyalty retailers and the industry as a whole have invested in their ecosystems. This can be seen in the current developments at Kölle Zoo, Futterhaus, Fressnapf and AlphaPet. The shelf display tends to be similar, at least there is a clear commitment to bricks-and-mortar retail without neglecting digitalisation and eCommerce. This is demonstrated by the investments in new store designs, the focus on B2B partnerships, collaborations with start-ups and aspects such as retail media. Rewe's entry into bricks-and-mortar retail with Zoo Royal also emphasises these developments, as do further acquisitions by Fressnapf with the takeover of Jumper Groep.

Online is seen as a supplementary sales channel, an important shop window channel for bricks-and-mortar stores. The digital shelf is therefore gaining in importance across all channels and is intended to create added value and customer loyalty.

The increasing demand for petcare products and services has attracted a surge of competition. Traditional pet supply retailers, online platforms, and tech-based startups are all vying for a piece of the market share. Leading brands will have to do more in future. The petcare market of tomorrow is not just about meeting the needs of today's pets but about anticipating and exceeding the expectations of future generations of pet owners.

Branding gains importance
The topics of strategy, brand development and eCommerce are being reprioritised almost everywhere. Various changes in management - both in retail and in the industry - point to change, new beginnings and a new direction.

In the future, retailers will focus even more strongly on the further development and exclusive marketing of their own brands, prioritising the value-adding product groups. Brand management, strategic development and other business functions will be prioritised to push for individual business goals.

The duel between Nestlé Purina and Mars Petcare is entering a new round. Mars Petcare has the clear goal of regaining market leadership, and this year not only wants to fill distribution gaps, but also further develop its portfolio. The Sheba and Cesar brands are scheduled to be revamped.

However, after years of dynamic growth there are signs of increasing market saturation and consolidation effects. In a changing pet market, branding is becoming a decisive success factor. "A logo and a pretty animal photo are not enough anymore," says Marcel Verhaaf.  This means that companies - whether manufacturers or retailer, private label or brand, start-up or established player - will have to sharpen up their offering in future, differentiate more clearly and, above all, communicate more clearly.

I spoke to my colleague Marcel Verhaaf, Executive Creative Director at SGK, about the changes in the pet market, the aspect of humanization and its impact on branding. More on this shortly.


About Andreas Schambeck
Andreas is experienced in the world of branding, marketing communications and in particular the entire packaging graphics supply chain. As part of the business development team, he brings over 30 years of experience from various industries and target markets. He primarily supports brand owners and retail clients in organising their marketing ecosystem in the best possible way to be even more agile, efficient and consistent.