For the US Pet Food & Supplies industry, provide the top 10 challenges which this industry is facing now and/or in the future. What challenges are mentioned most with reference to this industry? Include a one-line summary for each challenge along with a fully-cited overview of it.
Hello! Thank you for asking about the top challenges faced by the U.S. pet food and supplies industry, both current and projected for the future. In brief, the biggest challenges facing the industry are competition from e-commerce retailers, industry consolidation, and demand for varied, healthier food options. A review of my findings follows.
An article published in Pet Business in March, 2017 addresses the challenges of the growing, pet-related consumer goods market. The article highlights interviews with top executives of pet product companies. The most noted issues include:
Pet owners are looking for more specialized and varied options for their pets, particularly in pet food. Some pets have special, health-related dietary needs and require specialized products. Regardless of whether these specialized needs exist, a larger share of pet owners overall are seeking variety in options and flavors of pet food. As pets are increasingly "humanized" and considered members of the family, owners want to provide them with the same pleasing variety of food.
INCREASE IN COMPETITION DUE TO ECOMMERCE
Consumers are increasingly purchasing pet food and supplies via online channels, creating a challenge for brick-and-mortar retailers. Stores will need to provide expert service and leverage the in-person experience in order to remain competitive. Competitive pricing and one-on-one relationships will continue to be factors that differentiate brick-and-mortar pet supply stores from their online competitors.
Hiring friendly, knowledgeable staff who can provide exceptional customer service and address customer questions continues to be key in the pet food and supplies market. Customers often stop by a brick-and-mortar store seeking a solution to a specific pet-related problem - something they can't get online. Filling this advice gap are store employees, who will drive the brand's image and consumer perception. These employees serve as brand ambassadors.
Food Safety Tech published an interview with pet food safety specialist Alan Baumfalk. He addresses the differences in production of human food versus pet food:
U.S. pet food production facilities are overseen by the Food and Drug Administration (FDA) and follow HACCP (hazard analysis and critical control points) plans in the preparation of pet food. However, major differences exist between products for pets versus those for human consumption. For example, pets are not adversely affected by the presence of Salmonella or E. Coli. There are allergens and pathogens that are harmful to pets, and these are regulated by the FDA. As the regulatory landscape continues to evolve, pet food companies must keep pace with approved processes and safe products to be compliant.
As mentioned above, the presence of certain pathogens in food - such as Salmonella and E. Coli - do not present any risk to animals. However, they do adversely affect humans who come in contact with products during processing. As a result, pet food must meet guidelines for both pet and human consumption. The industry is challenged with maintaining production facilities of the highest caliber in order to ensure human safety during processing.
A blog post published by Whittaker Associates notes that Americans spent $58 billion on pet products and services in 2014. As the range of services and products has vastly expanded to include doggy day spas, play facilities, gourmet food, and more, small companies have found it challenging to keep pace. Large companies such as Nestle and Proctor & Gamble are much better equipped to handle the multi-faceted market, including product export, marketing, and multi-channel distribution. By the numbers, over 70% of pet products today are manufactured by five companies.
Aside from product innovation, pet food manufacturers are working on packaging innovations to provide the freshest food available to pet owners. Packaging designers are also working to create packaging which is easy to handle, reusable and appealing to consumers. This can significantly impact a consumer's choice of product.
The pet food industry has endured frequent recalls in recent years, ranging from foreign objects found in food to potential contamination issues. According to Cathy Enright, president and CEO of the Petfood Institute (PFI), "pet food is safer, more transparent and more regulated than before. The challenge now is helping the public realize that recalls are part of food safety program". To help consumers differentiate between real safety issues and perceived threats, the industry must better increase transparency into the pet food manufacturing process and do more to avoid recalls.
The demographics of pet owners are changing, and they are increasingly humanizing their pets, using the same standards in caring for them as they would for human family members. These consumers are increasingly interested in reading labels, understanding the products and sources of raw materials that make up pet food, and are demanding natural ingredients from local, fresh sources. Private label brands are creating an additional source of competition in this market. This continues to present a challenge for the industry to reduce fillers, increase vegetable content, and provide healthier options.
A recent Mintel survey revealed that pet owners "would rather cut back on their own food than see their beloved pets go without." As these consumers become more discerning about the food and products that are consumed by their pets, the demand for visually appealing products is rising. Higher end products are in greater demand, and keeping these customers satisfied is an ongoing challenge.
Wrapping up, the biggest challenges facing the pet food and supplied industry are competition from e-commerce retailers, industry consolidation, and demand for varied, healthier food options. The regulatory environment and reducing the negative publicity surrounding frequent product recalls present additional challenges.
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