LONDON — Year after year, the US pet food industry proves to be an attractive market for investors, according to OC&C Strategy Consultants’ “Opportunities in US Pet” report. Humanization and premiumization have turned pet nutrition products into a necessity for pet parents — fueling growth in several niche categories and demonstrating significant opportunity for super-premium.

“Pet, therefore, represents a substantial and growing investment opportunity,” the company shared. “The sector has seen strong and sustained growth, even through the COVID-19 pandemic… While the premium sector is already well-developed, there is significant headroom for growth through innovation in super-premium offerings.”

According to the report, the US pet food and treat market is currently worth an estimated $50 billion and will reach about $65 billion in 2028. Dog nutrition products represent two-thirds of total spend, but the cat category is growing much faster in recent years. OC&C attributed the industry’s continued growth to premiumization, which makes up about 30% of dog products and 10% to 15% of cat products. 

Premiumization

The fresh pet food segment continues to experience rapid growth and is expected to increase 20% to be worth $3 billion to $5 billion in 2027. This category accounts for 10% to 15% of the premium pet food arena, but experts estimate this category to reach 30% to 40% penetration. Further growth for the fresh category will be primarily fueled by a retail-first strategy, as well as direct-to-consumer (DTC) and subscription models, according to OC&C. 

As premium products become more common place, newer, super-premium products are beginning to hit the pet market aiming to bring even higher quality products. Freeze-dried raw, frozen raw, raw coated and other newer formats offer pet parents a more convenient and cheaper option compared to fresh formats. 

Pet food toppers continue to proliferate the market as pet parents seek to provide their four-legged companions with both wet and dry foods, as well as functional health benefits, without completely changing their pet’s diet. The topper segment also allows brands to introduce more consumers to premium or super-premium categories, according to OC&C, as toppers offer a more accessible price-point. 

Hybridization

With consumers demanding both functional products and more natural ingredients, lines between these attributes are blurring with many taking a hybrid approach. These “functional natural” products, as they are called by OC&C, address a wide range of product attributes within a single package — bringing health benefits to pets while maintaining the human desire for natural food. 

Product claims under this category often include “skin and coat health,” “immune health,” “gut health,” etc., while also touting natural ingredient attributes. 

According to OC&C, there are a limited number of mainstream brands that are currently playing in this hybrid category. Dry products account for the most common format for these products, representing 90% of volume and about 75% value. However, many “functional natural” brands play in both dry and wet formats. 

Additionally, OC&C found cat foods in this segment have outperformed the general cat food market, growing at 15% from 2019 to 2023 compared to the general cat food market growth of 10% from 2019 to 2023. 

Feline frenzy

Speaking of cat food, the US premium cat food market was estimated to be worth $5 billion in 2023 and is expected to grow by 7% CAGR to reach $6 billion by 2028. This segment currently represents about 25% to 30% of the total cat food market, which is expected to reach a full 30% in 2028. 

According to OC&C, natural products account for a majority (60%) of the premium cat food category. Within this, natural products in soft formats (think wet and coated-kibble recipes) represent a majority (70%) of consumers’ dollars. 

Many manufacturers are cashing in on cats, premiumization and soft/natural formats. For example, Whitebridge Pet Brands, which owns premium brand Tiki Cat, experienced 50% sales growth in the United States, Weruva witnessed 10% sales growth, and MPM witnessed 50% sales growth from 2019 to 2022, according to OC&C. 

Plant power

Pet parent concerns around sustainability have given rise to the plant-based pet food market. Though this particular segment remains small, many brands are dipping their toes in as consumers transfer their eating habits onto their pets. 

According to OC&C about 20% of consumers have either partially or completely switched to vegan (plant- or insect-based) pet food due to sustainability concerns. This has led newer players into the market, as well as forced more established players to diversify their product range to include sustainable proteins. 

Single ingredient 

Growing awareness of pet health, desire for natural ingredients and demand for transparency in the industry has also driven the single-ingredient product category, particularly in treats, according to OC&C. Single-ingredient products also align closely with consumers’ desire for high-protein formulas and clean labels. 

Additionally, these single-ingredient treats that are free from fillers, preservatives and artificial additives, provide pet parents with an increased sense of quality, and even food safety. 

Read more insights from OC&C’s Opportunities in US Pet report. 

Keep up with the latest pet food trends on our Trends page.