Raising the kitty - healthy cat food products provide healthy margins, but their price points can make them a hard sell
Manufacturers of cat food haven't given up on bringing more premium, health oriented products to supermarket shelves. Although past versions of these products have met with varying degrees of success, healthier is still in, according to industry executives contacted by SN.
While some retailers may not truly identify with Fluffy's dietary needs, they certainly can relate to the concept of healthier bottom lines. As a result, products backed with strong promotional programs are likely to stay on the shelves.
Retailers also recognize that pet superstore stores carry premium cat food. Therefore, "healthy" products can't hurt the grocery trade. Nonetheless, some said their sales show many consumers still want a bargain, judging by the increased sales of the less expensive dry products.
According to Nielsen North America, Schaumburg, Ill., wet cat food saw a slight dip in sales (1%) and unit volume (3%) for the 52 week period ended March 11. Meanwhile, dry cat food remained relatively stable in both categories. Dollar sales in dry crept up to roughly $758 million, a 1.3% increase.
"Rice products are getting big right now, with some manufacturers starting to introduce more in canned," said John Ruhland, a grocery buyer with Holiday Cos., Minneapolis. "That's something new. [Suppliers] want to spur on the premium cat food and healthiness business. So they're doing a lot more regarding urinary tract disorders in cats."
Nick Wedberg, vice president of sales at Plumb's, Muskegon, Mich., agreed. "With the growth of the super pet stores, manufacturers are really trying to pump up the healthy diet of the cat," he said.
Vin Costanzo, senior grocery buyer at Cheshire, Conn based wholesaler Bozzuto's, said his company has just taken on the Thirsty Cat product, a fish flavored, 1 liter bottle of water, with nutrients and vitamins for felines.
"It's a nutrition focus in pet foods," said Costanzo, noting that products, addressing cat health issues have lagged behind those for dogs. "This is what I think is going to be the continuing trend in pet foods. The urinary tract problems for cats, have been the only thrust in the health area of cat foods in the recent past.
"This seems to be the first look at minerals and vitamins for cats. Cats are pretty finicky, so you have to make it palatable." With an average retail of $1.89, Costanzo is hoping pet owners won't be finicky about price.
This month Costanzo will begin carrying Ralston Purina's new nutritious Nutrient Management. "It has a manageable fat content, as opposed to too much fat or no fat," he explained.
"This is an answer to Iams and Science Diet, with basically the same ingredients," said Terry McKean, category manager at Thrifty Food Stores, Burlington, Wash.
However, before retailers get too giddy with the prospects of competing with pet stores, Bozzuto's Costanzo noted that Purina also will distribute its new product to those very competitors.
"Where we can't get our hands on Science Diet in our business, [Purina is] going to make its new product available to its regular pet food stores," he said. "So we're going to be very cognizant of the pricing on it. But we're happy to get the item and perhaps bring some of that business into the supermarket.
"In general, people are starting to trade up a little bit. There's still going to be the five and six for a $1 cat food, but people aren't afraid to trade up for what they think is right for their pet," Costanzo said.
Of course, there still are customers who consider what's right for their wallet and buy dry.
When asked if his customers were willing to pay higher prices for premium cat food, Plumb's Wedberg said, "That's kind of a give and take situation. Some of our stores in better areas are selling them. But people in our area are still, in a lot of cases, pretty price-conscious. We do sell the whole spectrum. But overall, the lower-priced items sell much better."
Thrifty's McKean said dry outsells canned cat food by far at his stores. "The only people who really use the can have a super fussy cat at home."
Robert Nowell, grocery buyer at Community Cash Stores, Spartanburg S.C., said both dry and canned are popular, and it's hard to say which sells better.
"You seem to have people who are a little more price conscious buying dry. And then you've got people that feel like they're giving their cats treats when they buy the can."
"It's probably close to an even split," said Spencer Burt, a grocery buyer at Nash Finch Co.'s Denver division. "The problem is you have to sell a lot more cans to make the 3 or 5 pound [dry package]. So the repeat purchase is more on the cans."
Holiday's Ruhland said dry outpaces canned to some degree because of its lower price, but he noted that enhanced package design has boosted sales as well.
When it comes to profit margins, Ruhland said the canned 5.5 ounce products, which are the most popular in the subsegment, are generally loss leader items. "Things get very competitive in that area, with the cans retailing for around four for $1.
"But there is profit in the dry," he said. "Margins on canned are good much better than canned dog food. But dry, in our market, is the best."
While some retailers said they average anywhere from 15% to 20% on cat food, there are some who have to squeeze out far less.
"You make a little bit on it, but not much," said Community Cash's Nowell. "It's just one of those categories that's very competitive because consumers know the pricing on it. They pretty well know what your competition has it priced at. Whereas in categories like health and beauty care, you can get away with being a little more expensive than the competition."
Aside from the health oriented products, retailers said there currently isn't much going on in the way of new products.
In terms of the whole category, it's mostly new flavors on old lines," said Bozzuto's Costanzo. "There's not a whole lot of newness out there. Sizes are holding where they were, after a lot of downsizing in the can industry the last two years, which seems to have stopped."
"There are always new flavors and line extensions, but there's really nothing new or innovative in the category," said Nash Finch's Burt.
Dick Copeland, senior grocery buyer at Rainbow Foods, Hopkins, Minn., concurred that "there's very little change in the section. They're always trying to dice, cube or flake [cat food] differently."
"The only thing I'm familiar with is the flaked or shredded items, as far as canned food [goes]," said Community Cash's Nowell. "What they've had [in the past] is ground or chunk cat food. And a lot of that is fish like tuna and shrimp. I guess the trend now is toward flake. It's just a new idea to perk up sales."
Naturally, retailers aren't concerned with how the food is presented to Kitty, but rather if it sells.
"In cat food, we carry all the major national brands," said Susan Burge, director of public relations at New Orleans based Schwegmann Giant Super Markets. "If we are presented with a new product or flavor that's backed up with good advertising allowances and manufacturer support with couponing and that sort of thing, we will put it on the shelf. Then, of course, its life on the shelf is going to depend on sales."
Posted by Hung Truong Pham Duy on Jan 10 2017