The US pet food industry sales increase from 2022 to 2023 can be ascribed to rising prices since the retail volume of pet food remained steady. Cascadia Capital analysed this development in its report “Pet Industry Overview: Spring 2023”. In years of the COVID-19 pandemic the pet food industry in the US has started to grow, but this has changed by now. According to Cascadia “all signs point to decelerating fundamentals as year-over-year growth declined off the COVID-19 apex.”
“However, industry growth in 2022 is almost universally attributable to price with little-to-no benefit from volume, a fact pattern that has continued in 2023,” Cascadia analysts stated.
APPA statistics also detected decreasing numbers of households owing a pet. In 2021, 90.5 million households owned at least one pet while this number fell to 89.6 per cent in 2022.
“We believe this validates our ownership thesis – that while acquisition was elevated through COVID-19, the lapping of subsidies and renter protection caused ownership retrenchment from older generations and more economically sensitive demographics,” APPA wrote. “Sources are projecting meaningfully slower growth for the industry in 2023, albeit robust relative to other consumer segments.”
According to the report, this year, prices for pet food increased faster than broader consumer price index due to inflation. This spring however, the costs for pet food manufacturers have settled down since price indexes evened out for meat processors, renderers, resin and transport sectors. As the prices stabilize, it will get better for pet food producers.
“It will be critical for manufacturers and marketers to pass along a portion of any cost savings realized in order to prevent the industry from continuing the shift to focusing on the super-premium and high-income consumer, leaving behind more value-oriented demographics,” Cascadia explained.
In 1999, Michael Butler and Jim McIlwain have founded Cascadia Capital. The Seattle-based investment and advisory business offer financial services like mergers, strategic counsel, acquisitions, and capital raising to middle-market companies.