The importance of authenticity against masquerading brands

Right now, it’s David vs. Goliath in the pet food business. Already a hot category and getting hotter even in tenuous economic times, pet food is rife with major combatants like Mars and Proctor & Gamble — deep-pocketed behemoths with bigger marketing budgets than boutique rivals may have in gross sales. That said the game is on between the smaller, natural, holistic brands that have for years conducted business in the specialty pet store environment. While it may look from the top down like a tough battle given the differences in resources, there are compelling reasons to believe the pet food “David’s” have an opportunity to make significant share and sales in-roads in this dynamic category.

The global pet food business continues to spiral upward, despite looming economic pressures and price increases at the shelf. According to the Bureau of Labor Consumer Price Index, pet food prices have risen on average from eight to nine percent in the last three months. This is due in no small measure to increased ingredient costs – especially the higher quality proteins used by super-premium holistic and natural brands.

Meanwhile, consumers continue their shift to better quality pet diets – a behavior change that gained momentum following last year’s Menu Foods recall. Industry sources peg the value of the high-end pet food market at about $1.4 billion. Natural brands like Nature’s Variety (disclosure: a client of our firm since February) saw a marked increase in volume and velocity last year as consumers decided that formulations providing greater percentages of higher quality proteins and other natural, whole food ingredients are well-worth a few extra dollars.

For the first time in pet food, a large-scale exodus away from mass brands launched — the recall event had prompted widespread brand re-consideration as consumers started to question pet food ingredient statements. Pet blogs stepped in to feature dramatic revelations of what’s behind ingredient label names, while reciting the facts about lower quality protein sources and other items that can masquerade as protein in pet diets.

Consumers responded to the peek behind the pet food formula curtain by trading up. The $17 billion US pet food market experienced a ground swell of interest in higher quality pet diets. This also opened the pet food conversation to more interest in what dogs and cats really need nutritionally – diets featuring quality proteins, fruits and vegetables, and in some cases grain-free recipes such as Nature’s Variety “Instinct” brand. Nature’s Variety is also one of the largest competitors in the new and emerging raw diet category with their line of frozen and freeze dried raw diets.

Petco, a major force in the pet food retail business, took note of these changes and began featuring some of the super-premium, natural brands in their own section. The larger brands have taken stock of this, too. Re-tooled mass brand labels and formulas are beginning to show up as the definition of a higher quality pet diet evolves. This move is undoubtedly in response to the consumer’s increasing knowledge of what’s really going inside the kibble and cans. Efforts by these mainstream brands to mimic both the nomenclature, recipes and positioning of the natural, holistic sector may work to blur the segmentation lines between mass and specialty brands.

So what do the pet food David’s bring to the battle with these CPG Goliath’s? Authenticity reigns in the market today. Consumers are simply better able to read marketing make-up applied to a brand, separating the wheat from the chaff so to speak on what is essentially a line extension vs. something that is simply more genuine. Brand DNA matters. The natural brands for the most part were created around a deep desire of pet friendly entrepreneurs to improve on the state of the art in nutrition. Their devotion to top quality ingredients is not going unnoticed as pet parents now realize there’s a demonstrable difference between meat by-products and real chicken. This doesn’t make it easy for the smaller competitors. It’s going to take a lot of hard work and persistence. But the conditions are right to reap rewards based on a fundamental fact: consumers want the best from those who’ve historically provided it – perhaps more so than from those who recently woke up to the fact that this shift is happening under their feet.