An increasingly bitter fight is building along the pet food aisle, as some of the best-known consumer goods companies scramble for increased share in the $30-billion worldwide market for pet food.
The ongoing consolidation is reshaping how and where pet supplies are sold and leading to a widening array of pet foods, supplements, treats and accessories--not to mention a rising level of rivalry.
Procter & Gamble Co. entered the fray in 1999 with the $2.05-billion acquisition of premium pet food manufacturer Iams Inc. The consumer goods giant immediately pushed Iams beyond specialty pet stores where it long had been sold and into grocery stores and mass merchants, which sell 70% of the nation's pet food.
Among the responses from competitors Kal Kan Foods Inc. and Nutro Inc. were lawsuits alleging that P&G engaged in a misleading marketing campaign that attempted to make the pricier Iams brand seem less expensive by reducing the recommended daily amounts of certain Iams chows. Los Angeles resident Karen Pollack on July 26 filed suit in Superior Court in Los Angeles seeking unspecified damages after her dog, Ally, allegedly lost more than 4 pounds while following Iams' feeding guidelines.
Kal Kan's suit includes what the company describes as independent feeding trials alleging that dogs fed according to Iams' instructions won't receive sufficient nutrition. Sources in the industry say the FDA has questioned Iams about the revised feeding instructions, though an FDA spokeswoman said only that the agency "is aware of the lawsuits."
Iams executives deny that the feeding instructions are inappropriate and say the allegations in the lawsuits are without merit.
The influx of consumer goods giants and the legal wrangling are part of a changing competitive environment. "Five or six major manufacturers now have 70% to 80% of the market," said Philip Francis, chairman, president and chief executive of the 660-store PetSmart chain. "That's clearly more concentration than there used to be."
Mars Inc., which owns the Kal Kan, Pedigree and Whiskas brands, last summer agreed to pay $730 million for premium French pet food company Royal Canin.
Nestle, which owns Friskies and Alpo, is buying Ralston Purina for $10.3 billion, a deal that would make pet chow the company's second-largest business behind chocolates.
And Colgate-Palmolive Co. acquired the Hill's Pet Nutrition premium brand in the 1980s.
Pet food makers are counting on revenue and profit growth not only from leveraging their distribution and marketing channels but also because dog and cat populations are on the rise. It doesn't hurt that many pets are obese.
More than 25% of dogs examined during veterinary office visits are obese. Many pets don't get enough exercise, and veterinarians say owners often don't measure accurately--if at all--when filling chow bowls. Americans also spend freely for pet food supplements and store-bought treats and feed their pets table scraps.
Amount of Ingredients Is Unregulated
Whether it's toothpaste, laundry detergent or a 50-pound bag of dog chow, manufacturers struggle to differentiate their products. The resulting advertising and marketing blitz has created a baffling array of choices for owners of the nation's 58 million dogs and 71million cats.
The Food and Drug Administration, which regulates dog and cat foods--but not the growing number of supplements and treats--acknowledges that "choosing a pet food from among the cans, bags and boxes stacked on store shelves can be a daunting experience," according to an article in the most recent issue of the agency's FDA Consumer magazine.
Manufacturers are required to list ingredients contained in their feeds. But manufacturers don't have to say what percentage of the product is, say, liver or chicken. Pet food manufacturers also are allowed to incorporate animal byproducts into their chows. The broad category includes the heads, feet and other parts of cattle, swine and fish, according to the FDA.
Some veterinary researchers suggest that manufacturers haven't conducted sufficient research into the nutritional value of animal byproducts. The Pet Food Institute counters that animal parts are "an important source of protein, carbohydrates, vitamins, minerals and essential amino acids."
The industry trade group also rejects animal activists' claims that bodies of dead pets are processed into pet chow. Manufacturers "have gone to extreme measures to make sure that no ingredients from dogs or cats go into their products," according to the institute.
The FDA, which works with the Assn. of American Feed Control Officers to develop nutritional standards, recommends that consumers check nutritional guidelines contained in "life stage information" printed on labels. Those guidelines tell whether the pet food is designed to meet the nutritional needs of puppies, lactating dogs or other grown animals.