This episode was recorded at the 2025 Petfood Forum in Kansas City, Missouri. Diana predicts the global pet industry to reach about $500 billion by the end of the decade, compared to $380 billion currently. The US will remain the largest market, comprising about 40%, and is predicted to reach $200 billion compared to $150 billion currently. Healthcare is expected to be the biggest driver over the next five years, and food will remain the largest expense. (5:37)
This episode was recorded at the 2025 Petfood Forum in Kansas City, Missouri.
Diana predicts the global pet industry to reach about $500 billion by the end of the decade, compared to $380 billion currently. The US will remain the largest market, comprising about 40%, and is predicted to reach $200 billion compared to $150 billion currently. Healthcare is expected to be the biggest driver over the next five years, and food will remain the largest expense. (5:37)
The panel discusses some of the drivers behind pet owner decisions, including the humanization of pets. Nicole notes in some of her company’s market research, most pet owners say either their pet is a member of their family or their pet is their best friend. When money gets tight, people are more likely to reduce expenditures on their own healthcare rather than trade down in their pet expenditures. The panel also talks about generational differences in pet owner decisions. Nicole notes pet longevity is a major driver in many decisions. (7:51)
Diana and Nicole discuss how pet trends tend to follow human trends. They cover ingredient quality, snacks/treats, supplements in a treat form and preventative veterinary care. (17:55)
Jeremy notes from a commercial perspective, more pet food/treat companies are requisitioning 100% human-grade ingredients. The panel talks more about customization trends in the pet industry, the movement of luxury brands into the pet sector, and the presence of large food companies at every price point for dog and cat food. (25:56)
The panel discusses how the large increase in pet ownership during the pandemic has impacted and continues to impact the industry (31:50)
Diana mentions e-commerce continues to be a significant driver, with 30% of pet owners in 2025 surveyed purchasing items through e-commerce, compared to 23% in 2023. Amazon and Chewy make up 70% of the pet e-commerce sector. (34:53)
Panelists share their take-home thoughts. (39:25)
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Scott (00:08):
Good evening everyone, and welcome to the Real Science Exchange, the podcast where leading scientists and industry professionals made over a few drinks to discuss the latest ideas and trends in animal nutrition. I got an interesting one here for, uh, for you to wrap up the evening, we're gonna be talking about the 2025 Pet Economic Report, and we're, uh, recording this at the 2025, uh, pet Food, um, pet food Forum. So our guest here, the, the gave a presentation earlier today, Diana Rosaro, Pena. Diana, welcome. Appreciate you joining us here at the pub. So you gave a pre, uh, presentation earlier today. What I'd like to do before we get started and dive into the presentation, if you could just kind of give us a little bit of background, uh, about yourself and because this is a pub theme, what is in your glass tonight?
Diana Rosero-Pena (00:58):
Well, um, I have white wine Chardonnay. Uh, I'm usually a Sauvignon Blanc kind of a person or a tequila. Um, but I am the Consumer Staples Analyst at Bloomberg Intelligence. Um, you know, for those of us that are not familiar with the department, um, we are the research arm at Bloomberg. We're not news. Um, and we are not reporters. Uh, so yeah.
Scott (01:22):
Okay,
Diana Rosero-Pena (01:22):
Good. I've been there for a while. Yeah. Don't ask me how many years though,
Scott (01:25):
Nicole Hill (01:46):
Thank you, Scott. I'm excited to be here. Uh, my name's Nicole Hill. I am the VP of Strategy and Innovation at Marketplace. Um, we do strategy research, branding and marketing for brands in the pet space, B2B ingredients, all the way to those consumer goods that the consumers buy off shelf and take home and feed to their pet. And, uh, in my beverage, my beverage here is a Boulevard Wheat. So enjoying some good Kansas City brews.
Scott (02:13):
Yeah, there you go. Awesome. And next to you is gonna be the co-host for this evening, Jeremy Painter. Jeremy, welcome. First time to the pub. It is. So, yeah, I
Jeremy Painter (02:22):
Mean, I've been to many pubs in my life, but the first time,
Scott (02:24):
First one in this one. Good. Well, it's, it's glad to have you in. This will not be the last time. We'll find a way to get you here again, Jeremy, uh, a a a new employee at Chem. Uh, glad to have you on board. Tell us about yourself and, and what's in your can tonight.
Jeremy Painter (02:39):
Yeah, thanks Scott, and, uh, looking forward to this discussion. So I'm actually an economist by, uh, by education, so it's always kind of fun to meet with analysts and economists as well. So, but, uh, grew up on a farm in Missouri, actually about two hours away from here. So beef cattle farm. And, uh, I work for Alchem as the, uh, vice President of Global Commercial Operations, which is, uh, a fancy way of saying I, I look after the sales team really. So, um, I'm drinking a good Missouri beer as well here. I I, I grew up on this stuff here, Boulevard Wheat, and, uh, looking forward to the conversation and the discussion.
Scott (03:11):
So, yeah, absolutely. It's gonna be a fun one, Diane, and also in your, oh, with
Jeremy Painter (03:28):
Kind of looks like it's in a shot glass, Scott. So,
Scott (03:30):
I don't know. I think it's, it's a plastic glass, so how fancy can, it's right. No, it, it, it, it's tasty. It's not a bourbon. Uh, we will have to talk to our friends at the pet food forum about getting bourbon for next year, but we'll, we'll, we'll cross that bridge when we come to it. Diana, really looking forward to the conversation tonight. So, as a starting point, give us kind of an overview of the presentation you gave, kind of an outline, uh, kind of give us some themes that we might wanna cover during the discussion.
Speaker 5 (04:09):
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Speaker 6 (05:20):
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Diana Rosero-Pena (05:37):
Yeah. Um, basically we, we think that, you know, the, the pet industry globally is, is gonna probably reach about $500 billion by the end of the, of the decade compared to $380 billion that it is now. Uh, the US is gonna remain the biggest region at 40% of the market, um, and it's probably gonna reach $200 billion, uh, compared to 150 that it, that is currently
Scott (06:04):
What, what's the calculated kicker on that?
Diana Rosero-Pena (06:07):
It's, uh, 36, 35. Okay.
Scott (06:09):
You know, you know. Excellent.
Diana Rosero-Pena (06:11):
The mid thirties.
Scott (06:11):
Yeah. And what were some of the key points that you guys talked about that that, that you, you presented to the audience there today?
Diana Rosero-Pena (06:17):
Yes. So healthcare, we think that it is gonna be, um, the, one of the biggest drivers, uh, for the, for the pet economy over the next five years. Shorter term. We also do a survey,
Scott (06:30):
Just real quick, when you talk about healthcare, we're talking about physically taking an animal to the veterinary and, and, and what takes place there. Yes.
Diana Rosero-Pena (06:39):
We also do, uh, we are talking about diagnostics. We also do pharma, um, you know, like treatment for the animal. All of those things we think, you know, that is one of the biggest, uh, growth drivers, um, on, on like the category part. Uh, food will remain, um, you know, the biggest expense for, for the, for the animal. Um, and, and we think that even though there's gonna be probably a slowdown, because we're seeing people be more what we call strategic with their spending. So what we are seeing them do is probably start to trade down premium foods to a little bit of more of a value, uh, things or mixing both of them to be able to, to kind of, um, you know, compensate for like the inflation. Uh,
Scott (07:29):
Is that a long term or just a short term
Diana Rosero-Pena (07:31):
Trend? No, we think this is gonna be more of the short term. We think premium products probably will grow 40% and will be close to 60% of food in the United States. But, uh, right now value products are probably gonna outpace premium products for 2025. Yeah.
So what's, what's driving this growth, Diana?
Diana Rosero-Pena (07:51):
Well, I think it, there's a few things. Um, the humanization of pets is definitely a very, very strong one. Um, we think that the US is gonna lead the pack and continue to lead the pack. We're still, we're seeing humanization of pets in other part parts of the globe. Um, China, for example, is, is big on that, even though they haven't had a, a good track record when it comes to, you know, the treatment of dogs and, and, and, and all of that. But it seems that the rise in urbanization, uh, the delay of, uh, family formation, it's, it's allowing for pets to become kind of like the fur babies. Um, and that is, is gonna continue. So,
Scott (08:33):
So what's driving that part of it? Uh, the humanization? Is it we're having fewer kids, we're delaying having kids. What, what's driving all that? All of that wealth. All of it. Yeah. Yes,
Diana Rosero-Pena (08:44):
All of that wealth. Um, you know, they're cute too. They're adorable
Nicole Hill (09:27):
So yeah, on the consumer research side of things, I think we see some of the attitudes and values that are driving those trends. And one of the things that I latched onto that you mentioned is the mixing the various meal, uh, types in, in the feeding of pets. We're seeing that already. Um, many dog and cat parents are, they might be feeding kibble as one portion of their diet and perhaps the largest portion, but they're adding a wet food to it. Um, many are adding treats to their pet's meals at mealtime and, and proper toppers, but also just the treats that they buy to feed their, feed their pet throughout the day. They're adding some of that to kind of
Nicole Hill (10:26):
Most said either, um, my pet is a member of my family, so they really think of their pet as a part of their nuclear family, um, or my pet is my best friend. And so regardless of whether you have human children in the household, um, that the way that we think about our pets is so different than 20 years ago. Uh, when, and, you know, even 10 years ago when I would say the humanization trend really took hold, but we're now seeing it reach into, um, other areas, even in the ingredient space. When we look at the ingredients people want in their own supplements, in their own nutrition, they are associating the positive correlation they have with that in their own nutrition, in their own diets as something that their pet would benefit from as well. And I think that's really, you know, a key part of how that's reflected in their purchase decisions. And when you talk about, you know, when budgets get tight, pet is one of the last things to get reduced or cut. People are more likely to reduce their own expenditures on healthcare, on their own healthcare than to trade down in pet. Um, which is incredible. And I think, you know, the, the market data ends up proving that out over time as we see, you know, where pet parents are essentially, uh, prioritizing things in their lives.
Diana Rosero-Pena (11:45):
And, and they're seen as, because obviously these animals, these animals do not talk, um, you know, even though some might argue that they do, um,
Scott (11:57):
They certainly understand. They, they, at least mine do.
Diana Rosero-Pena (12:00):
Yes. They're, you know, I have seen videos of, of, you know, like a person talking to a dog or a cat, and they def there's definitely an understanding, but there is a hesitancy to change the pet's diets.
Nicole Hill (12:15):
But you were making a good point about how, um, those factors are changing what they put into the pet's diet. But people aren't wanting to holistically change everything about their pet's diet because disrupting their digestive system and things like that, there are concerns and fears around making a holistic change so that mixing and matching of different things allow them to make kind of personalized changes. I kind of think of it like the personalized nutrition trend that a couple of years ago we saw in, you know, human supplements heavily, um, with brands trying to say, we made this bespoke product based on how you filled out this survey. Um, and a lot of those brands didn't stick around because it just wasn't a very scalable model. But I think they're, the learning from that is people took that desire to personalize nutrition for themselves and their pet and their own hands, and their personalizing the nutrition through those individual product selections that they take to form a meal.
Nicole Hill (13:09):
So to your point, they can stick with that base of their pet's meal that is consistent, and they feel like, okay, this is my pet tolerates this. Well, it seems like, you know, it's meeting their dietary needs, but you know, this time of year, I have a dog that maybe deals with some skin allergies, so maybe I'm going to add a supplement. Even people are putting their supplements not just in hand to their pet, but added to their pet's food or, um, maybe choose a diet certain times, uh, of year, if their pets may be having some more digestive issues that have some digestive health. Um, a sprinkled on food topper to add those personalized elements to their pet's diet without, to your point, making a holistic change and switching to a whole new brand, a whole new food, a whole new product.
Diana Rosero-Pena (13:56):
I have seen studies that mention that pet parents prefer to, um, cut down their own food spending. They prefer to, I don't wanna say it, but they prefer to eat ram then kind of like change the, their pet's diet or in a significant way, as, as she was meant. Well,
Scott (14:17):
It kind of goes back to what we're talking about, pet parents, right? That's what you do for your children. You're gonna, you're gonna give up yourself for your kids. So it's, it's amazing that we're projecting that now in our pets. We've been talking in generalities that people are changing their behaviors. Certainly not everybody's doing that. So can we talk a little bit about percentages? What percentages of the population is changing, uh, these, these types of behaviors? And then can we stratify that among demographics, uh, ages of people, country versus a rural, I, I don't know. Yeah.
Diana Rosero-Pena (14:54):
Um, so we've noticed that, uh, millennials and Gen Cs tend to be a little bit more on trend with what we're seeing, and they tend to have, uh, more pets and they tend to spend more and seek, uh, treatments, seek, uh, these, these, um, premium products. Um, and, and compared to boomers and, and Gen X, so, uh, we're seeing, which is why we're very, uh, we consider that the, the trends that are driving this industry are strong as ever because millennials and Gen Zs are in the most productive, uh, parts of their lives. So they, they're the, uh,
Nicole Hill (15:33):
They
Scott (15:33):
Have the money, they,
Diana Rosero-Pena (15:34):
They got the money to spend. And, and this is definitely gonna be something that the, the industry is gonna capture
Nicole Hill (15:40):
On the consumer insights front. One thing that we've seen, um, and to compliment that perspective is that really across age ranges and across, um, household incomes, there are purchase decisions being made that are not exclusive to a generation or an income bracket. So you can have folks in what many would consider the bottom income brackets that are still spending more on their pet than themselves. To your point, I eat, I eat ramen for myself, but maybe I am purchasing, you know, a higher end premium pet food. And on top of that, a supplement. And, uh, you know, going above and beyond to one, ensure my pet is healthy and happy today. But so much of it, I believe is driven by like, the longevity aspect, because that's a very, um, proactive approach. You have to take in that. And we all say, what does everyone say about their dog?
Nicole Hill (16:38):
My dog's never live long enough. Um, they, you know, their lifespan doesn't keep pace with ours. And so trying to get as many good years as possible with your pet really necessitates a long-term commitment to their health and nutrition. Um, and like you said, people think of their pets in many ways, like their kids, um, decades and decades and decades ago when I would babysit, uh, I remember going to a household where I was watching, uh, a child and opening the refrigerator to prepare her a meal. And there were two types of milk in the refrigerator. There was the regular, like conventional gallon of milk that you'd buy the, you know, 2% or whatever. And then there was the organic with, uh, omegas and DHA, dah, dah, dah, dah, dah. And, and I was thinking like, if you feel so strongly that this is the right choice for your family, but you're only, you're, you're pouring separate bowls of cereal, you know, you're giving this to your child and, and taking this for yourself, it's, it's to me, speaks to kind of, um, an almost intangible, uh, investment in the promise of something in the future state of someone or a pet that you care about.
Nicole Hill (17:48):
And I think that, um, is one of those less tangible qualities that really motivate some of those purchase decisions.
Diana Rosero-Pena (17:55):
Another thing that, uh, we notice is that human, uh, pet food tends to follow the trends of human food. So 10, 15 years ago, organic has been, uh, making inroads in the, in the business and, um, not necessarily in terms of one by one on like organic, uh, pet food, but more, better ingredients, a better understanding of the ingredients that go into the food, be, uh, more investigation, more research is done on like the type of brands and how sustainable and how the ingredients will affect the dog. One of the things that we have seen, uh, though, is that snacks do not follow that trend. Um, we see that for, um, go, going back to millennials and gen gen Zs. Um, snacking is very important, uh, for very popular for, for those generations.
Nicole Hill (18:53):
Um, for themselves.
Diana Rosero-Pena (18:54):
For themselves, yeah. Human grade, um, because there's, there's that, uh, perception that there's some health, uh, attributions to those snacks. So there can be some displacement of meals. So we have seen that millennials and Gen Zs, the younger generations, I mean, not millennials that much, but, um, they seem to skip some meals to be, uh, in, in lieu of snacks. We don't see necessarily that happening to, to pets. Um, obviously they will eat everything that you put in front of them. So snacking is very popular for pets, but not for pet parents. And the reason for that is, um, you know, first of all, um, you know, compared to 2020 when everybody was home, so that's snacking occasion was significant. Yeah, I snacked
Nicole Hill (19:42):
A lot then
Diana Rosero-Pena (19:43):
Yeah, exactly.
Nicole Hill (20:17):
That's interesting. Can you, I, I'm curious about the perception of, um, treats for pets. Because I we're seeing a prevalence of what some might call a functional treat or a treat that includes functional benefits, which if you talk to any supplement folks, they will say, not a supplement that is a treat, it does not, you know, have a daily dosage and an appropriate, you know, amount of those ingredients. But pet parents are purchasing treats that say joint support or joint health on it, or skin and coat, you know, um, digestive support, but it's a treat. And, uh, it's managed differently from a regulatory and claims and labeling standpoint and all of those things. Um, but from a pet parent standpoint, even if you tell them a treat is not a supplement, which of the following supplements, um, are you supplement formats or shapes or types, are you most likely to prefer for your pet second to soft chew?
Nicole Hill (21:18):
It's a treat made with ingredients that promote health benefits for my pet. And so I think there is that intention of that. Now there's the, the treats that are positioned that way, which again, uh, there's some disagreement between supplement centered folks and, uh, treat folks that incorporate nutraceuticals, um, in terms of, of what they each offer. 'cause it's a very different product, but from a pet parent standpoint, they're saying, okay, I'm already going to give my dog treats, why not upgrade what I'm giving them so that I'm giving them not just, you know, um, uh, a little soft and chewy treat to make them wag their tail or, you know, uh, cat pitter-patter toward me on the floor at the end of the day when I get home. But also to get that much closer to the benefits that I want them to have for that longer, healthier, happier life so that they can make it up the stairs so that they can go on those long walks with me so that, um, they can, you know, jump up on the bed or the couch.
Nicole Hill (22:21):
And, and we're seeing so much of those lifestyle, um, experiences that people have with their pets, really inform the decisions that they're making about their nutrition and their, their pet care. And I think that, um, distinguishing aspect you mentioned at the beginning about, okay, people are, you're anticipating higher spending on all things related to healthcare with veterinary visits and things like that. One of the things we've noticed in the past is when there are times of economic uncertainty and belt tightening in the pet space, you'll notice a slightly higher inclination toward proactive management. So, dental care, for instance, so many, um, pet parents know that dental health is an essential part of overall health, and also that it's really, really expensive and can be kind of, you know, difficult on your pet. Um, if they have to go under anesthesia at a vet's office to have a comprehensive dental cleaning or deal with a tooth extraction or something like that.
Nicole Hill (23:26):
So, you know, adding a dental supplement, um, or a water additive to their water, you know, for x many dollars a month is still more, a more affordable approach than putting your pet in a position where you might have to have a unplanned vet visit or, uh, to, to address a dental health issue. So, you know, while it's not a guarantee that it's preventative, we do see some pet parents take those steps to be more preventative because they hear that high dollar, you know, intensive on their pet's body as well with going under anesthesia, um, approach to dental health in the vet office. If they can avoid that and just keep their vet visits to those, you know, annual well visits, they, they try to go that route where they can. And again, it's not always based on income bracket. So you'll see that, um, really across income and age ranges, people are driven more based on values, um, and corollary behaviors than even the, um, the income that they're bringing in or, you know, the, the generation they're part of.
Nicole Hill (24:36):
And while I think it's really important to still look at those generational factors, um, especially when it comes to marketing, like, okay, if you grew up in Gen Z, you're more likely to go to TikTok. Where if you grew up as a millennial or Gen Xer, you're probably more inclined to use YouTube. You know, there are factors there that are important, um, and, and are really based on your kind of, uh, teen and young adult years, um, and what was around at that time. And so social media, especially with how rapidly that's evolved, you'll see distinctions. But when it comes to those pet purchases, you'll find it's, it's, it is different. You mentioned Scott earlier, urban and suburban, uh, lifestyles. I just gave a presentation on novel proteins, and we found, uh, in some of the consumer research that people who live in urban areas were more likely to consider a pet food made with cultivated meat than people who lived in suburban areas, which I thought was kind of interesting. Appreciate that is interesting. So all of those drivers can really shape different things. And it's, you know, it might be how, uh, sustainably minded are you, it might be how much do you trust science and clinical validation? Um, there are a lot of those factors that go into shaping those product decisions.
Jeremy Painter (25:56):
Well, and I think one of the trends we're seeing from a commercial perspective as well is we're getting more requests. We're working on more projects where the pet food company, the treat company specifically, is requesting human grade nutrients, ingredients, vitamins, et cetera. So we have several projects we're, we're doing right now that, you know, these products are 100% human grade. So in theory, you know, you could go buy these off the shelf at Kroger, Albertsons or whatnot, and you could eat it. It's all, you know, 100% approved for human consumption. So it really seems like, you know, again, just to the, the points and the trends you're, you're making, like, this is gonna accelerate, right? And, and it's, it's back to this humanization of pets, which I think is, is really fascinating. Right. And from a, you know, I think an industry perspective, you know, that presents unique margin opportunities, innovation opportunities, right? For, for us to, you know, think about the pet as a human really in some, in many ways. So
Nicole Hill (26:47):
It is, and one of the things that I think is really, uh, interesting about the humanization of pets trend is it, to date has kind of gone one way. So there have been some products that are dog treats that, uh, you can take a bite of and your pet can take a bite of, and everyone's happy and they taste good, you know, like jerky sticks and things like that. Um, but in so many cases, we want our pets to have human grade nutrition, but we don't want to eat pet grade nutrition, you know? And so I think it's interesting how we want to give our pets things that are more like us, but if you turn that word around, um, it doesn't always have the same meaning. I, I wonder, you know, what do you think is the, the next step of humanization in pets?
Nicole Hill (27:31):
You know, we've gone through that personalization aspect, and it's not really scalable in a singular products or hasn't been to date. Um, so that mixing and matching that's happening, um, that people personalize their own nutrition and their macros and things like that with, uh, tracking their nutrition. Um, and I know we're seeing some technology in, in the pet space where people can report even on, you know, their pet's digestive health by taking pictures and sending them, you know, into the, the company that they're purchasing, you know, some of the fresh pet foods from. So what are, what are your thoughts in, in terms of the next steps in that, that humanization trend? So
Diana Rosero-Pena (28:06):
One of the things that, um, I learned here is that there is, um, Ali, it's, it's a, it's a, it's a company that actually, uh, you can send them your, your, your pet's, um, waste, and they analyze the, yes, they analyze the, the, the waste, and they recommend a diet, especially for your dog. Um, so that is like part of the personalization. I think, you know, we will probably see more of the trends that are driving humans to get into, into, to sleep, sleep lover into, into, into pet food as well. Uh, one of the things that we have noticed, and you know, maybe this is not completely related to pet food, is discretionary, uh, hard goods. It's, it seems that it's, it's, it's a good profitable part of the business that, um, you know, you have Gucci, you have like really
Nicole Hill (29:29):
Yeah, I mean, but that says something of, you know, when we make choices about the brands we purchase from and the apparel we wear and how obvious the labels we wear are, um, if someone, you know, wants to, if we see that pet as like an extension of us as a member of our family, then what we put them in, you know, says something about us. It's just like, you know, my, uh, a friend of mine is a high pointer, so he's trying to get to the high point in every state, uh, does a lot of hiking with his dog, and, you know, so the, the packs that the dog wears are, you know, to carry, uh, things to support that endeavor. And I think that when you, you know, look at a dog that wears a surface vest, you know, it's a surface dog. When you meet a dog that maybe has a Louis Vuitton or Gucci collar on maybe that says something, you know about that dog or the, the family that it comes from. Um, my dog's wearing card hearts. Exactly. Exactly. But I mean, that, that does translate. And, um, and when you think of the, uh, apparel segment and, and dog and cat, um, certainly from a global standpoint, we see that even more in Asia than we do in the us but in the US it continues to seem to be a growing market.
Diana Rosero-Pena (30:45):
Absolutely. And it seems that everybody wants to get in on the action. Um, you know, obviously the, I had a slide that showed, um, big food companies in every single price point for, for dog and cat food. Um, there's also a private label that had some, uh, share and some penetration, and there's been a lot of, um, in innovation on private label. And I think obviously that is the most profitable part for the retailer. So they see that the, the pet food, um, economy is growing, you know, it used to grow like six, 7% range. Now we're probably gonna think like we're probably normalizing to a 5% over the next 5% annually CAGR over the next, uh, five years. Um, but they see as like one of the most profitable parts of the, of the store, even freshed, um, is, is, is significant. There's a lot of velocity that it's giving them a lot of, uh, profitability for the, for the, for the retailers.
Jeremy Painter (31:50):
So how did this big bump during the pandemic, right? We talked about pandemic puppies, right? And you had all these people that were home, they bought all these pets, you know, a lot of these were first time pet owners, so I, I would guess we had this big condensed like surge in, you know, new pet ownership. Like how does that play out? Because those pets are, what, five years old now, which is kind of crazy to believe, right? So how does that translate as they turn into like middle aged pets and, you know, those people that maybe were first time pet owners, will they, do you guys expect that they'll repeat, you know, how does that like big, uh, condensation of demand effectively, you know, translate out in the industry long term? Yes.
Diana Rosero-Pena (32:25):
So back in 2020, um, you know, usually the pet population grows like in the low, mid single digits. Um, and we were seeing in 2020, like close to nine, 10% growth for the pet population in the United States. Um, obviously that was, that was a significant bump for, uh, food. Um, it's, it's, it's starting to, obviously these, these pets are growing, so their food demands are increasing. So that's a, a, a tailwind for the industry. Um, one of the things that we saw also was discretionary was significant at that time because you have to buy bowls and crates and, and all of that. But in the past 12 to 18 months, we have seen sales for discretionary items, and I'm talking about toys and, and, and supplies to actually show sales declines because there's been some relinquishment of the pets, uh, in the past in I would say 20 23, 20 24, 20 22, 20 23.
Diana Rosero-Pena (33:26):
So, um, that obviously has curved some of that population growth. And obviously you don't necessarily need, um, you know, bowls and crates. But we're starting to see, and that is one of, in, in our survey that we did in February of this year, um, that we, we, we interviewed 650 pet owners in the United States, and that was one of the main, like I was really, uh, impressed with. There seems to be an inflection point that consumers are starting to increase spending in toys and supplies as well as grooming. And that tells me a couple of things. Uh, one is the replacement cycle of all the crates and the bowls that were acquired during the pandemic, they broke, uh, or the, the needs of the pets have changed because these, these animals, uh, grew as well as a normalization in that pet population. So, which is why when we say we're, we expect the pet population to normalize in the low to mid single digits, that is one of like our first main point that we reference. Yeah,
Scott (34:34):
Great conversation guys.
Diana Rosero-Pena (34:53):
Um, I would say, uh, you know, e-commerce continues to be a significant driver. Um, the respondents in our survey, 30% of her respondents said that they, uh, purchase items from e-commerce. And the main, the main players of that is Amazon and Chewy. Um, chewy has lost a little bit of a share in terms of that, of the response well, to Walmart, to Petco and PetSmart. Uh, but it's still very, I mean, we, it's 70% of e-commerce is, is between the two Amazon and Chewy. So, um, we, we think that obviously that is a very significant player. Both of them are significant players, but we have seen that people seem to be a little bit more comfortable with e-commerce also, that it seems that they're already into a, a, um, uh, what do, why, you know, like they're, it's how habitual, um, the purchase and you don't really wanna carry like the bag, like the 10 20 pound bag. So it's easier if, if it comes in, like comes to your door. So we noticed that 30% of the respondents said that they're purchasing e-commerce compared to 23% back in 2023. So that is a significant, uh, ship that
Jeremy Painter (36:12):
It's that chewy auto ship. I, that's why I have three months worth of cat food.
Scott (36:15):
So 80% of their
Diana Rosero-Pena (36:17):
Revenue is that
Scott (36:18):
Autoship. You need to buy more cats. I know.
Diana Rosero-Pena (36:28):
So we have started, uh, this, this, uh, report back three years ago, but we would go all the way through, uh, 2030.
Scott (36:38):
Okay. Yeah. And so what are the big trends? What's coming?
Diana Rosero-Pena (36:43):
What's coming? Well, I think we're gonna see normalization of, of a lot of the categories. Um, you know, discretionary, we're gonna see, uh, there's gonna be a normalization in food. Uh, we're probably gonna see a little bit of a slowdown in terms of, you know, like I mentioned from 67 back in 2020 to 5% in 2025, um, premium. We'll probably lose a little bit of that cadence, um, still, like I mentioned 40% over the next five years, but in 2025, they're probably gonna grow around 5%. And then you have the value products that are probably gonna outpace that. Um, and it's because, you know, of all the things that we were mentioning, yeah.
Scott (37:28):
Hmm. Great conversation guys. This has been awesome. It's been a great one to end the day on. Uh, Danny, you've been a great guest. Um, what I'd like for you guys to do is just kind of as we wrap up here, come up with one or two things, key takeaways for yourself or that you think the audience needs to know, uh, about the conversation we had or the pre presentation you gave Diana. Um, and, and Jeremy, if you don't start, uh, or don't mind, I'd like to start with you being the co-host down there. A couple things you'd like to share with the audience.
Speaker 5 (38:08):
Treats are an important way for pet parents to show their love and commitment to their pet. But with the rise in animal obesity and health issues, reducing calories without impacting size can be a real challenge. Our pet sugar porosity and texture management products control levity in a variety of treats. This control allows us to change product density, volume crumb, et cetera, to better suit the customer's desires or enable producers to create unique products that weren't possible before. In this example, we've taken a plain dog biscuit that has been sheeted to five millimeters of thickness, and we've added our pet sugar porosity leavening system to it. First, let's open up the unleavened biscuit. As you can see, very little porosity, very tight carbon structure, very small height. And then with the pet share product, you can see the added volume and thickness.
Speaker 6 (39:08):
This is just one in a series of videos highlighting product usage examples and new ideas. Visit the pet Sure. Webpage to see more ways to turn your imagination into reality.
Jeremy Painter (39:25):
Well, I mean, I just think this trend and discussion around humanization is interesting, right? I think A, it's fascinating and, and b, it seems to be accelerating. So I think, you know, if we continue to look at things that we see on the human nutrition side, and obviously balk, Kim's got a great human nutrition and health portfolio as well. It's interesting to see those start to translate over into the pet space. I think that's something to really watch, Scott.
Scott (39:46):
Yeah. Yep. Excellent. Thank you for that, Nicole. It's great connecting with you again. You've been a great guest. Yeah, I appreciate you, uh, providing some color to the conversation today. Awesome job. Uh, if you will kind of give us a couple ideas here. Yeah,
Nicole Hill (39:59):
Thanks Scott for inviting me. This has been really fun. And Diana, I feel like I learned so much from you, so thank you for sharing your knowledge and, and your great presentation earlier. Um, I think one of the things that I'll be continuing to keep my eye on that you mentioned is that, uh, share of bull, essentially how, uh, pet parents respond to economic uncertainty by changing the proportions of things they put in their pet's bowl. I don't think they're necessarily going to go back to single format feeding, but they might give, you know, maybe today they're doing 50% kibble and 50% a variety of other, you know, toppers and things. I could see that maybe shifting upward. And so I'll be interested to see if that, uh, hypothesis proves out in the coming years. Yeah.
Scott (40:43):
Interesting. Diana, you've been a great guest. I, I appreciate you joining us. Uh, this has been awesome. If you would just give us a couple key takeaways.
Diana Rosero-Pena (40:52):
Yeah, I would say that there's a lot of worrying and, um, from, from a person that talks to investors, uh, that invest in the companies in these big food companies. Um, I would say that there's a worry that the pet economy and the pet industries slowing down to not become a significant, uh, growth engine for these big food companies. I don't, I don't necessarily agree with that, even though 2025 might be a little bit difficult, we're seeing volume declines even though price increases have, have, have, um, slowed down a little bit, but we're still think, we we're still thinking that these, these dehumanization of pets, uh, that part of the business is probably going to keep in pushing that, that industry forward.
Scott (41:40):
I'm kind of curious, how far can it go though? Sorry, I'm just one last question.
Diana Rosero-Pena (41:44):
Well, I mean, so far we think it's $500 billion compared like the $380 billion globally. Um, so that's a significant cagr. I mean, you're talking about, um, you know, even for food, $145 billion globally, uh, a cagr of, of, of, you know, a total growth of 36%. Um, and, and you compare that with like the low single digits that this company, this companies are obtaining from, like regular food that that's definitely gonna entice them to, to keep doing
Scott (42:17):
This. Yeah, for sure. Great conversation. Been a great panel wish. Uh, thank you guys for joining us here, uh, to our loyal audience as always, thank you for joining us here. Uh, hope you learned something. I hope you had some fun, and I hope to see you next time here to Real Science Exchange, where it's always happy hour and you're always among friends.
Speaker 7 (42:37):
We'd love to hear your comments or ideas for topics and guests. So please reach out via email@anh.marketing at balchem.com with any suggestions, and we'll work hard to add them to the schedule. Don't forget to leave a five star rating on your way out. You can request your Real Science Exchange t-shirt in just a few easy steps, just like or subscribe to the Real Science Exchange. And send us a screenshot along with your address and t-shirt size to anh.marketing at balchem.com. Balchems real science lecture series of webinars takes place on the first Tuesday of every month with the top research and nutrition topics that will impact your business. We also include small ruminant, monogastric, and companion animal focused topics throughout the year. Visit balchem.com/realscience to see the upcoming topics and to register for future webinars. You can also access past webinars and search for the topics most important to you.