The South African economy remains constrained by slow growth in 2018. This, combined with the volatile rand, resulted in massive cost pressures, with rising prices leading consumers to seek more affordable brands and pack sizes in pet food. Brands positioned to attract bargain-hunters experienced the highest growth. As a result, mid-priced and economy brands gained popularity as consumers still desired discounts and promotional offers. Major players in the pet food industry responded to consumers by introducing larger economy-sized packs, especially in dry pet food, which is a lower-priced product than wet pet food. As a result, dry dog and cat food volumes continued to grow, whilst wet dog and cat food volumes fell slightly in 2018.
Analysts at market research provider, Euromonitor International said, “the reduced purchasing power of the rand and increasing food prices put considerable pressure on consumers’ incomes, decreasing volume growth and driving them to hunt for bargains, whilst still seeking quality and the most affordable products. In line with this trend, economy and mid-priced products remain popular amongst South African pet owners. However, cats are fussy eaters, so consumers often cannot make big changes. Affordable and mid-priced brands, such as Catmor from RCL Foods, may provide some financial relief.”
Future opportunities – Economy Dry Cat Food Leads in Growth
Sales of ZA dog and cat food are set to grow by 3% in volume terms and 6% in value terms, between 2018 and 2023. By 2018 the dog and cat food market will be 266 million ZAR bigger than it is now. Mid-priced dry dog food offers the biggest opportunity with consumers spending an extra 117 million rands by 2023.
Wet pet food offers the biggest opportunity in terms of their value growth over the period 2018 to 2023. Value growth rates will be slower than those seen 2017. Real value growth will be driven by the trend for more premium products as consumers develop the international trend of pet humanisation. They will become more demanding in terms of quality products although they will not be willing to pay a big premium for these. The fastest growth will be in economy dry cat food where sales are expected to increase by 19% in value terms over the next 5 years.
South Africa’s economy has been struggling since 2011. In recent years, growth was too weak to make a dent in the huge pool of unemployed. Tough economic conditions are expected to continue to impose a significant constraint on volume growth in pet care. Consumers will also continue to seek the best value for money in the future. Depending on the product type, this may see consumers moving to larger pack sizes to enjoy bulk savings. This is particularly true of dry dog food and will mostly be seen in households with more than one dog. These bigger pack sizes are found in pet shops rather than supermarkets. Households with one pet may choose smaller pack sizes for convenient storage, as well as a lower cash outlay per purchase.
Source: Euromonitor International