SWITZERLAND- Nestlé shared its plans to further growth for its Purina Petcare division though the company is doubtful of the profitability of the human-grade pet food industry. 

The swiss multinational company shared these plans during its presentation at the Consumer Analyst Group of New York (CAGNY) Conference on 24th February 2023. 

The Purina brand will invest approximately 3 billion CHF ($3.2 billion) in pet nutrition from 2022 to 2025 to include two dry facilities in Eden, and Williamsburg Township, Ohio. 

The investment will also go towards two wet facilities in Wroclaw, Poland, and Rayong, Thailand, and two dry/wet combination facilities in Vargeão, Brazil, and Tianjin, China.

According to François-Xavier Roger, Nestle’s CFO, the company has had unmet demand, which makes the company willing to invest much more into the Purina petcare division. 

We are not concerned at all of the fact that we would have overcapacity… as far as we are concerned, the demand is there,” François-Xavier Roger said. 

In 2022, the Purina Petcare business had global sales of 18.1 billion CHF (US$19.3 billion), while the pet care segment, overall, registered 17.9 billion CHF (US$19.1 billion), accounting for 19% of the total sales.

According to data by Euromonitor, Purina has a leading position in the global pet care market, accounting for a 20.6% share, just behind Mars at 21.9%, with the largest market being the USA.

Purina reported that Purina Pro Plan, Purina ONE, Friskies, Fancy Feast, Felix, and Dog Chow brands posted billions of dollars in sales and could achieve US$2 billion by the end of this year.

Purina also expects the value of its pet care business to be over $57 billion by the end of 2025. 

These predictions are informed by the growing demand for premium pet food globally, especially in China, where pet ownership has soared in recent years. 

According to Euromonitor, the global pet population could have a Compound annual growth rate (CAGR) of 2.4% from 2022 to 2025.

Moreover, the calorific coverage – the percentage of consumers feeding pets shop-bought food as opposed to scraps– is likely to continue growing. 

According to Roger, even a one percentage point increase in calorie coverage translates to US$1bn of additional market value, in this USD 99.10 billion industry. 

Consumers are more cognizant of the nutrition and science that they’re putting into their bodies and that’s translating exactly into the pet foods that they’re feeding,” Nina Leigh Krueger, CEO of Purina North America explained. 

Digitization has been another driver of the pet food industry growth with digitally enabled sales for Purina hitting 25% and expected to hit 30% by 2025. 

Other factors that influence the growth of the pet food industry include human food ideologies, proactive health management, increased social responsibility, and an “elevated” mealtime experience. 

Human-grade pet food profitability still not convincing 

Despite these impressive statistics for the pet food industry, CEO Roger remains doubtful of the profitability of the human-grade pet food sub-segment. 

The market opportunity is there. Could we get a good return out of it? We are not totally, totally sure at this stage, but it’s something that we will continue monitoring permanently, ” Roger explained. 

Roger provides that the company has to be cautious while investing in this niche of pet food, being the first one in the market for this sub-segment that has no legal definition. 

According to Krueger, the differences between human food and specially developed pet food could hold back the progress of human-grade food.

She also advised that just as humans get their nutrition from thousands of products, pet owners feed one or two products to get 100% of their pets’ nutrients.

It’s definitely an area that we’re looking into,” she said. “We definitely think it’s a space where growth will be but we’re taking our time and making sure that we enter it in the right way.”

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