From The April/May 2003 Issue of Natural Grocery Buyer

Merchandisers Lick Their Chops Over Food for Pets

Marty Traynor Spencer

Statistics show that sales in the pet food aisle may be less than inspiring—more shoppers choose to get pet food at specialty stores rather than in their grocers' aisles. Sixteen years ago, 95 percent of pet food was sold in grocery, according to The Natural Foods Merchandiser (March 2002). And according to Watt Publishing Co.'s The Petfood Report, sales in the grocery channel were down to 39.6 percent in 2001.

But retailers don't have to be resigned to ever-diminishing sales—at least they don't if they follow a strategy developed by Three Dog Bakery and Hen House Market.

Ed Mareth, vice president, national sales, of Three Dog Bakery in Kansas City, Mo., wanted to build sales for his company's products in grocery stores. "We organized a plan to go to the grocery channel and promote the concept of the 'food for pets' category." This is different from traditional pet food, he says, which can be prepared with animal by-products and what the pet food industry refers to as the four Ds—animals that are disabled, diseased, dying or dead before they reach the slaughterhouse.

Three Dog's food for pets uses all human-grade ingredients and is prepared in a U.S. Food and Drug Administration-approved kitchen. "We felt it was important to start conveying to the public that, no, we're not pet food," Mareth says. "We are food for pets right down to the vitamins and minerals being human grade."

Mareth needed a grocer willing to try selling food for pets; he found a partner with the Kansas City, Kan.-based Hen House Market.

"We went to Hen House and discussed drawing people back into the pet food aisle," he says. "They were very receptive of the idea—they offered us the ability to bring in the product line that we felt would work best for their clientele, which is upscale grocery, and we married up a regimen of products we felt would work well there."

Thirteen Hen House Markets have a 4-foot section in the pet food department; the company's two limited-square-footage specialty stores have 2-foot free-standing fixtures, says Paul Anderson, director of grocery operations for Balls Food Stores, Hen House's parent company. Three Dog has provided floor decals, banners and signs to help identify the category.

"We're still working on how we communicate that product line to the consumer, on how we draw and attract attention to it from the normal pet food buyer," Anderson says. "We're still learning, and I think Three Dog Bakery is too. They've been innovative, and we've experimented with a few things."

One such experiment was Mareth's idea to place Three Dog's human-grade treats in a highly trafficked aisle to encourage impulse purchases. According to a 2002 survey of pet owners done by the American Animal Hospital Association, 86 percent of pet owners include their pets in holiday celebrations such as Halloween and Christmas, and 80 percent said the way they include their pets is by giving them special treats.

"I thought maybe we ought to try to put some of the Halloween treats in with the candy section during Halloween," Mareth says. "We went inline with candy bars and handout treats for Halloween, and lo and behold, we went back a week later to restock and the entire display that we had put out was completely gone—unlike in the pet food area where we still had shelf stock."

Mareth says there's no problem shelving his company's food for pets next to treats for children because Three Dog Bakery's products are made from human-grade food. "We can sit right along with the Hershey's and M&M's and the Snickers and the Mars [bars], and you can feel good about that when you put it out for Halloween."

Mareth says Hen House had almost three times the number of holiday treat tins in the specialty aisle as it had in the pet aisle, and the amount of takeaway was about five times greater.

It demonstrates that the grocery store channel can get the same impulse buyers as pet specialty stores if they market correctly to the consumer, he says.

Two weeks prior to Christmas, Hen House again put pet treats in the holiday aisle. "Our sales per store doubled," Mareth says. "We were not only driving takeaway on that, we were driving people to the aisle. We brought it top of mind, and top of mind was, 'Well, while I'm here I might as well go over to the pet aisle to get what I need.'"

"I'm pleased with the initial sales during the holiday periods," Anderson says. "We did some promotional deals on their holiday items and we had total sale through on some of their decorated treats and their Christmas tins. It's really surprising to see that kind of excitement with pet food. I've got to be careful about how I say pet food because it's really not. We're still learning how to work and place that product."

Balls Food also carries Three Dog Bakery products in its Price Chopper grocery stores. Price Chopper stocked a Christmas dinner bag for pets featuring three entrees, an appetizer and a dessert. "We put it in at the last minute," Anderson says. "We put half pallets, and it was right before Christmas. Some locations did very well and others just did fair. But I think it helped identify that there is a niche in the market for that kind of product."