Pet & Animal Food Manufacturers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 1,200 pet and animal food manufacturers in the US produce food for pets and other animals, such as livestock and birds. Product categories include animal feed (cattle, swine, poultry), dog food, cat food, specialty feeds (birds, fish, rabbits, laboratory animals), and rendering and meat byproducts. Animal feed manufacturers account for 77% of companies and 58% of industry sales.

Food Safety

Outbreaks of serious diseases and contaminants related to food safety have affected the livestock production and pet product industries, including pet and animal food manufacturers.

Variability In Raw Materials’ Costs

With narrow margins, pet and animal food manufacturers often struggle to deal with volatile raw materials’ costs.

Industry size & Structure

A typical animal feed manufacturer employs 31 workers and generates about $34 million annually. A typical pet food manufacturer employs 79 workers and generates $80 million annually.

    • The pet and animal food manufacturing industry consists of about 1,200 companies that employ 66,000 workers and generate about $56 billion annually.
    • Animal feed manufacturers account for 77% of companies and 58% of industry sales. The poultry and swine industries are the largest consumers of animal feed.
    • Pet food manufacturing is highly concentrated, with the top 20 companies accounting for 86% of sales. Animal feed manufacturing is less concentrated, with the top 20 companies accounting for about 50% of sales.
    • Large animal feed companies include Land O'Lakes, Cargill, and Archer Daniels Midland. Most major pet food brands are owned by large consumer products companies, such as Mars (Pedigree, Iams), Nestle (Purina), and Colgate-Palmolive (Hill's Science Diet).
                                Industry Forecast
                                Pet & Animal Food Manufacturers Industry Growth
                                Source: Vertical IQ and Inforum

                                Coronavirus Update

                                May 17, 2022 - Equipment Purchasing Plans Suggest A Shift To Raw, Fresh Ingredients
                                • Pet food manufacturers estimate that they will invest an average of $13 million in processing equipment or process support utilities over the next three years, according to engineering and consulting firm CRB Group. The largest group (roughly 40%) expects to invest between $5 million and $10 million, which is about equivalent to a new processing line. The biggest changes, such as a decrease in oven baking and an increase in both thermal/hot-fill and high-pressure processing, indicate a shift toward more raw or fresh ingredients.
                                • Demand for pet food and supplies via online remained consistently high throughout 2021, with dog products outranking cat products, according to retail analytics platform Pattern. COVID-19 caused an increase in online pet product demand, which has continued since, and online demand for pet food reached an all-time high in early 2022. E-commerce demand for pet supplies spiked during the summer of 2021 and hit its lowest point in December of 2021, according to Pattern, with dog and cat supplies leading demand.
                                • Pattern noticed that demand for pet supplies on Amazon soared around the same time as consumers faced lockdowns. The increase in e-commerce demand for Amazon was a reaction to supermarket and pet stores shutdowns that happened during the start of the pandemic. E-commerce demand remained high even as supermarkets and pet stores reopened, hitting a low in November and December 2021.
                                • Net farm income, a broad measure of profits and an indicator of demand for some animal food, is forecast to decrease 7.9% year over year in 2022 when adjusted for inflation, according to the federal Economic Research Service. Farm cash receipts are forecast to increase 6.8% in nominal dollars during 2022 but direct government farm payments are forecast to decrease 57% from 2021 forecast levels.
                                • Shortages at grocery stores across the country have grown more acute in early 2022 as the Omicron variant of the coronavirus spreads and winter storms intensify supply chain struggles and labor shortages. The shortages include some pet foods. Shipping woes and aluminum shortages have led to a scarcity problem for the pet food industry as stores throughout the country are unable to stock all their traditional brands and products. The shortages are impacting the movement of ingredients and finished products, the Pet Food Institute says. Pet owners are spending more time with their pets which can lead to increased feeding and more treating. The high demand has resulted in larger purchases, which intensify the material, labor, and transportation shortages.
                                • Retail sales of dog and cat treats are expected to have reached $9.87 billion by the end of 2021 after two years of double-digit increases, according to Packaged Facts. Sales growth has consistently outpaced the more mature pet food market and pet supplies in general, and this growth accelerated with the COVID-19 pandemic. “Pet owners spending more time at home with their pets has translated into more opportunities for treat-giving,” notes Packaged Facts analyst Shannon Brown, “and an increased focus on health and wellness has resulted in more interest in functional treats.” Dog treats hold an 80% market share, but the largest growth percentages have come from the cat side of the aisle.
                                • Animal food manufacturers may benefit if an attempt by cattle ranchers to build their own meat processing plants boosts investment in livestock farming by ensuring a more resilient food processing system. Cattle ranchers have raised funding to build their own meat processing plants, and construction of some facilities is underway. Construction of the Sustainable Beef plant on nearly 400 acres near North Platte, NB, began this fall, and other facilities are planned for Iowa, Idaho, and Wisconsin. Experts say that the enterprises will test whether it’s possible to compete financially against the meat processing industry consolidation trend that has swept through American agriculture and that played a role in meat shortages during the coronavirus pandemic. The backers of the planned new plants say that they will have important advantages, including more modern equipment and, they hope, less employee turnover thanks to slightly higher pay of more than $50,000 annually plus benefits along with more favorable work schedules. The new Midwest plants are also counting on closer relationships with ranchers, encouraging them to invest in the plants, to share in the profits.
                                • Net farm income is expected to have increased to $113 billion in 2021, the highest since 2013, according to the US Department of Agriculture. Income would be 26% higher than the 10-year average, reflecting the economy-wide recovery from the coronavirus pandemic. Animal food manufacturers are likely to benefit if rising sales boost investment in livestock. Government aid is expected to equal one-third of net farm income, down from 2020 but still more than average.
                                • Animal food manufacturers may benefit if a federal government plan to spend $500 million to encourage the construction of smaller meat processing plants boosts investment in livestock farming by ensuring a more resilient food processing system. The goal of the plan is to build plants closer to farmers who raise chickens, pigs, and cows, reducing reliance on the small number of large processing facilities that currently dominate the industry. The coronavirus pandemic shut down significant portions of the nation's meat processing capacity when the virus spread quickly among workers at processing plants. The production bottleneck forced some pig farmers to euthanize animals when they couldn't find facilities to process them.
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