In the year ending on January 1st 2023, the market of food products for dogs and cats in Italy developed a turnover of 2,759.5 million Euros, for a total of 673,449 tonnes sold. Also in 2022, pet food was able to develop in large-scale distribution a growth higher than that of the total packaged consumer goods sector, which saw an increase in sales in value equal to 6%. In the period analyzed by the new Assalco-Zoomark Report, the average inflation of Pet food offer broke the ceiling of eight percentage points, well over +7.4% of the average inflation recorded by the general grocery assortment.
So, in the year ending in December 2022, the large-scale dog and cat food market (superstores + Supermarkets + Small self-service) developed a turnover growth of 14%. In terms of volume, its results are still positive, although less than a percentage point.
At the same time, in 2022 the Pet shops of large-scale distribution achieved a much higher increase in turnover, approaching the 40% threshold, accompanied by a leap in volumes of more than 30%. This result can be explained in the light of strong network developments, but also justifies the heavy investments made by numerous chains to oversee the specific area that looks to families with pets at their home.
The geographical distribution
As regards the geographical distribution, Northern Italy develops over half of the sales, especially concentrated in the North-West. Central Italy with Sardinia is the second zone in terms of incidence on turnover, while Southern Italy still remains the lowest area by incidence. This scenario could change radically in the next few months, in view of the heightened competition that in those regions wants to bring the reference brand of specialized products to Italy.
Beyond the brilliant development dynamics of the specialized channels and their good market momentum, the generalist ones collected 59% of the total revenue of the pet food market (i.e. over 1,600 million Euros), equivalent to 77% of the volumes. The generalist channels include data from the sum of superstores, supermarkets, minimarkets, traditional channels (including Micro-markets, stores with an area of less than 100 m2), and obviously discount stores.
This result is mainly linked to the capillarity of coverage of the territory of these commercial types. Supermarkets with over 9,000 stores intercept a third of the sector’s turnover and volumes. They report a growth in value of 12.5%. Superstores are less brilliant: they develop 7% of volumes and 6.7% of total turnover, with growth in value of less than ten points, accompanied by a decline in volumes. Neighbourhoods work well: small self-service areas show an extremely interesting growth in sales in terms of value and record a growth of +2.4% in volume, demonstrating a shift in places for purchase by Italians. The discount channel was the most inflationary of the generalist channels. It recorded a (slight) decrease in terms of volumes, but a growth in value of more than 20%.
Today, pure specialized chains are worth just under 400 million Euros on the market. They are the totality of stores specialized in the sale of food and items for animals (over 750 shops in Italy) equipped with a management structure of at least 7 owned stores. In the surveys carried out by Circana (previously IRI), which form the basis of the Assalco-Zoomark report, only 458 are considered. Among others, the shops of the leader Arcaplanet are missing.
In 2022, the development of large-scale retail Pet shops continued. Their distribution format was developed a few years ago by some food retailers (Conad, Coop, Selex, Végé), equipped with their own and easily recognizable brands according to their specialization – from Joe Zampetti to Animali Che Passione, from Petstore Conad to Amici di Casa Coop -. It was born with the intention of contrasting the growing competition of Pet shop chains in the specific area of animal feed. Today they are to all intents and purposes specialized stores that focus on the assortment (wide and with the presence of premium, functional, dietetic products) and on the service (qualified personnel, grooming services and, sometimes, veterinary service). The large-scale retail pet shops, with a turnover of 72.7 million Euros, have reached a market share of 2.6% of the total turnover of pet food for dogs and cats.
The traditional specialized store is confirmed as a highly profitable channel, alongside with the specialized chains.
This commercial typology, with just over half of the stores compared to supermarkets alone (4,995 vs. 9,246), invoice on average about twice for each shop: 134,900 Euros/year against 87,619 Euros/year for supermarkets (limited to the pet food category).
The chains that have a wider and deeper assortment guarantee a turnover per store on average 6 times that of a traditional pet shop. The specialized stores of the large-scale distribution have an assortment similar to that of the chains in terms of numbers and a turnover store that comes close to €700,000/year, a performance slightly lower than that achieved by pure specialized stores.
The private label market
Although it is complex to impose a private label assortment on customers, in a competitive scenario such as the one just presented, market data consoles the most active players in this direction. In 2022, Private Label accelerated its growth and marked a significant increase in the value share of the total lcc (Food and non-Food markets), which settled a few decimals under 30%, with a leap of about two points compared to the previous year. In the Pet food market, understood as the sum of the generalist and specialized channels, in 2022 the private label developed a value share of 23%, up by +1.2 points compared to 2021, while in terms of volume private label confirmed the level share of the previous year (40.4%).
As regards the specialized chains, private labels achieved a share of the turnover developed by the Pet food market in the channel equal to 20.1% (+0.3 points compared to the previous year), against a drop in volume (27.6%, -0.3 points compared to 2021).
The level of promotional pressure encountered in 2022 was 18.4% of total turnover. This is a sharply decreasing figure, even if in the presence of a substantial increase in prices. The need to preserve margins within a very healthy category has held back the use of leverage by distributors and branded industry. The average discount is also reduced by one percentage point compared to 2021. A promotional incidence in value (19.2%) is confirmed for cat food (19.2%), higher than that of dog food (15.5%), both decreasing by 4 points.
In Pet shop chains as well as pet shops of large-scale distribution, the promotional pressure at price value was 12.9% (-2.1 points compared to the previous year): a higher promotional incidence was confirmed for cat food compared to dog food (13.9% vs. 12%).
As regards superstores, supermarkets, and mini-markets, for the pet food category, there is an increase in the number of campaigns (titles of the flyers) compared to last year (7,482, +4.1% compared to the previous year) and a stable number of flyers (22,511).
Despite the decline recorded in Pet Specialized Stores, the use of flyers remains a significant component in the promotional strategy of the Pet food category.
The leaders of the market
There are almost 5,000 stores managed by independents, and some of them are able to cover the local territory with multiple stores, exercising a sort of leadership function in the marketplace. In terms of importance for the market, they still represent a quarter of the market, with revenues approaching 700 million Euros. Despite strong competition from chains that continue to grow and the advent of large-scale retail pet shops, innovation, service, and focus on the core business allow traditional pet shops to defend their identity and the turnover developed by their channel.
The advantage of specialized stores in large-scale distribution
In some ways, large-scale retail pet shops have a profile similar to specialized chains in terms of assortment (number of references, distribution of product categories, importance of therapeutic products…) and price. But they bring an advantage: that of the data collected on the territory even before the openings, thanks to the trends of the pet departments inside supermarkets and superstores. In the case of consortium groups – such as Conad, Selex, and VéGé – the direct link of the associated entrepreneur with the reference area also matters. This factor – the other side of the coin – partially slows down the dynamics of development at the national level.
Discount stores protagonists with private labels
Obviously the phenomenon of affirmation of private labels is driven by the development of Discount stores, commercial typology where private labels represent about 60% of the revenues, because they find retailers strategically oriented to control the market via private labels and at the same time an optimal coverage of the territory. In any case, the trend affected all the main distribution formats in the generalist area (superstores, supermarkets, small self-service).
Greater exposure pressure of private labels
The increase in the share of private labels is also explained by the increase in exposure pressure. Even in this sector, distributor brands continue to increase their referencing to the detriment of Industrial Brands that have seen a constant reduction in the offer of shelf space in the second half of 2022.
The coverage of the offer of distributors brand of high-end products (premium, functional, organic/ecological) is growing, even if in 2022 there was a parallel growth in First Price.
Promo campaigns are decreasing
In the year ending in December 2022, Pet specialized stores for the Pet food category recorded a decrease in promo campaigns (flyer titles equal to 99, -9.2% compared to the previous year) and in the number of flyers (198, -19.2% compared to the previous year). Retailers are centralizing their offer to a greater extent, probably favouring efficiency criteria and reducing local differences. The number of products per flyer page is reduced (less crowding on the page) and the same things happens for the number of pet food references per flyer (greater concentration on the single promoted references).
