Concerns about rising gas prices are taking a toll on consumers’ pockets and could be headed for a recession, especially if you look through the prism of the pet products market.
By all accounts, the industry – which has seen a huge lift in the form of families adopting pets during the pandemic – continues to see strong demand. According to the latest data from Nielsen, sales of pet food increased by 12.7% for the four weeks ended February 26 (latest available). Dog and cat food sales grew 12.3% and 15.8%, respectively.
Pet supply sales grew a solid 6.9%, led by cat litter and pet toys.
Ron Coughlin, CEO of Petco, said, “I’m no economist. It’s my job to be prepared for a recession. We start with history. And history has been that the pet industry has been the most resilient of any industry.” On a new episode of Yahoo Finance Presents.
Here are some other signs that the pet spending boom that began during COVID-19 is very much alive and well.
Petco Crushed Its Quarter
The pet products retailer reported earlier in March that fourth-quarter sales rose 13% compared to a year ago. Adjusted operating profit increased 16%. The company posted double-digit sales growth for the seventh consecutive quarter.
Petco Health & Wellness Company Inc. CEO of Ron Coughlin walks with his dog Yummy during the company’s IPO at the Nasdaq Market site in Times Square on January 14, 2021 in New York City, United States. Reuters/Brendan McDermid
Coughlin says consumers are not paying attention to higher trading prices because of inflationary pressures on manufacturers.
“If you go back to the Great Recession, there was almost no impact on the pet industry. People don’t really change their practices in the industry. That said, it’s our job to make sure we have customers during the recession. There are offers for the environment. So things like Vital Care can help. We have mega bags and other solutions for them. But the pet industry has been relatively resilient to any macro,” Coughlin said.
Blue Buffalo for Sparky?
One of the strongest businesses for cereal giant General Mills in its most recent quarter wasn’t Honey Nut Cheerios, it was its Blue Buffalo pet food business.
The company said Wednesday that sales in its pet food business jumped 30% compared to a year ago. Adjusted operating profit for the division was up 8% year-over-year.
“We estimate the range [pet food] Will continue to perform well, and we think our segment will continue to perform well. And even during the last recession, which was a long time ago, one of the things before I bought Blue Buffalo, we looked at how the category fared during the downturn, and it turns out that it performed very well. The last thing you want to do in a tough time is sub-optimize what you’re going to give your pet. And I will tell you that on top of that, the major trend in pet food, and I think going forward, is the humanization of pet food. And we’re clearly very well positioned in that area, given that we’re the number one natural pet food in the pet category, by a long, long way,” General Mills CEO Jeff Harmoning said on the earnings call.
General Mills bought Blue Buffalo in 2018 for $8 billion.
Fresh Food for Fido
Fresh pet food maker FreshPet is coming off a strong quarter on its own.
Sales grew 37.1% in the most recent quarter, which is faster than the 33.5% pace seen in 2021.
The demand for fresh pet food is so strong, FreshPet has a hard time keeping up with the shelves.
Scott Morris, COO of Freshpet, explained, “And the biggest challenge we have is that we have periods where we are completely out of stock on cat food. We are completely out of stock on bags or even completely Out of stock.” an earnings call. “What I can tell you now is that when those products are back in stock, the growth rate is phenomenal and it’s explosive. So when we finally get to all of our products, I think that we will have a really, really significant explosion in our penetration.”
Brian Sozzy is a great editor and Anchor at Yahoo Finance, follow soji on twitter @BrianSozzi and on linkedin,
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