New York, NY (PRWEB) February 11, 2015
The Pet Food Production industry has fared well over the past five years. The increase in pet ownership has coincided with a tendency to treat pets as members of the family, thereby encouraging the purchase of higher-priced premium goods that claim to possess special benefits, formulations or specialized ingredients. As a result, industry revenue is expected to grow at an annualized rate of 0.9% to $23.6 billion in the five years to 2015. According to IBISWorld Industry Analyst Antal Neville, “A drop in input costs in 2015 is expected to lead industry operators to cut their sales prices, increasing volume while preserving margins.” Consequently, industry revenue is expected to decline 1.0% in 2015.
Over the past five years, pet parenthood has become more prevalent among consumers. Indeed, as birth rates declined following the recession, pet ownership has served as an alternative to outright parenthood. Pet parents are typically more willing to splurge on organic and premium pet food products, which helped stimulate revenue growth over the past five years. However, while revenue experienced limited growth in the past five years, profit margins have remained strong due to falling input costs, especially for grains like corn. The price of corn has fallen an annualized 3.1% in the past five years. Further, despite increases in 2012 and 2013, the price of poultry meat has also fallen in 2014 and 2015. Falling input prices have increased profit margins, even while allowing operators to cut product sale prices. Profit margins are expected to reach 15.6% of revenue in 2015.
Pet ownership is projected to continue to grow over the next five years, partly because rising disposable income will allow more consumers to afford owning pets. “In the five years to 2020, the number of pets is projected to grow, thereby bolstering demand for pet food products,” says Neville. As a result, IBISWorld forecasts that industry revenue will increase in the five years to 2020. The largest pet food companies, including Mars and Nestle, will continue to develop and market formulas that boast advanced benefits for pets, such as age-specific nutrients and all-natural ingredients, which command premium margins. Input costs will also fall as corn and poultry prices stabilize. Therefore, industry profitability is projected to remain strong over the next five years.
For more information, visit IBISWorld’s Visual Arts Schools in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
This industry primarily manufactures dog and cat food. Common ingredients include grains, oilseed mill products and meat products. This industry concentrates on dry and semi-moist dog and cat foods in cans or packaged otherwise. Feed for livestock is excluded.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.