Region/Countries: Canada, North America Industry: Food and Beverage, Other Date: February 2017

Why this is important to Wisconsin businesses: Opportunities for Wisconsin exporters

Demand for pet food in Canada has been on an upward trend in the last five years, and growth is expected to continue as more Millennials and Baby Boomers adopt pets. More Canadians are becoming pet owners, and demand for healthier pet food options is increasing, primarily within the dog and cat food categories. The development of enhanced pet food products is creating greater segmentation, with factors such as age, breed and health maintenance as the focus in this market. Leaders in the pet food industry report that people want to know exactly what goes into their pet’s food and are now more willing to pay for it. Over 70 percent of dog and cat food sold in Canada is purchased through pet shops, superstores and grocery stores. Select types of pet food are available for sale only through veterinary clinics.

Three major players – PetSmart, Pet Valu and Global Pet Foods – comprise more than 40 percent of the market share within Canada. These retailers are pushing out the midsize chains from an otherwise growing market. They face competition from grocery stores that increasingly include a pet supply aisle, as well as from discount retailers like Wal-Mart, which offer convenience for those looking to pick up pet supplies while they shop for food and household goods.

PetSmart Canada currently offers 21 varieties of gluten-free dog food, 11 organic varieties, and 228 options for grain-free pet food. The top-selling natural and organic brands include Blue Buffalo, Natural Balance, and Nature’s Variety Instinct. These brands are manufactured in the U.S. Since 2012, imports of cat and dog food from the United States have increased from CAD$790 million to just over CAD$1 billion in 2016. From Wisconsin specifically, imports increased from CAD$41 million in 2012 to CAD$68 million in 2016.

In Canada, there are a total of 76 manufacturers of dog and cat food. Of these, 23 companies are considered micro (with 1 to4 employees), 45 are small businesses (with 5 to 99 employees), and 8 are midsize businesses (with 100 to 499 employees). From the total of 76 dog and cat food manufacturers, 27 are in Ontario, followed by 20 in British Columbia, 13 in Alberta, 11 in Quebec, two in Saskatchewan, and one each in Manitoba, New Brunswick, and Nova Scotia.

Per capita, the demand for all-natural and organic pet food within the dog and cat categories is continuing to increase as more pet owners are requesting organic and all-natural pet foods. Given the increase in imports from U.S. and more specifically from Wisconsin, in the last five years, this market presents opportunities for companies in the sector. Manufacturers should consider developing a statement of their value proposition specific to the Canadian market, focusing on differentiation. Premium and all-natural ingredients are top sellers, and the greater the variety the better.