From snouts to tails, pet treats fetch sales

Discount Store News, March 18, 1996 by Richard Halverson

NATIONWIDE DSN REPORT -- When it comes to the billion dollar pet treats and chews market, Fido now has choices, which range from the gross to the gourmet.

Whether it's cow ears; turkey feet; smoked pig ears, lungs, tails and snouts; peanut butter-flavored rawhide chews; lamb and rice dog biscuits; beef chip gourmet cookies; all-natural, non-fat vegetarian treats; or shrimp alfredo sauce for dry dog food, someone, somewhere is making something designed to appeal to every dog's taste.

Pet treats makers are even taking a leaf from the toothpaste industry, promoting tartar-control treats for cats (Pounce) and dogs (Milk-Bone biscuits).

Pet treats and chews (primarily for dogs, but also for cats, birds and gerbils) comprise a major segment of the $7 billion pet food category.

Wheat First Securities in its annual Maxwell report pegged retail sales of dog treats--chews, jerky and bone-shaped biscuits--at $1.01 billion in 1994, up from $963.3 million in 1993, the most recent statistics available. Cat treats declined to $77 million in 1994 from $78 million in 1993. In addition, bird treats and supplements sales were $45.1 million in 1994, while small-animal treats, such as seed logs and chew sticks, contributed $21.8 million more for a total of $1.14 billion.

For dogs, chews accounted for the largest segment, estimated Simon Handelsman, a Newburyport, Mass.-based pet industry consultant. Jerky represents the next largest segment, he said, followed by biscuits. A worldwide shortage of rawhide, along with a resurgence of popularity for buckskin jackets, is putting pressure on prices for chews, Handelsman added.

Chews and treats are the most pervasive category of pet foods and accessories sold in flea markets, discount stores, supermarkets and drugstores. Depending on the region, sales are growing from between 5% and 10%, Handelsman estimated. Growth stems from the increasing treatment of pets as family members.

At Petco in Eatontown, N.J., catnip and catgrass (trays of grass seed to be grown for cats to eat), represent the biggest sellers in cat treats.

Treats for birds, such as Honey Sticks (seeds) from Eight-in-One, are essential for good nutrition, Handelsman said. For hamsters and gerbils, chew sticks help keep growing teeth worn down.

In a merchandising wrinkle some chains are opting for bulk sales of popular items such as smoked pig ears--last year's smash product following cow hooves in 1994. For 1996, pig snouts could be a big hit, provided that dog owners can get over the gross-out factor.

Chains such as Petco are also testing the new bulk sales merchandiser of Old Mother Hubbard, an upscale brand of dog biscuits in gourmet flavors, including vegetarian and marrow bones.

Some chains are even testing a salad bar approach to bulk treats and chews for dogs, Handelsman added.

Kmart, West Long Branch, N.J., offers about 60 skus of rawhide, mostly private label (Fluff `n' Bob) in a 10-ft. gondola run. Prices include $2.17 for a rawhide Frisbee, $2.97 for a basted-beef rawhide bone and $6.27 for a 24-in. bone. The store was sold out of pig ears.

Kmart has developed its K9 Feast private label for jerky ($1.99 for a 7-oz. package) and biscuits ($2.88 for a 4-lb. bag). That compares with Milk-Bone at $3.97 for a 4-lb. box.

Wal-Mart reserves its Ol' Roy private label for dog biscuits and jerky. It also offers a commemorative tin of Ol' Roy biscuits that features lithographs of Sam Walton in his dove hunting garb and pictures of Ol' Roy, his favorite hunting dog. The price was $4.97 for a 5-lb. tin.

PetCare Superstore, Chicago, is testing bulk biscuit sales in two of its 78 stores. The chain carries rawhide in bulk, said Michael Riggan, executive vp. It offers private label dog biscuits that are priced to sell for 10% to 20% less than the market leader, Milk-Bone.

PetCare offers both pig ears and cow ears at prices as low as two for $1, depending on the market. Ears are the fastest growing item in the chews category, Riggan said, "absolutely double-digit."

PetCare has carried pig snouts for the past three months and so far has gotten no customer resistance. Other pig products include 6-in. pig tails and pig lungs.

Meat packers are working at bringing still more new items to market, Riggan said. He noted that margins on ears are higher than 30%, but still less than on rawhide.

For Pet Food Warehouse, Minneapolis, pig ears for 69 cents in bulk "are a huge business," said senior buyer Pam Upton. Pigskin also has been turned into chews called Pigarillos and Pigars. But Upton said that both pig snouts and turkey feet are too extreme for her customers.

Pet Food Warehouse carries 125 skus of rawhide on a 48-ft. gondola. Rawhide sales are increasing in the double digits, she said, noting that the chain is trying to hold down rawhide prices, even though more price increases may come this year.

For biscuits and jerky, Pet Food Warehouse developed its Founder's Blend private label. It stocks about 200 skus of treats. The chain would like to handle biscuits in bulk, but the lack of scales at checkout is holding up a test, she said.