Business ideas for 2016: Posh pet food

Interest in premium pet food is on the up. As pet products advance, we predict this growing industry will open up new avenues for start-up entrepreneurs…

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  • Megan Dunsby

Pet owners are increasingly looking to feed their animals the crème de la crème when it comes to pet food; regardless of price.

A 2015 report by Mintel found that a fifth of UK cat or dog owners would cut back on spending on their own food before cutting back spending on food for their pet – indicating that the diets of our pets are equally as, if not more, important than our own.

With “posh” pet food business Lily’s Kitchen having recently raised millions from investors, we estimate that demand for gourmet pet food will scale in 2016.

Get in on the trend and start an independent pet food range before the market becomes overcrowded…

Starting a posh pet food company: Why it’s a good business idea

Devoted pet owners are now looking to spend more on quality pet food, which translates into increased spending habits. As Mintel suggests “interest in pet food with premium features such as ‘human grade’ ingredients and chilled pet food suggests opportunities […] to fuel trading up.”

You only need to look at the recent success of Lily’s Kitchen to see that the gourmet pet food market is growing. Founded in 2008, the London-based business uses natural, grain free, nutritionally balanced ingredients and fresh vegetables to give cats and dogs an improved diet. The company already sells to 2,000 UK outlets and announced last year that it is now looking to expand across Europe.

Similarly, UK start-up Billy + Margot has gained popularity among pet owners for its range of “nutritious”, healthy treats for dogs such as honey and banana iced snacks. Having secured £60,000 from Deborah Meaden on Dragons’ Den backed in 2012, the business is now stocked with the likes of Ocado and Relais & Chateux Hotels.

Pets at Home also recently identified the growing craze for ‘posh pet food’ with strong sales in the third quarter of 2015 which it said was thanks, in part, to growing demand for “advanced nutrition” pet food. The pet retailer has also revealed that it will be bringing its service to the high street with local convenience stores for cat and dog owners; starting with a trial shop in Dorking.

In addition, Mintel noted that recent scares around commercially produced pet food haven’t gone unnoticed, suggesting that doting pet owners are shifting to an independently produced alternative.

Posh pet food business opportunities

For those interested in entering the pet food market, you’ll need to find your niche. Think about the luxury or ‘premium’ ingredients you’re going to use and how you’re going to differentiate your brand from market leaders.

Take inspiration from Surrey-based Nutriment, winner of Lean Start-up of the Year at the Startups Awards 2015, which specialises in healthy, natural and completely raw pet food for cats and dogs. Since launch in 2013, the business has produced over 190 tonnes of pet food, expanded to six international markets and doubled turnover by focusing on human-grade meat, vegetables and superfoods.

Mintel has also reported that dry pet food has been faring pretty poorly in UK sales so an emphasis on wet or fresh pet food is likely to have better traction. Humanisation also remains relevant in pet food; Lily’s Kitchen have successfully humanised their range with products such as ‘mini slow cooked lamb hotpot’ so this is one way to consider branding your gourmet range.

With regards to what not to do, Mintel has suggested that rising pet obesity could hinder long-term growth in pet food snacks and treats so we wouldn’t advise starting a gourmet pet treats business. However, you could capitalise on these pet obesity worries with a ‘low-fat’ range.

Insider opinion

Suzanne Brock, co-founder of Nutriment, believes there are opportunities for budding pet food entrepreneurs but has warned that the industry “is one where many small businesses start and fail”.

Brock goes on to say: “Often businesses can evolve from a love of pets and their desire to produce a quality food. This can bring a lack of understanding of how the industry works and the ebb and flow of trends and fashions.

“Others start a business because they see the reports of the pet food industry being a £2.5bn industry with the consumers being made up of people who want to buy the very best for their loved ones. What they do not see is that 90% of the market is taken by just a few very large companies, with the marketing purse and a strong desire not to lose an inch in the marketplace.

“There are, however, still opportunities. Customers are becoming increasingly aware of what a list of ingredients actually means. They can spot what cheap ingredients look like, and the nature of the multi-national companies with their desire for market domination and large profit margins means that the bestselling dog foods are made up from poorer quality ingredients.

“The smaller companies, with quality ingredients and an ethical stance on animal welfare are the ones who are now starting to make waves.”

Published Jan 2016

Megan Dunsby

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