Beef Stroganoff for Your Dog? Pet Food Goes Upscale

Mars Inc. set a key goal for its new line of wet dog food: Make it look less like wet dog food.

Instead of the usual brownish mush, the world's biggest pet-food company by sales rolled out recognizable pot roast with spring vegetables, beef stroganoff and meat lasagna under its Cesar Home Delights line across the U.S. in 2015. Home visits and consumer panels told Mars some people felt guilty feeding their pets the same food every day and were more likely to buy pet food that reminded them of their own meals.

"The focus is to deliver dishes that literally look and smell like human food but are nutritionally balanced to be right for a pet," said Chris Mondzelewski, North America head of specialty pet care for Mars.

Two years later, Home Delights generates $100 million in annual sales. It is one of a widening array of lines incorporating human-food trends Mars and rival Nestlé SA -- which together dominate 48% of the $75 billion global pet-food market -- are creating. Appealing to human beings is helping the industry charge more to counter declining volumes: North American pet-food volumes fell 0.8% last year, according to Euromonitor, but revenue climbed 4%.

"Just like people spend more money on their own good nutrition, they also want to do this for their pets," Nestlé Chief Executive Mark Schneider said in February.

Pet owners in developed markets are cultivating stronger emotional bonds with their dogs and cats, motivated by later marriages, smaller families and elevated divorce rates, according to Euromonitor. In 2016, the U.S.'s 84.6 million pet-owning households spent $28.2 billion on pet food, up 23% from a year earlier, according to the American Pet Products Association. That translates into $333 spent per household last year.

Nicole Latza, a school-district clerk in West Seneca, N.Y., feeds her two cats a variety of Fancy Feast Medleys canned food from Nestlé's Purina unit, along with some dry food and food designed to clean their teeth. She said she has never tallied up the cost.

"We don't care what it costs for our animals since we want to get them something that's good for them and that they enjoy," Ms. Latza said. Fancy Feast Medleys comes in flavors such as wild salmon primavera with garden veggies and greens. A 24-pack of 3-ounce cans costs $19.20 on Petco.com.

The Medleys line includes a pâté for cats, launched last year, which contains whole pieces of carrots, tomatoes and spinach. It sells for 85 cents a can, compared with regular Fancy Feast cans that are 20 cents cheaper.

A workshop with Purina chef Amanda Hassner -- who previously fed humans at restaurants including Sans Souci at the Renaissance Cleveland Hotel and Il Fornaio in San Francisco -- helped the Fancy Feast development team decide to include three colors in the new cat pâté, even though cats are partly colorblind. Ms. Hassner noted that people respond well to seeing one primary color and two complementary colors.

"Dogs and cats don't push the grocery cart down the aisle, their owners do," said Dan Smith, a research-and-development vice president at Purina.

As people seek to connect with their pets, revenue from treats has risen. High-price pet foods labeled all-natural and grain-free -- and ones that incorporate ingredients such as blueberries and sweet potatoes -- are also growing faster than more mainstream kibble because people think they are healthier.

"People think that what is good for them is good for their pets," said Bernard Meunier, Purina's CEO for Europe, the Middle East and Africa. "There is some truth to that and also not."

Richard Hill, a professor at the University of Florida's College of Veterinary Medicine, says consumers focus more on ingredients than nutrients but the nutrients' origin often makes no difference to a pet's health. "There's a feeling if a substance has been through a chemical process it's more dangerous than one that hasn't been," he says. "But it's all marketing and there's no scientific basis for any of it."

Natural products' share of U.S. pet food jumped to 18% in 2015 from 11% in 2011, according to data provided by Susquehanna Financial Group. Over that period, mainstream pet food's market share dropped to 67% from 74%.

"The big companies were not ready for that trend, so they've had to buy brands or come out with new brands or extensions," said Susquehanna analyst Pablo Zuanic.

In 2014, Mars bought Iams, Natura and other pet-food brands from Procter & Gamble Co. for $2.9 billion. Nestlé in 2015 bought natural and organic pet-food maker Merrick Pet Care, which owns limited-ingredient and grain-free pet-food brands. Also that year, J.M. Smucker Co. bought Big Heart Pet Brands, owner of Milk-Bone dog treats and Meow Mix cat foods.

Under Merrick, Nestlé sells grain-free dog food in flavors such as Grammy's Pot Pie, which includes chicken, red jacket new potatoes and red apples, and Thanksgiving Day Dinner which has turkey, sweet potatoes, green beans and Granny Smith apples. The food, which sells for roughly $2.50 per can, costs about $10 for the average Labrador a day.

In the documents for its 2015 initial public offering, natural-pet-food company Blue Buffalo Pet Products Inc. said the trend toward the "humanization" of pets was the key driver of premium product sales and pet-food growth. Blue Buffalo, based in Wilton, Conn., reported a 12% rise in net sales for 2016, more than twice the 5.3% pet-care growth that Nestlé reported.

Mars's researchers took two years to create Home Delights, comparing the aroma and aesthetics of trial versions of the dog food against those of human ready meals from Campbell Soup Co. They sought out new suppliers for ingredients such as bow tie pasta, which Mars hadn't previously used before. The food sells for about 98 cents per 100-gram tray at Walmart.com, with three trays recommended daily for small dogs. Advertising campaigns showing a meat lasagna read: "He'll have what you're having."

Mars marketing director Denise Truelove chose to have the Home Delights line photographed in crockery pots for advertisements, evoking images of home-cooked family meals. "We wanted to break through and say the wet dog food you know today is very different," she said.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

(END) Dow Jones Newswires

May 08, 2017 05:44 ET (09:44 GMT)