Pet Food Ingredients Market to Witness Huge Growth by 2025

According to the new market research report “Pet Food Ingredients Market by Ingredient (Cereals, Meat & Meat Products, Vegetables, Fruits, Fats, and Additives), Source (Animal-based, Plant-based, and Synthetic), Pet (Dog, Cat, and Fish), Form (Dry and Liquid), and Region – Global Forecast to 2025″, published by MarketsandMarkets™, the global Pet Food Ingredients Market size is projected to reach USD 53.2 billion by 2025, which was estimated at USD 38.6 billion in 2020; it is expected to grow at a CAGR of 6.6% from 2020. Factors such as rise in the disposable income of the middle-class population have led to an increase in the spending capacity on pets. Pets are treated as companions to the owners, and increasing health concerns of their pets have encouraged them to opt for premium pet food products. Pet owners prefer buying high-quality and differentiated food products for their pets to provide them nutrition and variety in pet food. Furthermore, the expansion of pet superstores has made premium and super-premium pet food easily accessible.

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Market Dynamics
Driver: Increase in pet expenditure with a substantial rise in pet food expenditure
Along with the rise in the pet population, the global pet food industry has also been expanding, owing to the increasing expenditure of pet owners on a variety of pet food products. For instance, according to the APPA, the total US pet industry expenditure increased from USD 48.35 billion in 2010 and stood at USD 72.56 billion in 2018. Furthermore, it is estimated that that pet industry expenditure would reach USD 75.38 billion in 2019. In 2017, about USD 29.07 billion was spent on pet food, which is 44.6% of the total expenditure. This increased by 4.3% in 2018, making the total expenditure on pet food reach USD 30.32 billion. Thus, the rise in pet ownership, along with the increase in pet food expenditure, is projected to drive the demand for pet food across the globe.

Restraint: Non-uniformity of regulations hindering international trade
According to the Federal Food, Drug, and Cosmetic Act of 1938 (FFDCA), animal food is required to be safe for consumption and manufactured in sanitary conditions. The foods must not contain harmful substances and should have approximate labeling. The Food Safety Modernization Act of 2010 (FSMA) introduced guidelines related to certification, sterilization, hygiene, and labeling of ingredients for pet food manufacturers in the US.

Government monitoring agencies in Europe and North America have strict regulations set for the animal feed industry as compared to those in the Asia Pacific and South American regions. The regulations related to pet food ingredients such as preservatives, ethoxyquin, and food dye are different in various countries.

Due to the lack of a universal regulatory structure, global trading becomes difficult. Huge investments are made in manufacturing feed additives. Different regulations lead to severe losses for manufacturers. It becomes expensive to frequently update the technologies and facilities in accordance with the changing guidelines. Pet food manufacturers are required to submit patent and approval applications to launch new products in different countries. Huge losses are incurred due to delays in receiving approvals from agencies, such as the European Patent Office and the Canadian Intellectual Property Office, which issue patents for new products that are launched. Establishment of a universal governing body for the pet food ingredients sector will help in smooth business operations worldwide..

Opportunity: Use of cannabis in pet food
The Agricultural Improvement Act of 2018, passed in December 2018, took a significant step forward by separating hemp and hemp-derived CBD from marijuana-based products, thereby placing hemp-derived products under the control of the Department of Agriculture as a crop, rather than under the Justice Department as a controlled substance. The Farm Bill defines marijuana as cannabis with THC of 0.3% or greater (under the DEA), and hemp as cannabis with THC of less than 0.3%.

The use of cannabis in pet food treats has gained popularity, as the regulations have become less stringent. Cannabis-based pet food is available in concentrates, isolates, and synthetic forms. In cannabis-based food products, anxiety curing products are most useful to lower down anxiety. Additionally, pet owners are looking at CBD as an alternative to mitigate pain and allergies. Cannabis-based products were highly visible in the recent Global Pet Expo in Orlando (March 2019). Cannabis-based pet food is majorly sold through the Internet (via Amazon). Pet businesses have identified cannabis-based pet products as one of the growth areas of 2019.

Challenge: Capital investments for equipment
Pet food manufacturers require high capital investments to install different types of machinery and equipment. This equipment has not only high installation costs but also require timely maintenance, which is an additional cost. Pet food manufacturers look for more economical options, such as equipment rentals, contract processing, and other related facilities.

Renting equipment or contract manufacturing requires less capital investment and avoids annual maintenance costs, which are incurred by rental companies. However, capital investments are one-time investments that are usually offset in the long run.

South America is projected to witness the highest growth in the market during the forecast period.
South America, followed by Asia Pacific, is expected to grow at high rates from 2020 to 2025. Brazil and Argentina are the most leading markets in the South American region. The market in this region is in the early stage of development, and hence, provides growth opportunities for key companies. The South American region is projected to grow at a high rate in the pet food ingredients market, as some countries in this region offer profitable growth opportunities for the pet food industry. Brazil is the largest pet food ingredient market and is also one of the fast-emerging markets for South America.

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Key Market Players
Many domestic and global players provide pet food ingredients to improve pet health and performance. Major manufacturers have their presence in the European and Asian countries. The key companies in the global market are Cargill, Incorporated (US), BASF SE (Germany), DuPont (US), Ingredion Incorporated (US) and Archer Daniels Midland Company (US). Various strategies, such as expansions, mergers & acquisitions, and new product launches, were adopted by the key companies to remain competitive in this market.