Pet owners shell out big bucks for premium pet food

Organic kibble? All-natural chow? Fido and Fluffy don't know it, but their owners want them to eat better – and they are forking over big bucks to make it happen.

Marketed as a healthier, more nutritious alternative, some premium dog and cat cuisine has gone the Whole Foods route.

Nowhere is that more evident than in the new $25 million eastern Pennsylvania factory of upstart pet food maker Freshpet, where thousands of pounds of fresh meat and poultry are pasteurized, mixed with vegetables, and then immediately chilled, packaged, and sent to branded, refrigerated display cases in more than 10,000 stores across America.

The 7-year-old company, founded by former Purina executives, is trying to establish a new category in an industry long dominated by kibbles and cans: fresh, preservative-free food that requires refrigeration. With sales exceeding $100 million, executives say they're on their way.

"People are trying to eat healthier, less processed, simpler foods, and I think they are applying that logic when they're making pet food decisions," said Scott Morris, Freshpet's president and co-founder.

Major manufacturers like Nestle Purina and Del Monte Foods are also capitalizing on consumers' willingness to spend more on food they perceive to be better for their furry friends.

Even through the Great Recession, premium dog and cat food – the latest iteration of which is advertised as "natural" and "organic" – has been claiming an ever-bigger share of the market. Sales of the more expensive brands jumped 68 percent from 2002 to 2012, compared with 19 percent for mid-priced brands and just 8 percent for economy brands, according to Euromonitor International.

Marketing experts say manufacturers are tapping into a number of powerful trends and emotions: Americans' interest in healthy eating, the rising popularity of organic food, the tendency to humanize pets.

"People think of their pets not as pets, but as members of their family, and they want to treat the members of their family with the same respect as they treat themselves," said Molly Maier, senior analyst at market research firm Mintel Group Ltd.

Nestle, the No. 1 pet food maker, has reported solid growth in its high-end, "made with natural ingredients" Beyond line. Del Monte, whose brands include Kibbles 'n Bits and Meow Mix, purchased premium pet food maker Natural Balance in July. "Higher consumer spending on more premium pet products will continue to drive market expansion," Del Monte said.

Despite its explosive growth, Secaucus, N.J.-based Freshpet remains a tiny player in the $17 billion dog and cat food market. Morris sees the company as fundamentally different, its new "Freshpet Kitchens" factory in Bethlehem using ingredients and processes adapted from human food production.

The company entered the market at an opportune time. A widespread pet food recall in early 2007 – which followed US dog and cat deaths linked to tainted ingredients from China – jolted consumers and got them thinking about what they were feeding their pets.

But the jury's still out on whether food marketed as "fresh," ''organic," or "natural" helps pets lead longer or healthier lives.

Theoretically, it's hard to argue with the idea that minimally processed and preservative-free food like the kind Freshpet makes would be better for dogs and cats, said Amy Farcas, a veterinary clinical nutritionist at the University of Pennsylvania. But she said the research to prove it is lacking.

Farcas routinely advises her clients that as long as their dog is the appropriate weight, healthy, and energetic, they probably don't need a diet change.

"Nutritionally, most adult dog foods would be considered appropriate for most adult healthy dogs, though there are differences in ingredients, quality control, and other factors among products," she said via email.

Freshpet has embarked on a long-term study to measure whether dogs on a Freshpet diet fare better than dogs fed a more conventional diet. Until then, company executives say, common sense, anecdotal evidence and customer feedback tell them they're on to something.

Amy Eagle, 43, of Center Valley, Pa., stopped at a Freshpet display case at Target recently to pick up chow for her chocolate lab, Potroast. She said the dog turns up her nose at anything else.

"It feels like it's closer to the farm," Eagle said. "I don't think I would go to the length of making fresh chicken or beef for her, but it feels like I'm almost doing that."