The pet food industry in the 21st Century – Why evolution of the pet food industry must continue

 

david
Written by: David

Evolution“the gradual development of something” (Oxford English Dictionary)

On the grand scale of things, the pet food industry is relatively young with the first commercial petfood being invented by James Spratt in the late 1860’s. Since then, the market has undergone marked evolutionary change and grown into a global business worth an estimated $70 billion in 2014 (Source: – Petfood Industry website). However, it is not only the sales value that has seen significant change but also the environment in which the industry operates.

In general terms, many definitions of environment exist but all relate to the surroundings and influencing factors in which we exist. If we look more specifically at businesses, we can distinguish between both “micro environment” i.e. the surroundings and influencing factors within a company and a “macro environment” i.e. the wider, global scenario in which a business operates.

Petfood industry micro and macro environments

If we think about how these definitions of environment apply to the pet food industry, we might consider the following: –

Pet food industry “micro environment” – business systems, quality and food safety management systems, technology, ways of working, business culture, people interactions, stakeholders (employees, senior management team, business owners) etc.

Pet food industry “macro environment” – with the exception of resource availability and commercial law, many external influences relate to a wide range of stakeholders, for example: – regulatory authorities, trade associations, consumer pressure groups, human and pet demographics, shareholders etc.

Since its birth, the petfood industry has seen significant changes at both micro and macro environmental levels. At micro level we have seen major changes, with for example the evolution of our approach towards quality management. As our customers demand more (safe, higher quality, higher performance humanised / premium products) our approach to quality has evolved to embrace one where customer satisfaction is no longer enough but where customer excellence is now expected. This has resulted in significant investment in recipe design, external 3rd party certification (ISO22000 for food safety management), streamlined business processes etc.

The growing influence of stakeholders

Arguably, however it is at macro environmental level that the pet food industry has seen most change. Not only are we faced with increasing environmental concerns e.g. global warming, pollution and sustainability of resources but stakeholders have greater and more varied influence on the industry.

The concept of “stakeholder” is important in any business and is defined as: –

Stakeholder – “A person with an interest or concern in something”

As previously outlined, there are many stakeholders in the petfood industry. Historically the industry faced less stakeholder involvement, with internal stakeholders (petfood manufacturing company employees, senior management and owners) interacting with those externally i.e. customers, in an environment where there were lower levels of regulatory control (legal and self-governed). Recently however, the external influence of stakeholders has become greater with, for example, increased regulation (labelling requirements, pollution control, nutritional requirements etc.), consumer pressure groups, financial institutions (acquisitions by investment companies) etc.

Will the growing problem of resource availability and sustainability lead to the end of humanisation of petfood?

We are all faced with macro changes on an environmental scale affecting resource availability that in turn affects food security and the price we pay for food. Examples include: – climate change, pollution, labour relations, inconsistent global quality / food safety standards etc. All of these also impact on how the global petfood industry operates.

A further challenge on the pet food raw material resources will come from the growing needs of an exploding human population with more mouths to feed globally, with the UN predicting a population of around 9.6 billion by 2050, that will in turn require a 70 – 100% increase in food production (United Nations, 2013).

The scenario of population growth might of course open up new sources of raw materials, through increased co-products from human food manufacture but this will be balanced against more stringent efforts to reduce process streams from which petfood raw materials might originate.

Some industry leaders are also suggesting that increased demand for human food will mean that the petfood industry will no longer be able to rely on sourcing human food materials (GlobalPETS, Purple Guide 2016, Ingredients). Some inside the industry are already critical of the use of human grade materials in pet treats (Personal communication, Nordic Pet Food Seminar, 2015).

Is it time to rethink our approach to business and develop our petfood industry business ecosystems?

In general terms, an ecosystem can be defined as: –

Ecosystem – “everything that exists in a particular environment”.

This can also be applied to business, where James Moore (American business strategist) originated the concept of a “business ecosystem” back in the 1990s. Here the ecosystem refers to an interconnecting “network of organizations and individuals that co-evolve their capabilities and roles and align their investments so as to create additional value and / or improve efficiency”.

Business ecosystems already exist in the agri-food sector, an example being the non-profit making organisation Global Food Safety Initiative (GFSI). Whilst many of its members are fierce competitors they collaborate to address the challenges of ensuring global food safety and maintaining trust in the global food supply chain.

Through the history of plant Earth evolution of our ecosystems has been on-going. Given the scenario outlined above maybe the time is right for the development of our approach towards business ecosystems in the global petfood industry?

History has shown us that some species have not been able to evolve and survive. A classic example is the case of the Dodo bird of Mauritius which became extinct. As the global petfood industry faces up to the challenges of the 21st century, there will for sure be failures like the Dodo bird and others where success is the outcome.

However, for those looking to succeed and grow in a market predicted to be worth over $74 billion in 2020 (Mordor Intelligence, 2016), it is worthwhile remembering the timeless words of the 19th English naturalist and geologist Charles Darwin:


“It is not the strongest of the species that survives, nor the most intelligent,

 but the one most responsive to change.” Charles Darwin (1809 – 1852)


 

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