Harvard Business School

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Rev. 10/2/93

Cat Fight in the Pet Food Industry (A)

The Product

op yo “[Pet foods] is an industry waiting for a breakthrough,” said Peter Bowen, marketing manager of H.J. Heinz's 9 Lives cat food.1 In 1986, virtually all U.S. pet owners purchased commercially-produced food for their dogs and cats. However, by the mid-1980s, the nation's pet population, consisting of about 50 million dogs and 50 million cats in half of the U.S. households, had entered a period of slow growth. As pet food consumption stabilized at around 10 billion pounds per year, the industry's major players realized that sales increases would most likely follow only from larger “share of stomach.”

The vast majority of pet food sales were for cats and dogs. In 1986, dog food sales exceeded $3.2 billion, while cat food sales were about $2.1 billion. Within each of these two broad categories, however, there were different types and several flavors of pet food made from many different ingredients including grains, poultry, fish, meat, and animal by-products.

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The principal types of pet food were (in order of sales) dry, canned, and moist. Dry pet food, the largest dog and second largest cat segment in 1986, had a cereal base that was augmented with animal- or plant-based protein, fats, vitamins, and minerals. Dry foods had a low moisture content (5% to 15%), and therefore did not contain preservatives. Canned food for dogs consisted of meat and meat offal (inedible animal by-products), and for cats it was usually made from fish and fish offal. Canned products typically had a moisture content of 70% to 80%.
Moist pet food was made from animal by-products, dairy products, fats, oils, soybean products, vitamins, and minerals. These products, with a moisture content of 20% to 30%, were usually shaped into