Pet food e-commerce in Europe has pros and cons

Online sales of all pet care products in Europe, including pet food, are growing 5 percent to 9 percent a year, according to Euromonitor International, which projects similar compound annual growth rates through 2021.

That means Western Europe’s current pet care e-commerce sales of $1.8 billion (€1.6 billion) will continue to grow at a healthy clip of 5.6 percent, while Eastern Europe, though showing much lower sales of $271 thousand (€235 thousand) in 2016, will average about 9.2 percent growth a year.

Paula Flores, global head of pet care research for Euromonitor, presented this data during Petfood Forum Europe 2017 on 13 June in Cologne, Germany. She included internet retailing as part of a key trend for the future of pet food and pet care: technology. As she put it, “Technology conquers all,” referring not just to e-commerce but also to the growing development and popularity of apps and devices for owners to keep tabs on their pets’ eating habits, activity and whereabouts.

She is right. Today, technology does conquer all, causing significant change – good and bad – in nearly every area and aspect of our lives. For pet care, one of the more difficult shifts has been the inability of small, independent pet retailers to compete with e-commerce on pricing, especially for pet food. Unfortunately, this seems to be a universal problem.

Pet food minimum advertides price not an option in Europe

In the U.S., as e-commerce sites like Amazon and Chewy have risen and gained higher shares of the pet food market, independent pet stores have pushed back by demanding that pet food manufacturers extend policies such as minimum advertised price (MAP) or minimum retail price (MRP) to online sites. Increasingly, pet food companies are complying, with a few even pulling their business from Chewy after its purchase by PetSmart, in a bid to prove their loyalty to the independent pet retail channel.

In the European Union (EU), adopting a MAP policy for online retailing is not an option for pet food companies, even if they see the value and want to do so. EU laws prohibit MAPs, according to Juergen Wigger, PhD, managing director of Bewital Petfood in Germany. The reasoning is a belief that MAPs are detrimental to innovation in retailing, he told Petfood Industry after Petfood Forum Europe; yet, in his view, those laws contribute to the inability of smaller pet retailers to compete against internet retailers. “This is killing smaller businesses, even small cities and villages in Europe,” Wigger said, adding that he and others are lobbying in the EU to change the law.

Superpremium brands such as Bewital’s Belcando and Leonardo account for 45 percent of the pet specialty trade in Europe, Wigger said, and now 15 percent of that business is going online – representing a “huge problem” for the market.

Positive partnerships between pet food companies and online retailers

That does not mean e-commerce can not complement and even support traditional retail sales. Wigger said he resisted selling his company’s products on Zooplus, a growing pet e-commerce site in Europe, for many years; but since deciding to work with the site in 2014 or 2015, Bewital has enjoyed even more revenue growth, including with existing independent retail accounts.

As with other online retailers, pet food is driving sales growth for Zooplus itself, which reported a 26 percent increase in pet food sales year over year (YOY) in the first quarter of 2017. Its overall sales growth for the quarter was 24 percent YOY. With sales of €257 million ($287 million) for the quarter, Zooplus is projecting annual sales to reach €1.1 billion ($1.25 billion).

Likewise, Wigger projects robust growth of 15 to 20 percent this year for Bewital. While he attributes that to several factors, it can not be denied that e-commerce can be a positive force for pet food companies; yet for the long-term health of the market, all pet retailers also need to share in the industry’s continued growth and success.

Petfood Industry