The pet food ingredients market was valued at USD 34.9 billion in 2018 and is projected to reach USD 54.3 billion by 2025, recording a CAGR of 6.62% during the forecast period. The growth of this market is primarily driven by the increase in the global pet population, high production of pet food, and the rise in the trend of pet humanization. However, different regulatory structures for the use of pet food ingredients and the scarcity of raw materials are factors inhibiting the growth of this market.
The key players in this market are Cargill, Incorporated (US), Archer Daniels Midland Company (US), BASF SE (Germany), DowDuPont Inc. (US), and Ingredion Incorporated (US). Manufacturers are adopting strategies such as new product launches, expansion & investments, mergers and acquisition, agreements, collaborations, joint ventures, and partnerships to strengthen their position in the market.
How is the use of cannabis in pet food products is offering new opportunities?
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%.
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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.
South America is projected to grow at the highest rate during the forecast period
South America, followed by Asia Pacific, is expected to grow at high rates from 2019 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 ingredients market and is also one of the fast-emerging markets for South America. In 2018, pet food sales accounted for 81% of all the pet care products. Dog food ingredients accounted for 46% of pet foods, followed by cat food.
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Pets mostly consume the dry form of ingredients due to convenient handling and storage
Based on form, the dry segment accounted for a larger market share in 2018, followed by the liquid segment. The dry form is used more widely in pet food products, and their popularity can be attributed to their cost-effective nature and low moisture content, which facilitates convenient handling during processing and storage. Due to these factors, the market for the dry form of pet food ingredients accounted for the largest share.