While you mightn’t live there, you should find it interesting that this niche is also American owned.

Anyone who studies duopolies (two major companies dominating a market) would be right at home living in Australia.   Because of its small population size and isolated location, it seems that most industries can only afford a couple of big players, and the wholesale dog treat industry is no exception.

But you don’t have to live in the US to get any value from understanding what opportunities that affords both a dog treat retailer and dog owner.

In Australia we see duopolies everywhere.  The Telcom industry is mostly about Telstra and Optus, though TPG is catching up.  But more important for anyone wanting food, including dog food or dog treats, the retail food market is dominated by Coles and Woolworths, with Aldi a distant third.  And these supermarkets are coming hard to dominate the dog treat market too.

The UK and America seem to have sufficient size to afford up to 5 major players in most markets.  Which of course is better for competition and consumer choice and prices.

So, the relatively weird thing about Australia’s dog food and dog treat market is that while there are only a few major players, they are not LOCAL ones.  Yes, that is correct. Australia’s dog treat market is dominated by global brands, and much of the products in the past have been imported.

While total size of each share is hidden in expensive market share reports, we have agreement that the major players are these five:

• Colgate-Palmolive Company (Hill’s Pet Nutrition Inc.) Hill’s Science Diet and Hill’s Prescription Diet
• Mars Incorporated (Pedigree, Greenies, and Cesar,)
• Nestle (Purina) – brands like  Beggin’ Strips, Busy Bone, and Dentalife
• Real Pet Food Co. – VIP Petfoods, Nature’s Gift, and Farmers Market,
• EBOS Group Limited

For many years the top three companies exclusively imported products, and concentrated on selling into VETS  (for credibility) and the two major supermarkets (locking out competitors).

You might be curious about why the top three names are mostly connected to origins of toothpaste, confectionary and chocolate.   Almost seems like they would have little knowledge of what was actually good and healthy for dogs, a base carnivore breed, that can tolerate carbs.

Each of these brands have grown mostly by having great distribution channels, and purchasing competition companies.  Its amazing what a few billion dollars can do.

The last two brands on the top five have found their way into the market by creating mince, meat balls, and dog food rolls, often sold at the two major supermarkets.  But at the top end, the supermarkets are fighting back with their own brand of domination, by selling under their own brand, literally.

NONE of that bodes well for the smaller dog treats companies that provide the most natural and nutritious products.

What is driving growth in dog food and dog treats markets?

The humanisation of pets, and increased expenditure on things like dog clothing and expensive toys has lifted the humble dog’s profile.

And to cash in on that the dog treat market in Australia is like other western countries now trying to   focus on health and wellness.  That implies that the foods and treats will extend the life of the dogs.

And to this end the major companies have purchased companies like HILLS that are so called ‘vet approved’ companies.  This legitimises their credentials that spill across to all other dog food categories to the much less healthy treats (cheap plant-based ones)

It is said that consumers (i.e. dog owners) are becoming aware of the nutritional content of dog foods and are looking for food products that offer health benefits.  You will see this plastered on dog kibble bags suggesting they are aimed at obesity, puppy stage, dental health, skin and coat health, and joint support.

Be aware that if you compare ALL of their range, there are only subtle differences in ingredient lists, and there are rarely, if ever, any percentages given.  Much of this is smoke and mirrors.

How does an oligopoly (5 company dominance in wholesale dog treat market) help retailers and dog owners?

Its true that oligopolies (concentrated power in only a few companies) typically is a bad thing for choice and price.  In fact, in America many large corporations have either been banned from acquiring competitors or broken up when they become too powerful and hamper competition or innovation.

The problem for dog owners, is that with so many other industries having more power and overall sales, the dog good and dog treat industry has basically stayed off their radar.  They have too many other ‘big fish to fry’.

What you will notice about the big dog food companies, the ones that you see advertising for everywhere, and sponsoring all dog events, are the ones with massive factories and workforces.  Workforces with people with no interest in dogs, just picking up a pay cheque.  Board rooms full of managers and executives ONLY interested in the bottom line.

They are willing to jump on any ridiculous trend, as long as it grows their bottom line – hence the invention of the anti-carnivore VEGAN dog treats.

Herein lies the value of the small dog treat company wholesaler.

Big companies want the fast-food equivalent of dog treats.  They want cheap ingredients that photograph well, and have a VERY long shelf life.

They have no interest in true health, or buying expensive meat ingredients.  

To them meat can look too different from one batch to another, be difficult to pack, and when storing in no air-conditioned large warehouses can spoil or attract vermin.

Meanwhile the little true natural/ healthy dog wholesaler will deal almost exclusively in animal products (meat, offal and bones).  They will store in airconditioned warehouses.  They will take extra care of their product.  They will actually know about protein sources and why the amino acids from meats are the best fit for dogs.

They typically wont sell through discount dollar stores because many of those places also have bad storage solutions, and often sell treats near expiring, so they can buy them in cheaply.  These are still the places that sell things like rawhide treats with many toxins, that most experts in the industry have tried to ban.

Being massive, the dominating players in the market also need continuous supply of a massive amount of ingredients.  That is why they are so keen on over processed milled grain fillers like wheat and rice. They know that the bulk of dog owners value convenience of picking up a pretty packet of anything with a dog’s face on the front of it at the supermarket, rather than have to hunt down an actually healthy dog treat that is single ingredient.

It is precisely the focus of the big players on composite treats made of cheap ingredients that can be sold at large margins that provides the opportunity for the smaller players to provide the healthy dog treat options to the wholesale market.