How venture technologies are shaping the future of pet food nutrition

OPINION

By Rostyslav Vovk, chairman of the board and co-owner of Kormotech

Ninety-five percent of pet owners consider their cats or dogs to be genuine family members, leading them to choose diets for their pets as meticulously as they would for themselves. Such diets must provide adequate proteins and essential vitamins, as well as aligning with sustainability principles. According to Lynn Dornblaser, director of Innovation & Insight at the market research firm Mintel, the pet food industry is currently seeing even more innovation than that of human food.

In 2023, we at pet food manufacturer Kormotech established an internal venture unit called Kormotech Ventures. Its mission is to identify and invest in promising pet food startups. While working within Kormotech Ventures, I've observed three major trends that I believe are already shaping the future of the pet food industry. In this article, I'll outline these trends and explain why pet food manufacturers are increasingly investing in startups.

1. Personalized care and organic ingredients

Pet parents are increasingly eager to better understand their pets and make tailored care choices. A great example of this trend is the success of Basepaws, a startup offering DNA testing for cats and dogs. Their tests enable pet owners to develop customized nutritional and health plans based on genetic profiles. In 2022, Basepaws was acquired by Zoetis, a Fortune 500 animal healthcare giant, for $50 million.

Another impressive milestone in pet tech investments was achieved by Butternut Box, a startup producing customized dog food. The company tailors portion sizes and ingredients based on each dog's activity level and preferences. In 2023 alone, Butternut Box secured $351.5 million in funding. Market research consistently shows that pet owners value and are prepared to invest in personalized solutions for their furry companions.

Today's consumers increasingly prefer organic ingredients that have undergone minimal processing. Recognizing this lasting trend, we at Kormotech Ventures acquired a majority stake in the startup Rocketo, which had previously attracted approximately €2 million (US$2.2 million) in funding. Rocketo specializes in dog food produced through low-temperature dehydration at 40°C, preserving nutritional value. Their products contain 85% organic meat, supplemented by superfoods like chia seeds and seaweed. Although we do not yet manufacture products like these at our current production facilities, the growing availability of these innovations in the market compels us to stay competitive.

2. Alternative protein sources

Interest in non-meat protein products is steadily increasing worldwide. According to a forecast by BCG, alternative proteins will represent 11% of global animal-based product consumption by 2035.

In 2023, the insect-based pet food supplement startup Ynsect secured $175 million in funding, reaching a total of $625 million raised. Besides insects, startups are innovating pet nutrition by developing products based on plants, legumes, fungi, and even lab-grown meats. For instance, Meatly, who has already attracted $7.7 million in investment, creates cultivated meat ingredients by extracting cells from chicken eggs and growing meat in laboratory conditions. Similarly, the insect-based dog food company Tuggs raised $1.46 million after successfully tripling its revenue within nine months.

It's challenging to foresee exactly how mainstream the adoption of alternative proteins in pet nutrition will become. Potential allergic reactions might limit the speed of market expansion. However, despite these concerns, the sector is already experiencing consistent growth.

Pet parents are increasingly eager to better understand their pets and make tailored care choices.florianhoellmueller | Pixabay.com3. Sustainable packaging

Nowadays, the packaging of pet food is almost as important as its ingredients. Studies indicate that 82% of consumers are ready to pay extra for eco-friendly packaging options. Sustainability has become essential for modern brands aiming to connect with a wide consumer base.

Startups are leading by example, proving that even paper can effectively serve as packaging for pet food. A notable case is Wynn Petfood, a startup producing natural dry mixes that require the addition of water, allowing their products to be packaged entirely in paper.

At Kormotech, we are committed to improving the sustainability of our packaging. After conducting an in-depth analysis of one of our packages, we discovered that reducing its height, wall thickness and bottom thickness was possible without compromising product quality or volume. This optimization not only lowered costs for customers but also enabled the company to achieve annual savings of up to €50,000. Going forward, we intend to expand this approach to other packaging types.

Why pet food producers invest in startups

In 2023, investment in the pet care, pet food and related products sector surged by 659%, totaling $2.89 billion. Large multinational pet food corporations are investing hundreds of millions of dollars into innovative startups. Why do they pursue this strategy? Several factors motivate their actions.

• The potential to integrate startups into their operations, strengthening and expanding their business.
• The chance to be involved in developing innovative products that could reshape the entire market.
• An effective way to attract and secure industry talent.

In large multinational corporations, new ideas often face a challenging review process conducted by top management, where extensive risk analysis might prioritize immediate concerns, such as competitive positioning. On the other hand, partnering with startups enables companies to rapidly test new product ideas and swiftly gauge market reactions.

Rostyslav Vovk is chairman of the board and co-owner of Kormotech. This international family-owned company with Ukrainian roots ranks among the top 50 global pet food manufacturers. Its brands are available in 46 countries, both under its own trademarks and those of partner companies. Vovk leads a team of 1,300-plus employees worldwide.