Inflation Bites Dog

RACHAEL AND I WENT to Walmart the other day to stock up on dog food—and came away with a severe case of sticker shock.

We feed our two dogs a daily menu of dry food mixed into a delightful mash with a little canned wet food. Our go-to brands are Purina Dog Chow for the dry food and Pedigree Chopped Ground Dinner for the wet food.

The cost of the 40-pound bag of Purina dry food has barely budged. The price of the 12-can pack of Pedigree wet food, however, has jumped from about $12 to nearly $20.

What’s going on? Doing a little research, I discovered that Pedigree dog food is made by Mars Petcare, a subsidiary of Mars—yes, the same company that makes M&Ms and Twix bars for us humans. I sent a note to the people at Mars Petcare and got the following response back:

We’re sorry you are disappointed in the increased pricing. Our top priority will always be the happiness of your pet. Increasing our prices will allow us to maintain our standards and quality to ensure that our treats include the ingredients and flavors that your pet loves.  

Being a former PR guy, I can appreciate the spin in this nice note, but I’m not buying it. Yes, roaring inflation has made everything more expensive over the past couple of years, and pet food is no exception. But to raise the price of canned dog food by 60% overnight, without an obvious market or supply-chain shock driving the increase—clearly, something beyond ordinary inflationary pressures is at work here.

The answer came to me as I scanned the pet food shelves at Walmart. There were literally dozens of brands of bagged dry food to choose from—Purina, Iams, Kibbles ‘n Bits, Blue Buffalo, Nature’s Recipe and more. The choices were much more limited, however, when it came to wet food. We had maybe 10 choices of canned food, and all of them had gone up significantly in price. What’s more, all these wet food choices came from the same two or three suppliers.

This, it seems to me, was a classic case of an oligopoly of producers taking advantage of price inelasticity to increase profit margins. Economically speaking, price elasticity measures the sensitivity of demand for a given product to changes in price. An inelastic product is one where demand stays relatively static when its price or other supply factors change. Marketers love situations like this because they can raise prices without suffering a huge fall in sales or profits.

Inelastic markets typically occur in situations where consumers don’t have much choice when it comes to adequate substitutes. The market for pet products is one such market. Why? We pet owners are obsessed with our furry companions and are willing to pay up to take good care of them. Many of us are even willing to spend extra on so-called “organic” pet food, even though the Food and Drug Administration doesn’t regulate the labeling of organic foods for pets.

I’m not one of those pet owners. Until research provides clear evidence of the benefits of pricier “natural” pet foods, I’m happy choosing a “regular” product that has the right mix of protein, fiber and nutrients. The fact is, all the products on the Walmart shelves, whether regular or organic, are highly regulated and use real meat by-products. The difference in prices have a lot to do with the branding of the product and the advertising dollars that go into it.

As an educated buyer, I’m willing to switch brands if my favorite product becomes significantly more expensive than another product with a similar mix of quality ingredients. My willingness to switch brands based on price is where I, as a consumer, gain power during inflationary times like these. I can do so through the important economic principle of the substitution effect, defined as the decrease of sales that happens when a product’s price rise causes consumers to switch to a cheaper alternative.

Those cheaper alternatives don’t necessarily have to be in the same narrowly defined category. If, for example, a sudden shock in the supply of coffee beans makes ground coffee outrageously expensive, I could drink tea instead.

In the case of dog food, I have many competitive choices for dry dog food—which is likely why prices haven’t increased that much. With fewer choices for canned dog food, however, I’m at the mercy of sharp price increases, such as those I’m seeing on Walmart’s shelves.

For our household, what are the alternatives as we strive to keep our dogs healthy and happy without breaking our limited budgets? Well, we could cut back on the wet canned food, or eliminate it altogether and stick with dry food only for our dogs. While I suspect my Cassie would be fine with this, Rachael’s fussy Cavachon likely wouldn’t be happy with this option.

We could mix gravy in with the dry food to make it more appetizing. Both dogs would love that, and there would be no change in the nutrients they’re getting.

Another more radical option: We could cook up the ground venison in our freezer and mix some of that into the dry meal. The venison comes from a buddy who hunts my property up north. We know that venison is grass-fed and free of hormones, and we have plenty of it.

We’re still weighing our options as we work through the last of the canned dog food. At times like these, a little creativity goes a long way toward staying on budget and retaining our power as consumers.

James Kerr led global communications, public relations and social media for a number of Fortune 500 technology firms before leaving the corporate world to pursue his passion for writing and storytelling. His debut book, “The Long Walk Home: How I Lost My Job as a Corporate Remora Fish and Rediscovered My Life’s Purpose,” was published in 2022 by Blydyn Square Books. Jim blogs at PeaceableMan.com. Follow him on Twitter @JamesBKerr and check out his previous articles.

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