As Americans' appetite for wellness grows, consumers look for new products for their pets, said BarkBox CEO Matt Meeker.
"It's a huge industry," Meeker said, referring to the nearly $70 billion pet products industry. Meeker is co-founder of BarkBox, a subscription service that provides dog owners, and even some pet pig owners, a monthly box of two toys, two treats and a chew toy.
"We've walked into so many meetings where people say, 'The pet industry, what a joke,'" Meeker said Friday on CNBC's "Power Lunch." "[But] it's huge."
In fact, the pet industry is expanding at a record pace as companies in other sectors jump into the market. Last year, packaged foods in the U.S. grew 1.2 percent, while retail pet foods grew more than three times as fast, according to the research firm Euromonitor. The larger pet products industry is also expanding. In 2013, Americans spent approximately $55.7 billion on pet products, according to the American Pet Products Association. That number jumped to $66 billion in 2016 and is estimated at nearly $70 billion in 2017, with $29 billion to $30 billion spent on pet food alone.
"Consumers are moving to more natural products in human food, and it absolutely is happening in the pet space, where people treat their pets like a family member," David Lenhardt, the former president and chief executive officer of PetSmart, said Friday on CNBC's "Closing Bell."
Case in point, when BarkBox was launched in 2012, most subscribers were women, urban residents or millennials, people who treated their dogs "like a child" or "as family members," Meeker said. But as the product line and reach expands, people in rural areas have begun subscribing. In 2017, BarkBox began selling toys and treats at Target.
Meanwhile, the demand for packaged and processed human foods is on the decline. Food companies that specialize in packaged and ready-made foods are looking for other sources of revenue — and are betting on the booming pet industry.
On Friday, General Mills, the company famous for ready-made foods, such as cereals and yogurt, announced it would buy the Wilton, Connecticut-based company Blue Buffalo Pet Products for about $8 billion in cash. Blue Buffalo is known for its natural pet foods.
"In pet food, as in human food, consumers are seeking more natural and premium products," General Mills CEO Jeff Harmening said in a statement.
It's not just the pet-food sector that is changing. The entire food industry is struggling to adapt to new consumer trends, said Steve Odland, president and CEO of the Committee for Economic Development.
"It's surprising how fad-ish food has been," said Odland, who is also on the board of directors for General Mills. Throughout history, Odland pointed out, American food tendencies have evolved from farm-fresh foods to frozen meals and now to natural and organic fare.
"This happens continuously," he said. "It's very difficult for established food manufacturers to keep up with these trends, to innovate and to make sure that they are hitting the current trends. So here we are with natural and organic, and you see every food manufacturer scrambling to try to find, to buy new brands for growth.
"As dogs go from being animals to being part of the household — children, in this case — you see the move that mirrors what's happening in human food," he said.
Other brands that already have a stake in the pet industry include Mars Inc., which owns Pedigree Petfoods, Iams, Whistle and Royal Canin. Nestle, famous for its hot chocolate, owns Purina. The iconic jam and jelly company Smucker's owns Meow Mix, Kibbles 'n Bits, Natural Balance and Milk-Bone. And Hill's Science Diet is owned by the Colgate-Palmolive Company.
Meeker said he's excited about the Blue Buffalo acquisition. "This is a recognition that [the pet industry] is meaningful," he said.