Raw pet food could become a $500 million industry, says Scratch founder Mike Halligan, as Australian dog owners give up their own creature comforts instead of downgrading their pets’ diets.
D2C pet food brand Scratch launched Raw in September, calling the frozen mix of raw meat, vegetables, and nutrients a healthy and mess-free alternative to traditional raw feeds.
At $157 per 8.25kg delivery, Raw is significantly pricier than dry kibble, including Scratch’s own options.
But more than 1,000 dog lovers have already signed up for Raw food plans, showing what Halligan calls an increased focus on pet health and wellbeing among Australian households.
“We really looked at the market and thought there’s a trend of people wanting to treat their dogs, above and beyond,” Halligan told SmartCompany.
“It’s definitely a lot different than what it was when we started the business six years ago.”
This interest in pre-prepared raw food — combined with what Halligan calls “guilt” from pet owners about traditional dry foods — means the once-niche sector is set for further growth.
“I definitely think it could be a $500 million market in the next five years,” he said.
“I definitely think all the trends are sort of going this way, even as we are experiencing economic challenges, this side of the market continues to grow.”
A 2022 survey of Australian pet owners, commissioned by Animal Medicines Australia, found the nation spends over $33 billion on pets each year, with 51% of that expenditure devoted to food.
Not only are Australians spending big on their pets, Halligan believes households will choose to cut back on other discretionary expenses before giving up on gourmet pet food.
“Treats, and daycare, and dog walking and those extra enjoyment things — I’m sorry to say for dogs — have been the areas people are cutting back, but food is the area people are retaining,” he said.
The customers who have signed up for Raw, or who have found their own premium options, are unlikely to ditch them entirely in a tough economic environment.
“The only way it’s really hitting food is that people are mixing between a cheaper thing and a more expensive thing,” Halligan said.
“They’re definitely not giving up on the creme de la creme dog food, like Raw or some of the other fresh brands that came before us, but occasionally, if they are needing to tighten the belts a bit, they’re reducing how much of the dog’s diet is coming from that.”
Data from other retailers shows the cost of pet food is a real concern for many households.
Online retailer Fur King surveyed customers in April about their spending habits, finding 40% are worried about the cost of feeding their pet, with some switching to cheaper foods as a result.
“Cost of living pressures are affecting all areas of discretionary spending including pets,” Fur King general manager Tom Sadler said in a statement.
But not every pet owner is willing to sacrifice their pet food regimen.
“Despite this, we have found that many customers will put their pet’s need before their own,” Sadler said.
“There have been multiple instances where customers have told us that they have cut back on spending on their own food to be able to feed their pet or pay a pet’s medical bill.”
If those spending trends hold true, it will boost independent manufacturers like Scratch, and D2C competitor Lyka, which last year claimed $55 million in Series B funding.
“We are growing about 40% year-on-year, and we’re over $20 million of [annual recurring revenue] at the moment,” Halligan said of his own business.
“We’re still bootstrapped. Never done a big venture capital round or anything like that.
“We’re proud of how we’ve been able to grow on our own, and I think we’d expect to continue to grow at over 40% for the next year as well.”
Scratch is now considering new sales avenues, and is fielding interest from vet clinics interested in stocking its raw products.
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Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
