Amazon launches dog food brand for Prime customers
CNN — Amazon is jumping into the dog food business.
Wag, a line of kibble available exclusively to Prime members, launched this week.
It comes in two sizes: 5 pounds for $12.99 and 30 pounds for $44.99. There’s also a 15-pound choice for puppies for $26.99. Flavors include chicken, beef and lentil, and salmon.
Amazon will begin with dry dog food and add products later, spokesperson Nell Rona said.
In the same way Amazon’s purchase of Whole Foods forced down prices in supermarkets, Wag will intensify price competition among pet food retailers, especially online, AllianceBernstein analysts said in a report on Thursday.
Pet food is an attractive market: Americans spent $32 billion on it last year, according to AllianceBernstein.
“Pet owners are increasingly viewing their pets as a part of the family and are looking for products that are similar to their own eating preferences,” Morgan Stanley analyst Matthew Grainger said in a report last month.
Pet food is growing faster than the broader packaged food industry, led by owners willing to buy higher-priced foods with natural ingredients for their pets.
Seeking ways to diversify their products and boost sales, struggling home care and packaged food companies are paying substantial premiums to acquire pet-food brands.
General Mills, the maker of Cheerios, bought Blue Buffalo in February for $8 billion. JM Smucker paid $1.9 billion for Ainsworth Pet Nutrition, the producer of Rachael Ray Nutrish, in April and scooped up Big Heart Pet Brands for nearly $6 billion in 2015.
Amazon’s entry into the industry poses a threat to them. Shares of both companies fell on Thursday.
Amazon is also a risk to Colgate-Palmolive’s Hill’s brand, Mars’ Pedigree line and Nestle SA’s Purinam. Pedigree is the market share leader, according to Euromonitor.
Amazon’s move into the market may put even more pressure on brick-and-mortar specialty stores like Petco and PetSmart.
Sales at pet superstores make up about 21 percent of the market, down from 25 percent three years ago, according to AllianceBernstein.
A hit to profit margins couldn’t come at a worse time for PetSmart. The company dished out more than $3 billion for online marketplace Chewy.com last year.