Top 5 challenges dog food producers face and how Vietnam solves them

One of the key challenges that dog food producers are challenged with in the fast-growing pet food market is finding quality sources of ingredients, which directly affect the quality of the product and the cost of production. Raw materials constitute 60-70% of the entire cost of manufacturing and therefore the most conclusive of formulation and profitability. With growing demand for more high-quality and protein-enriched dog food around the globe, producers have to deliver high nutritional quality and deal with the fluctuation of prices, inconsistent quality, and increasingly strict sustainability regulations.

Through these forces, Vietnam is becoming a strategic sourcing center, providing rich agriculture, good by-product sources of aquaculture, and low ingredient prices. This offers manufacturers a good chance to get raw materials that are of good export quality. The suppliers, such as Vietfeeds, offer quality consistency, customizable parameters, and clear-cut documentation, assisting dog food manufacturers to build supply chains with confidence.

What ingredients dog food producers use today

Dog foods have been formulated between the economy, mid-range, and premium market segments, but the vast majority of dog food producers are basing their formulations on a structured blend of animal proteins, plant proteins, carbohydrates, fibers, and functional additives. The nutritional value of each ingredient group is determined by it, but it also affects the digestibility, palatability, extrusion stability, and, above all, cost per ton.

The raw materials that are utilized by the producers of dog food today have been detailed, and the reason behind each category is given below.

Animal protein ingredients

Most of the dog food formulas are based on animal proteins. They are the most costly ingredients yet the ones that have an effect on the nutritional performance and taste the most.

• Fish Meal (55%60% Protein): It is very digestible, is an excellent source of omega-3, and is commonly available in mid-range to high-end formulas. The catch limits of Peru, the seasonal supply in Southeast Asia, and the weather conditions, such as El Nino have a strong influence on price volatility.
• Poultry Meal / Chicken Meal: It is very consistent in protein quality and good amino acid profile, and cheaper as compared to fish meal. Frequently utilized as a base protein in mid-range as well as economy products.
• Meat & Bone Meal (MBM): This is a low-priced protein source that contains 45-55 percent protein. The increased ash content renders it inappropriate in high-end dog food, but in high demand in low-cost formulas.
• Hydrolyzed Animal Protein: This protein is utilized in high-quality, sensitive, or hypoallergenic dog food. Premier price in the animal protein group.

Plant-based proteins 

The demand for plant proteins is on the increase as dog food producers seek to strike a balance between high protein demands and cost.

• Soybean Meal (SBM): 44-48% of protein that is well-digestible. Very sensitive to the conditions of U.S.-Brazil crops and logistics prices.
• Peanut Meal: The protein content is 45-52, with competitive prices and supplies all year round. Being more popular with Asian pet food producers.
• Rice Bran (Full-fat or Defatted): aids digestion, provides fiber and energy, and aids in preserving the kibble structure. Vietnam is a major supplier of rice bran, which is stable due to its availability in the world.
• Corn Gluten Meal (CGM): 60% protein, and enhances the color of kibble. Greater cost aspect than peanut meal.

Carbohydrates and energy sources

Carbohydrates are important regarding extrusion ability, kibble form retention, and energy density.

• Broken Rice: This has high digestibility and enhances the consistency of kibble. Vietnam is among the biggest exporters in the world, enabling the sourcing to be cost-competitive.
• Corn: Cheap and high in energy. Global grain market price influence.
• Cassava Chips / Cassava Pellets: This is one of the cheapest sources of energy in dog food recipes. Famous for value dog foods.

Fibers, palatants, and functional additives

Brewer’s Yeast: Helps with digestion, immunity, and makes it taste good. Widespread in mid-range and high-end formulas.

• Corn Cob Powder / Fiber Ingredients: Stabilizes the quality of stool and reduces the cost of formulation. Another alternative to beet pulp.
• Oils (Fish Oil, Poultry Oil): Increase palatability and provide essential fatty acids. The prices of fish oil are also fluctuating, which is shifting towards poultry oil in cost-effective products.

Sourcing challenges dog food producers are facing now

The sourcing of ingredients has turned out to be one of the most challenging dog food production processes. With the growing demand for pet nutrition in the world, there is a growing pressure on dog food producers to obtain cost-effective, quality, traceable, and year-round quality ingredients. The following are the major sourcing issues that are defining the pet food industry in the modern day.

Price volatility across key raw materials

Prices of ingredients are highly fluctuating, particularly the animal proteins and grains, due to world supply interruptions. When Peru slaps an anchovy moratorium on harvesting, prices of fish meal shoot up. The reaction of corn and soybean meal to the U.S.-Brazil crop and world freight rates is strong. Meat meal and poultry meal rely on the production of livestock and the production of rendering plants. This volatility makes it hard to forecast costs, particularly the brands that have a slim margin. To cope with the risk, dog food producers are turning to other or regional ingredients.

Quality inconsistency and variable specifications

The quality of raw materials is different among suppliers and harvests. Such problems are: Variations in the protein content caused by varying raw meat and bone meal and fish meal components, High moisture, which causes moulding, aflatoxin, and diminished shelf life, overly large particle size, which negatively affects extrusion performance, and Impurities and foreign matter in agricultural by-products. Inconsistency in quality is one of the greatest risks to the dog food producers, particularly those who also sell the food in Europe, Australia, or Japan.

Limited supply stability throughout the year

Some raw materials are seasonal or weather-dependent: Rice bran and broken rice are subject to the harvest seasons of Vietnam and Thailand, and because of the very weather-sensitive nature of the raw material, the pellets of Cassava chains/nanoparticles vary with harvesting seasons of yearly yields, and Marine resources such as fish meal are highly dependent on their annual fishing quotas and weather conditions. Fluctuating supply is a significant operational problem for manufacturers with large and stable monthly volumes.

Increasing demand for traceability and sustainability

Multinational pet food companies are increasing the standards of supply-chain transparency. Buyers now require: Documentation of origin of ingredients used, Processing method: verification, Sustainability claims (low carbon, minimum wastage), and Compliance with standards of the importing country. The trend is high in the EU, North America, and Australia- areas that require standard COA, aflatoxin testing, and suppliers’ traceability.

Logistics disruptions and rising freight costs

The unpredictable logistics situation has increased sourcing difficulties: Freight shortages and increased container rates, Port congestion in Asia, Geopolitical disturbances in South America and the Middle East, and Delays that result in ingredient aging or moisture problems. This has pushed dog food producers to acquire regional suppliers that are nearer to their manufacturing centres to decrease the long-distance imports.

Vietnam is becoming a raw material hub for dog food producers

Aquaculture and agriculture are major producers of protein-rich by-products and have enabled Vietnam to become an important sourcing centre for dog food producers. Some of the products, such as fish meal, shrimp meal, rice bran, cassava products, and other plant-based meals, are made in bulk quantities, and manufacturers are able to obtain nutrient-rich raw materials at a low cost.

The other opportunity is the availability of a stable production throughout the year in Vietnam. There are continuous aquaculture cycles and high crop yields in order to reduce seasonal deficits and price fluctuations to provide dog food manufacturers with a more predictable procurement forecast. Meanwhile, quality standards are being enhanced, and the supply of suppliers offering standard specifications and testing of COA that can satisfy the international pet food standards.

The strategic export infrastructure also helps Vietnam, among other factors. Competitive prices of logistics, short transit routes throughout Asia, and efficient ports allow quicker and more adaptable shipments. Together with the access to the raw material, it is not only cost-effective but also reliable and is one of the factors that makes global dog food manufacturers shift their sourcing to Vietnam.

Conclusion

With the growing globalization of the market for high-quality dog food, there is growing pressure on producers to find reliable raw materials that are cost-efficient and nutritionally balanced. The increase of Vietnam as a sourcing hub of raw materials due to the presence of inexpensive agricultural raw materials, harvest throughout the year, and rising quality status provides manufacturers with a competitive edge in terms of pricing and stability of supply.

As a producer that needs a reliable partner, Vietfeeds can offer direct sourcing, rigorous quality control with COA of each shipment, flexible packaging, and a variety of protein and plant-based products used in pet foods according to their needs. Vietfeeds offers assistance to the dog food producers in enhancing their formulations without raising their production cost since the target is to ensure long-term reliability of their supplies, including export-grade.