1. The Evolving Regulatory and Legal Landscape

1.1 The Dual Authority: FDA, AAFCO, and a Shifting Paradigm

Pet food regulation in the U.S. is a two-tiered system involving the FDA and a non-governmental body. Under the FD&C Act, amended by the 2011 FSMA, the FDA ensures animal foods are safe, sanitary, and truthfully labeled. FSMA shifted the FDA’s focus from reacting to contamination to preventing it, requiring manufacturers to follow cGMPs, assess hazards, and maintain a food safety plan covering everything from sourcing to recalls.

FSMA’s focus on prevention is more than a regulatory requirement; it’s reshaping operations and supply chains. The law requires facilities to implement a food safety plan with hazard analysis, driving stronger supplier vetting and auditing. Since a single contaminated ingredient can trigger costly recalls, FSMA pushes manufacturers to rethink supply chain management from end to end.

The Association of American Feed Control Officials (AAFCO), though non-governmental, plays a major role in U.S. pet food regulation since most states adopt its model rules. As a result, AAFCO standards on labeling and ingredients have become the industry norm, complementing federal law that sets the baseline for safety and sanitation.

1.2 The Pet Food Label Modernization (PFLM) Initiative

AAFCO’s Pet Food Label Modernization (PFLM) initiative, launched in 2015, updates labeling to be more transparent and consumer-friendly by replacing the traditional “Guaranteed Analysis” with a modern “Nutrition Facts” box similar to human food labels.

Key PFLM changes include a redesigned, human-style nutrition panel with clearer calorie counts, product purpose (diet, treat, mixer), and life stage suitability. Nutrient terms are simplified (“protein” instead of “crude protein”), and labels must now include total calories (broken down by protein, fat, and carbs) as well as total carbohydrates with dietary fiber listed as a subset.

The shift from “crude fiber” to “dietary fiber” under PFLM is more than a name change — it requires more advanced and accurate testing methods (e.g., AOAC 991.43 or HPLC) to capture a broader range of fiber components. As a result, manufacturers must invest in new lab capabilities or partner with third-party labs, adding cost and complexity to quality control and supply chain management.

PFLM vs. Current Labeling Standards: A Comparative Overview

1.3 The Human-Grade Conundrum: A Powerful Marketing Claim with Operational Demands

The term “human-grade” is a strong marketing claim, but it has no official legal definition. AAFCO requires that all ingredients, including supplements, be edible for humans, and that the entire product be produced, stored, and transported under human food GMPs (21 CFR 117). This means it must be made in a human food facility, not a pet food plant. Because of these strict conditions, most traditional pet foods cannot qualify.

The “human-grade” trend taps into pet humanization and consumer desire for premium ingredients like prime meat cuts. But it clashes with sustainability: the most eco-friendly option is using animal byproducts, nutritious parts that reduce landfill waste and emissions. Since byproducts aren’t human-edible, they can’t be used in “human-grade” products. This creates a paradox, forcing brands to choose between premium positioning and sustainability, and to clearly communicate their values to consumers.

1.4 A Paradigm Shift: The End of the FDA-AAFCO MOU

On October 1, 2024, the long-standing FDA–AAFCO Memorandum of Understanding (MOU) expired, ending nearly two decades of shared responsibility for feed ingredient approvals. Under the MOU, AAFCO managed ingredient definitions with FDA-CVM input, but with its expiration, full oversight has shifted back to the FDA. In response, the agency launched the interim Animal Food Ingredient Consultation (AFIC) program, which allows consultation on the safety of new ingredients while exercising “enforcement discretion” for those already listed in the 2024 AAFCO Official Publication.

The transition creates major uncertainty for manufacturers, suppliers, and regulators. Companies pursuing new ingredients such as probiotics, alternative proteins, and functional additives will likely face heightened regulatory and financial hurdles, making this a critical turning point for the industry.

2. Major Pet Food Industry Trends and Their Driving Forces

2.1 The Humanization of Pets: The New Market Baseline

The humanization of pets, especially among Millennials and Gen Z, who often view pets as family, has reshaped the pet food industry. Many see pets as easier and less costly to care for than children, driving a willingness to spend more on healthier, transparent, and higher-quality foods. This trend fuels demand for specialized and functional diets, creating premium pricing power and higher margins for manufacturers.

The humanization trend has transformed pet food from a basic commodity into a health and wellness product. Pet owners increasingly see nutrition and supplements as vital for pets, driving demand for foods that are nutrient-rich, minimally processed, and offer functional benefits for issues like allergies, obesity, and digestion. In response, manufacturers use higher-quality, recognizable ingredients and emphasize sourcing and benefits on labels. This dynamic turns pet food into a value-added category, enabling premium pricing and reshaping R&D and marketing around specific health concerns.

2.2 The Rise of Minimally Processed Foods

Aligned with the humanization trend, demand is rising for minimally processed pet foods such as fresh, frozen, and freeze-dried formats. Though still niche, just 4% of U.S. sales, they are a clear growth driver, with refrigerated and frozen products growing 18.8% in the year ending June 28, 2025 (NielsenIQ). Their appeal lies in being perceived as less processed and more nutritious, with gentle methods like cooking or high-pressure processing (HPP) promoted as preserving nutrients and flavor.

The rapid growth of minimally processed pet foods signals a long-term shift that kibble manufacturers cannot ignore. Though still a small share of sales, their outsized growth shows a consumer segment willing to pay a premium. To stay competitive, traditional players must diversify into these formats or pursue strategic acquisitions. This requires more than new kibble flavors, and it demands investment in new processing technologies (e.g., HPP), cold-chain logistics, and entirely new product categories.

2.3 The Push for Transparency and Sustainability

Pet owners now demand full transparency, knowing what’s in their pets’ food, where ingredients come from, and how products are made, driven in part by past recalls. At the same time, sustainability is shaping purchase decisions, fueling demand for organic and natural foods, certified sustainable ingredients, and eco-friendly packaging. The natural and organic pet food market is projected to exceed $57 billion by 2033, with brands exploring options like mono-material pouches, compostable films, and recycled content to meet consumer expectations.

The push for transparency is driving manufacturers to adopt advanced traceability, turning compliance into a strategic asset. Traditional record-keeping can’t meet consumer expectations for ingredient origin and sourcing details. Digital systems, QR codes, and even blockchain offer real-time visibility, while also enabling faster, more precise recalls. This creates a virtuous cycle: consumer demand for transparency compels traceability, which not only protects the brand in a crisis but also builds lasting consumer trust.

3. Strategic Implications for Supply Chain & Supplier Management

3.1 The Imperative of Unprecedented Traceability and Audits

Past recalls have taught the pet food industry that traceability is no longer a regulatory checkbox but a mission-critical tool for brand protection. Advanced systems enable rapid, targeted recalls of specific lots, avoiding the costly, reputation-damaging blanket recalls of the past. Under FSMA, facilities must maintain recall-ready food safety plans, pushing manufacturers to adopt digital traceability that tracks raw materials through finished goods, delivering full lot lineage in seconds rather than hours.

Retailers and major brands now require third-party food safety audits, often GFSI-benchmarked programs like BRCGS or SQF, as a key risk-mitigation tool. Pressure for quality comes from all directions: regulators (FSMA), retailers, consumers, and manufacturers themselves. Pet food makers must follow GMPs and demand that suppliers, such as meat renderers, implement controls to prevent hazards like metal fragments. At the same time, retailers and consumers expect third-party certifications. This cascading pressure makes demonstrable quality and certification a baseline requirement across the supply chain, not a competitive bonus.

3.2 Elevating Supplier Vetting and Quality Agreements

Given the increasing complexity of sourcing for premium, functional, and "human-grade" products, the supplier relationship has shifted from a simple procurement function to a strategic partnership. In a market demanding a wider variety of ingredients, including novel proteins, functional additives, and plant-based options, manufacturers must engage with suppliers who have specialized expertise and a shared commitment to quality.

Robust quality agreements are critical when working with contract manufacturers, outlining ingredient standards, handling protocols, liability, and testing responsibilities. Supplier selection has become a strategic decision, as demand grows for novel proteins, functional additives, and specialized sourcing tied to human-grade and sustainability trends. With regulatory uncertainty adding further complexity, choosing the lowest-cost supplier is no longer viable. Brands must partner with suppliers who can help navigate these challenges and safeguard long-term success.

3.3 Adapting to New Manufacturing and Sourcing Demands

Stricter standards under FSMA are rendering many older facilities inadequate. “Warehouse-style” plants often cannot withstand the sanitary washdowns now required, pushing manufacturers to renovate or build new facilities designed for hygiene. Modern plants incorporate features like stainless-steel surfaces and antimicrobial polyurethane floors to meet today’s safety expectations.

Pet humanization has pushed pet food manufacturing to mirror human food production, requiring major capital investment and operational change. FSMA requirements and consumer demand for minimally processed, “human-grade” products are driving upgrades in hygienic design, sanitary zones, and automation, making facilities and equipment key competitive differentiators. Demand for diverse proteins and plant-based ingredients also requires flexible processing systems that can handle multiple product types while minimizing cross-contamination risk.

4. Conclusion and Strategic Recommendations

The U.S. pet food industry is being reshaped by evolving regulations, shifting consumer demands, and new technologies. Regulatory oversight, anchored by the FDA and AAFCO, is moving toward greater transparency and prevention, underscored by the PFLM initiative and the end of the FDA-AAFCO Memorandum of Understanding. At the same time, pet humanization is driving demand for healthier, more transparent, and sustainable products, fueling growth in minimally processed formats and elevating claims like “human-grade,” which carry heavy operational requirements.

Business as usual is no longer viable. Success now depends on excelling in supply chain management, operational excellence, and brand communication. Unprecedented traceability, rigorous supplier vetting, and investment in hygienic manufacturing and technology have become core imperatives.

Forward-Looking Recommendations for Industry Stakeholders

1. For Manufacturers: Don’t just meet regulations. Exceed them to build brand value and a competitive advantage. Use PFLM to showcase transparency and invest in advanced testing. Strengthen supplier vetting through risk-based audits and robust quality agreements. Invest in automation, hygienic design, and traceability to reduce risk and gain flexibility in a market demanding diverse ingredients and formats.

2. For Suppliers: Become a strategic partner to your clients. Anticipate their needs by investing in higher-level certifications (e.g., GFSI-benchmarked programs) and advanced testing capabilities (e.g., for dietary fiber). Embrace sustainability by focusing on providing ethically sourced ingredients or viable alternative proteins to meet future market demands.

3. For Brand Managers: Leverage PFLM and advanced traceability to tell an authentic story about sourcing and quality. Rather than avoiding industry complexities, take a clear, defensible stance on trends like “human-grade” and sustainability that aligns with brand values and target consumers. In this new era, trust built through transparency will be the ultimate competitive advantage.