Innovation is booming in the pet food industry and new healthy and nutraceutical food options are taking over retail shelves, according to a new report. With the population of pets in the US at an all-time high, and the market expected to reach sales exceeding US$12bn by 2006, the pet food industry is in a position to profit dramatically. Pet food owners are continuing to move away from semi-moist food into dry food equivalents, but the area of functional foods for pets shows the most promise.