Health and Wellness Opportunities in Global Pet Care

Health and Wellness Opportunities in Global Pet Care

Lee Linthicum

14 April 2010

© Euromonitor International

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Passport


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Global Market Overview

Key Trends and Market Drivers

Health & Wellness Opportunities

Future Outlook and Strategic Recommendations

Q&A


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Euromonitor International Global Pet Care Coverage

SEGMENTS COVERED:Dog foodCat foodBird foodFish foodSmall mammal/reptile foodCat litterHealthcareDietary supplementsOther pet care products

CONSUMER INSIGHTS:Pet indicatorsSocial trends

DemographicsMacro-economics

ALL CHANNELS COVERED:Supermarkets/Hypermarkets

DiscountersPet superstores

Pet shopsVeterinary clinics

HomeshoppingInternet retailing

Direct sellingOther grocery and non-

grocery retailers

Pet expenditure in 52 markets = 98% of total global expenditure


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Global Pet Food and Pet Care Products: 2004-2009



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Global Retail Value Sales by Category: 2009



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Global Sales of Dog and Cat Food: 2004-2009



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Retail Volumes Get Boost From Downturn, Emerging Markets


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Global Retail Value Performance by Price Platform


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Dog/Cat Food Global Retail Distribution Landscape


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Grocery Channels Halt Retail Value Share Decline In 2009

Non-grocery sees first share loss in decade in 2009 Grocery retailers hold steady at 53.2% of global retail value Internet retailing drives non-store another 10 bps in 2009


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Global Pet Specialists Constrained in 2009…


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…As Supermarkets/Hypermarkets Appeal to Price Conscious


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Global Premium Dog and Cat Food Competitive Landscape


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Greatest opportunities still in Latin America and Eastern Europe Russia remains primary engine of growth in Eastern Europe Brazil most dynamic market in Latin America but Mexico hurting


Dog and Cat Food Retail Value Performance by Region

0

5

10

15

20

05

10152025

North America

Western Europe

Asia Pacific

Latin America

Eastern Europe

Australasia Middle East & Africa

% g

rowt

h

US$

billio

n

Retail Value Sales of Dog & Cat Food by Region: 2008-2009

Retail sales 2008 Retail sales 2009 2004-09 CAGR 2008-2009 %


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Dog and Cat Food Absolute Retail Value Growth by Region


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10 Largest Markets in 2014 10 Fastest Growing Markets to 2014


Dog and Cat Food: Largest versus Fastest Growing Markets

Country2014 US$ Millions

2009-2014 CAGR

USA 20,182 2.5

Brazil 4,329 3.8

Japan 4,285 2.4

UK 3,579 0.7

France 3,309 1.0

Germany 2,649 0.2

Russia 2,226 11.8

Italy 2,037 0.4

Canada 1,556 2.4

Australia 1,410 0.8

Country 2014 US$ Millions

2009-2014 CAGR

India 65 11.9

Russia 2,226 11.8

Romania 333 11.5

Morocco 54 8.5

Thailand 409 7.7

S. Africa 489 7.2

Indonesia 25 7.1

Slovakia 120 6.9

China 407 5.9

Venezuela

490 5.9


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Prepared Dog and Cat Food on the Rise in Russia



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Dog/Cat Food: Untapped Potential in Emerging Markets



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Dog/Cat Food by Price Band in Key Emerging Markets



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Q&A


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•Pet ownership

•Pet humanisation

•Premiumisation

•Health and wellness


Global Dog and Cat Food Market Drivers


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Ageing Consumers Promote Pet Population in G7 Markets


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Dog/Cat Population Growth in Key Emerging Markets


• Dog/cat population will surpass 50 million animals in Brazil during 2009• China and Russia also see steady gains in dog/cat population• Strong growth in India but dog/cat population still under 10 million


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Urban Culture Will Soon Dominate the World


Fastest Urban Growth 2005-2015 ('000 People)China 154,317 India 115,626 Indonesia 28,730 US 26,860 Brazil 24,078 Philippines 14,229 Mexico 13,228 Turkey 11,644

Half the world’s population

urban by 2015


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•Ageing consumers

•Younger consumers staying single/childless longer

•Rising disposable incomes in emerging markets

•Increasingly urban populations

•Busy lifestyle and longer working hours

•Pet humanisation influencing purchase decisions

•Willing to pay a premium to improve pet’s quality AND quantity of life

Changing Demographics and Cultural Attitudes



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Dog and Cat Food: Key Growth Segments

•Fastest growing segments globally: 1998-2009 Retail Value CAGR

•Cat treats and mixers : 8%•Premium dog food: 8%•Healthcare: 7%•Dog treats and mixers: 6%•Premium cat food: 6%•Dietary supplements: 5%•Economy dog food: 4%•Mid-priced dog food: 3%•Mid-priced cat food: 3%•Economy cat food: 3%

•Treats, healthcare, premium food driving global growth!


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Global Dog/Cat Food Retail Value Share by Price Band



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Whiskas Cozinhado ao Vapor by Mars (Portugal) Gourmet Gold Soufflé by Nestlé (France)

Kwispelbier “Dog Beer” (Netherlands) Gourmet Perle Duck by Nestlé (Bulgaria)


Premiumisation: Human-Led Ingredients, Applications


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Q&A


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• Free from:• Gluten• Soy• Wheat

• Hydrolyzed proteins• For sensitive skin and digestion

• “Food Minus”• Less calories• Lower fat

• “Food Plus”• More fibre• Fortified with L-carnitine

• “New Premium”• Renewed importance after Menu Foods Recall

• Shift from purely organic to “all natural”

• Joints• Dental• Immunity• Digestive• Beauty• Age/breed/size/lifestyle specific

All Natural and Organic Fortified and Functional

Weight Management Food Allergies and Hypoallergenic

Health and Wellness Opportunities

Dog And Cat Food Health & Wellness Product Trends


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All Natural and Organic Fortified and Functional

Weight Management Food Allergies and Hypoallergenic


Dog And Cat Food Health & Wellness Product Examples


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The US$520 Billion Global Health & Wellness Market



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Organic Food And Beverages Go Mainstream…



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…But Manufacturers Need to Seek Out New Markets



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Natural, Organic and Human-Grade Dog and Cat Food


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•Pet humanisation leads to specialised formulas addressing:• Weight loss and management• Arthritis relief• Sensitive skin• Diabetes• Digestive / Urinary tract health• Immune system support• Mental development and health

Functional Dog and Cat Food Trends



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Leading Fortified/Functional Trends And Ingredients


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Pedigree Joint Care+ by Mars (UK) Whiskas Immuno Cat Food by Mars (Russia)

Royal Canin Oral Bar by Mars (Netherlands) Yorkshire Terrier Junior by Royal Canin (Spain)


Fortified/Functional Dog and Cat Food


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Retail Value Performance For Human Pre/Probiotic Yoghurt



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Retail Value Performance For Human Fish Oil Capsules



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Global Nutraceuticals Worth US$228 Billion In 2008…


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…But Retail Sales Still Concentrated In Developed Markets



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Pedigree Puppy Weaning (India): Fortified with calcium, phosphorus for healthy bones and teeth

Gimpet Comert’s Cat- Milk (Romania):

Similar to breast milk and fortified with taurine for cardiac health

Health and Wellness: Product Segmentation by Age



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Cats, Small Dogs Grow Share of Global Pet Population



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• Urbanisation boosts pure-breed popularity• Increasingly seen as status symbols

• Paris Hilton effect• Moscow Pet Fashion Week

• Pure breeds face more health problems • UK-based Animal Health Trust estimates more than 350 inherited diseases identified in pedigree dogs

• Swedish study found pure breeds pets had an average life expectancy of 6.7 years versus 8.5 years for mixed-breeds

• Sainsbury’s Pet Insurance in the UK found twice as many pedigree owners file claim• Cardiac arrest• General illness• Skin tumors/dermatitis• Diabetes

New Opportunities Emerging For Pure Breed Formulas



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• June 2007: Pfizer introduces Slentrol for canine obesity

• Pet “fat camps”• Efforts by pet food manufacturers:

• Reduce calories• Lower fat content• Increase fibre• Fortified with L- Carnitine, CLA, fish oils

Key Trends and Developments Doggy Fat Camp

Nestlé Pro Plan Adult Reduced Calorie Arden Grange Adult Cat (UK)


Dog and Cat Food for Weight Management


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• Hydrolyzed proteins• Free from gluten, soy, wheat• For sensitive skin and digestion• Market opportunities still focused in:• Western Europe• US


Food Intolerance and Allergies


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Q&A


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Global Sales of Pet Food and Pet Care Products: 2009-2014


Global Pet Food and Pet Care Products retail value sales still forecast to grow at an average rate of 2-3% annually from 2009-2014


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Global Sales Will Carry on Growing Through to 2014


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Value for Money vs Value for Health & Wellbeing


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Value for Money vs Value for Health & Wellbeing


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• Numerous functional ingredients currently available

•Consumers struggle with different benefits

•Too much scientific detail can put consumers off

• Clear message backed by solid science is essential

Manufacturers Must Effectively Reach Consumers



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• Nutrition claims:• A nutrition claim states or suggests that a food has particular beneficial nutritional properties. Examples include “low fat” or “source of omega-3 fatty acids.”

• Health claims:• A health claim is any statement used on labels, in marketing or in advertising that health benefits can result from consuming a given food or from one of its components, such as vitamins and minerals, fibre, and ‘probiotic’ bacteria.

• There are two different types of health claims:• General function health claims:• Statements that a food can help “reinforce the body’s natural defenses” or “enhance learning ability.”

• Disease reduction claims:• Claims to reduce disease risk and other substances that may improve or modify the normal functions of the body, such as “Calcium may help improve bone density.”


EFSA Articles 13 And 14 Will Be Transformational


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But Greater Regulation Can Also Help…


REGULATION is not always a burden

It can SPUR INNOVATION

Japan's leading position in global Health and Wellness Food is due in large part to the 1991 FOSHU (Food

For Specified Health Use) regulation


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Criteria For Future Success In Global Health & Wellness Food

• Congruence• Credibility• Regulatory Approval

GET YOUR SCIENCE RIGHT


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Average forecast growth

Ave

rage

his

toric

gr

owth

HIGH OPPORTUNITY

LOW OPPORTUNITY

Global Pet Care Category Performance:2004-2014



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Pet Shops and Superstores Outlets Will Grow Globally…

Global pet shops and superstores outlets will grow 13% from 2009-2014


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• The global pet food and pet care products market has been riding a strong wave of growth, in both developed and developing markets, which should sustain it through uncertain economic times

• Economy pet food consumers of today will still be the premium pet food consumers of tomorrow

• Strong investment in health and wellness pet food is still needed, particularly in markets where there is strong consumer awareness of health and wellness food and beverages for humans

• Provide consumer education on the benefits of your product offerings and make them widely available in order to grow your sales

• Leverage strong word-of-mouth recommendations through specialist channels, particularly for premium and health and wellness offerings

Key Conclusions: Yes, Times Have Been Hard But…



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Marketing

Product segmentation

Packaging

Distribution

Leverage strong and trusted recommendations through vet channels

Maximise distribution through pet superstores and Internet retailers

Continued segmentation by age, breed and lifestyle

Organic, natural, fortified/functional food and beverages

Consumer education

Reinforce brand awareness through sponsorship of “pet events”

Upscale packaging in the form of plastic pouches

Resealable packaging for better storage

Sustainability

Dog and Cat Food Prospects by Price Band in Your Markets



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Thank You!

Lee Linthicum

Head of Global Food Research

Euromonitor International

[email protected]

Q&A

Documents

Health and Wellness Opportunities in Global Pet Care