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PET CARE MARKET PLACE UPDATE
PIJAC, TORONTO, SEPTEMBER 2013
GLOBAL MARKETPLACE FOR PET CARE IN 2013
US AND CANADA: MARKET UPDATE
WHERE DO WE GO FROM HERE
© Euromonitor International
4 World moving at different speeds in 2013
Total sales reaching US$96 billion in 2013, at 5% rise in current value terms (y-on-y exchange rate)
Modest gains in North America and strong sales trends in Brazil and Russia
Return to stronger trends in economies like Germany, Sweden and the UK
Continuing weakness in Japan
NA +3.2%
LatAm +14%
WE +6%
EE +14%
Australasia +6%
Asia Pacific -6%
MEA +4%
© Euromonitor International
5 Increasing urbanisation: small breeds and other “urban” pets prosper!
0
5
10
15
20
25
30
2008 2009 2010 2011 2012 2013
Mil
lio
n
Small Dogs Population
US Brazil
Mexico China
Philippines Japan
India United Kingdom
Whiskas Indoor by Mars Foods Ireland Ltd Ireland, 2012
Ireland:
2008-2013 drop in large dog population
Increase in cat population and small dogs
Product development focus on cat and small
dog food:
Cesar Lightly Grilled by Mars Foods Ireland Ltd Ireland, 2012
© Euromonitor International
6
0 50 100 150
UAE
Australia
Switzerland
USA
Norway
Singapore
Hong Kong
Canada
Japan
New Zealand
2013 – US$ ’000
Annual Disposable Income/Household
Disposable Incomes on the Rise…not just in Emerging Markets
0% 20% 40% 60%
Brazil
Finland
United Kingdom
Norway
Chile
New Zealand
Canada
Australia
USA
France
2013-18 % growth
Pet Care spend/Household
Annual Disposable Income/Household
© Euromonitor International
7
15.8% 15.2% 13.8%
39.4% 37.7% 35.5%
44.8% 47.1% 50.7%
0%
20%
40%
60%
80%
100%
2008 2013 2018
Developed countries
Ongoing premiumization and adoption of human trends to pet care
30.7% 30.3% 29.7%
51.7% 50.9% 51.0%
17.6% 18.8% 19.2%
0%
20%
40%
60%
80%
100%
2008 2013 2018
Emerging countries
MeraDog Breeder Puppy by MERA Tiernahrung GmbH Egypt, 2012
Fancy Feast Royale by Nestle Purina UAE, 2012
© Euromonitor International
8 And Some Examples
Sheba Amuse, Mars Japan Ltd, Launched March 2012
From Hair Care to Pet Salon in China and in Israel
Shake & Bake H von Gimborn GmbH Germany
Pet Care Wipes Efila SA Peru, mid 2012
© Euromonitor International
9
US: Natural Balance (acquired by Del Monte in 2013) and Blue Buffalo among top 3 of best performing brands in 2007-12
P&G bought Natura in 2010
New products development Acquisitions of ‘natural’ companies
Natural and Organic
Israel: Nature’s Variety Instinct
Over-choice
Contamination scare
Fast moving urban lifestyles
Natural
Organic
Local
Back to Basic
© Euromonitor International
10 Private Label: Gaining Share When More Refined
El Corte Inglés Spain
Select Gold Senior Fressnapf Germany
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2008 2009 2010 2011 2012
Private Label %, Pet Care
Japan Brazil
Canada USA
France Germany
Spain United Kingdom
© Euromonitor International
11
Education Multichannel
Vet clinics potential and
caveats Experience
Shopping experience and education
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2013
Global Pet Care Distribution
Others
VeterinaryClinics
Non-StoreRetailing
Pet Shops
Pet Superstores
Supermarkets
Hypermarkets
Discounters
© Euromonitor International
12 What’s next? Time-savvy and on-the go
Top 5 M-Commerce markets in 2016:
1. USA
2. Japan
3. Thailand
4. UK
5. Philippines
Between 2012 and 2016
5.4 billion new smartphones will be purchased
© Euromonitor International
14 North America sees steady growth in value
0.000.200.400.600.801.001.201.401.601.802.00
2011 2012 2013
Canada, US$ 3 billion, up by 3% current value
02468
101214161820
2011 2012 2013
USA, US$ 29.6 billion, up by 3% in current value
Both markets see positive dollar growth in dollar value in dog and cat food, but only very modest 1% increase in volumes
Both see slowdown in growth of dog and cat population, at under 1%, a trend affecting demand for the foods
Both markets continue to see tendency towards “mass premium” in dog and cat food
Both markets see sales of Other Pet Food picking up, although driven by somewhat different dynamic of pet population
Canada sees stronger gains in healthcare and dietary supplements, while the US market shows better performance of cat litter
© Euromonitor International
15 Canada: overcoming challenges to growth
0.0
2,000.0
4,000.0
6,000.0
8,000.0
10,000.0
12,000.0
14,000.0
16,000.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Dog Population Cat Population
Dogs & cats, 000’ animals, 2008-2018 Challenges:
Slow growth in dog and cat population – the
key “consumer base”
Urbanization and ageing population key factors
in slowing growth of dogs and cats
Other pets see growth (reptile/small mammals)
but cannot offset unfavorable trend in dogs and
cats population
Cautious attitude of pet owners when it comes
to spending on therapeutic and super premium
products
Drop in veterinarian visits and cross-border
shift for savings on medical care and products
Opportunities:
More focus on smaller dogs
Targeted nutrition for urban pets (e.g. balanced
nutrition, weight management, in-door pets)
“Mass premium” in food and OTC SKUs in
healthcare and supplements
Pet care products and services aside from food
and medical care
© Euromonitor International
16 Canada: pets OTC healthcare and dietary supplements
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
20082009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Pet Healthcare Pet Dietary Supplements
Retail sales, US$ million, 2008-2018 Challenges:
Slow pet population growth
Low level of awareness on the part of some
manufacturers and retailers with respect to
existing regulations governing sales of dog and
cat dietary supplements
Some pet owners skeptical over benefits of
supplements
Cross-border shopping to reduce pet health care
expenses
Opportunities:
Better SKUs/merchandise development with
respect to OTC healthcare – choice of products
and pricing
Education with respect to existing rules on pre-
marketing approval for supplements
Emphasis on compliance with regulations to
increase consumer trust in products
Product development backed by research
Pet OTC healthcare worth US$55 million in 2013, up by 5% in current value
Pet dietary supplements worth US$265 million, up by 3% in current value
© Euromonitor International
18 Latin America and Eastern Europe will lead growth
Premium segment will continue to outpace mid-priced and economy in developed and many
emerging markets, supporting dollar growth
© Euromonitor International
19 Pet population remains key to growth but challenges ahead
0
20000
40000
60000
80000
100000
120000
140000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Brazil Russia Japan
Dog and cat population, in 000’ of animals
Expected growth in dog and cat population in markets like Brazil and Russia, but projected drop in Japan, which translates into
expected healthy growth for dog and cat food volumes in Brazilian and Russian markets but declines in Japanese market.
China so far is expected to see healthy growth, but watch for one-dog per household policies put in place by some
municipalities
© Euromonitor International
20
Regions and pets
Degree of recovery in Western
Europe
Strong growth in emerging
economies
Modest increases in NA
market
BUT:
Watching pet population
dynamic as urbanization
will increasingly put
pressure on the number
and size of households pets
Retail distribution
Rise of mass market modern
channels and chains
Opportunities for multi-
channel listing
Online shops as opportunity
for small/niche brands
BUT
Specialized retailers, especially
small pet shops and
veterinarian clinics, feel
increasing pressure from mass
channels across markets
Products
Premium still on the agenda
across markets
Adopting human trends to pet
care
Natural remains buzz word
Opportunities in products for
urban pet
BUT
“Mass premium” shows
more strength compared to
super premium and
therapeutic brands
Shift to smaller pets might
affect volume demand
Some takeaways
THANK YOU FOR LISTENING Svetlana Uduslivaia
Senior Research Analyst
Euromonitor International
Chicago
1-312-922-1115 ext. 8302
E-mail: [email protected]
