STATE OF THE GLOBAL PET FOOD RETAIL

Transcription

1 STATE OF THE GLOBAL PET FOOD RETAIL CURRENT TRENDS AND GROWTH OPPORTUNITIES PFAC, VANCOUVER, NOVEMBER 8, 2012

2 GLOBAL UPDATE ON PET CARE: GROWTH IN 2012 AND BEYOND 2 FASTEST GROWING PRODUCT CATEGORIES AND PRODUCT DEVELOPMENT TRENDS REGIONAL OVERVIEW RETAILERS: FOOD FOR THOUGHT? SUMMARY

3 Global Pet Care Market Worth US$ 94 billion in US$ million, constant value, fixed exch rate 96, , , , , , , % y-on-y growth rate Global market for pet care products shows healthy growth of close to 3% (constant value) Emerging economies feed growth, while NA and WE largest retail pet care markets - slow amidst persistent financial worries 82,

4 Dog and cat food accounts for most of consumer spending on pet care 4 US$ dollar value Million, fixed exchange rate 68, , , , , , % growth y-on-y Volume Million tonnes growth y-on-y Dog and cat food accounts for over 71% of dollar value sale within total consumer retail spending on pet care globally 2012 shows signs of improved performance in dog and cat food sales over 2011, in both value and volume Value growth somewhat ahead of volume as both developed and emerging economies show positive results for premium segment of dog and cat food

5 Market polarization: economy and premium products grow in emerging economies % growth in volume (tonnes) Mid-priced products account for the larger portion of value and volume sales Economy and premium led global growth Emerging economies support growth trends in economy and premium 5 Economy Premium Mid-Priced % growth in value (US$, constant, fixed exchange rate) Economy Mid-Priced Premium Natural & Delicious Peixe e Laranja by Farmina, Brazil Nature Brascorp by Brascorp S.A, Venezuela

6 Fastest Growing Pet Care Categories 6 Global Category Performance % Growth: 2011 vs 2012 Other Pet Products Pet Dietary Suplements Pet Healthcare Cat Litter Premium Dog Food Mid-Priced Dog Food Economy Dog Food Dog Treats Premium Cat Food Mid-Priced Cat Food Economy Cat Food Cat Treats

7 Premium Dog Food Outperforms Other Categories 7 Premium Dog Food Other Pet Products Mid-Priced Dog Food Dog Treats Premium Cat Food Mid-Priced Cat Food Economy Dog Food Economy Cat Food Pet Healthcare Cat Treats Economy Cat Food Bird Food Small Mammal/Reptile Cat Litter Pet Dietary Supplements Absolute Value Gains by Category: ,000 1,500 2,000 2,500 US$ million

8 Leveraging Strength in Healthcare and Supplements to Enter Functional Pet Food 8 Launch Date: November 2011 Retail Price: The product is available in 1.5kg, 1.75kg and 8.5kg. Price Platform: Mid-priced Retail Distribution: Available through leading supermarket and hypermarket retailers Unique Selling Points: Company has entered dog food market with dry dog food fortified with conditioning tablets. Competitive Strengths: Bob Martin Condition tablets have been present on South African market for many years, and company has capitalised on strength of the brand to enter into the dog food market. Bob Martin Complete Condition, South Africa By Martin & Martin Pty

9 Building Bonds: Dog Treats Carry On Growing 9 Germany Largest Dog Treats Markets by Retail Value: 2012 Australia Canada UK Japan Strongest Growing Dog Treats Markets: Israel UK Brazil Thailand Norway US US $ million India % Retail Value CAGR

10 PET FOOD MARKTEPLACE Dog Treats: focusing on functional, natural and lifestyle/bonding 10 Schmakos 96% Fat Free, Mars, Australia Purina Friskies Dental Delicious, Nestlé, Norway Grainea Softies Snack Mix, Grainea, Slovakia Brew Buddies by OmegaPaw, Canada Share the moment

11 Small but Growing Fast: Cat Treats Increasingly in Demand 11 Austria France Canada UK German US Largest Cat Treats Markets by Retail Value: US$ million Strongest Growing Cat Treats Markets: Brazil Poland Chile South Korea Romania Russia Gimpet Yoghurt by H. von Gim-born GmbH, Germany Ø Yoghurt for cats Ø Made with lactosereduced milk Ø Positioned as natural snack/treat % Retail Value CAGR

12 REGIONAL OVERVIEW

13 Largest Categories by Region 13 35, Regional Market Performance by Retail Value 30,000 US $ million 25,000 20,000 15,000 10,000 5,000 0 North America Western Europe Eastern Europe Latin America MEA Australasia Asia Pacific Cat Food Dog Food Other Pet Food Pet Products

14 North America (NA) Growth in Dog and Cat Food in 2012 But Challenges Abound 14 NA accounts for over third of value sales and nearly 40% of global volume in 2012 Though sales show improvement in 2012 vs ; performance is a mix of success and worry Overall growth at only about 2% US$, billion, fixed exchange rate % growth y-on-y Challenges to growth stem from market saturation, pet ownership trends, and persistent financial concerns Volume, million tonnes % growth y-on-y

15 Western Europe: A Market Moving at Different Speeds Dog and Cat Food Per Household Expenditure: % Retail Value CAGR Denmark France Greece Germany Spain Italy 2012 US$ per Household Netherlands Note: Size of Size of bubble denotes relative retail value size of market in 2012, ranging from US$4,436 million (UK) to US $150.5 million (Greece) UK

16 Eastern Europe: Vibrant Russian Market Drives Regional Sales 16 6 Pet Care Retail Values in Major Eastern European Markets: US$ billion Bulgaria Czech Republic Hungary Poland Romania Russia Slovakia Ukraine

17 Russian Consumers Opt for Mid-Priced Pet Food 17 US$ Million 1,400 1,200 1, Russian Dog and Cat Sales by Price Platform: Russian market accounts for nearly 60% of Eastern European sales Many consumers trading up from economy International brands hold good brand equity Economy Mid-Price Premium

18 Pet Ownership Rates Rising Across Latin America 18 % households Dog and Cat Ownership in Latin America: 2012 Brazil remains the strongest market with plenty of potential Argentina and Mexico post good growth as more consumers move into prepared food Rising pet ownership rates and a growing preference for cats boosts retail prospects Cat ownership Dog ownership

19 PET CARE MARKTEPLACE Over US$ 3 billion added between 2007 and 2012 in dog and cat food sales 19 Brazil remains the largest contributor in actual value, with close to US$5.8 billion in dog and cat food sales in 2012 Argentina and Venezuela show the strongest growth in 2012; challenges in Venezuela continue to include access to currency to import products Chile is small but is picking up steam from negative growth recorded in 2007/2008 Mid-price products account for the largest portion of sales, while premium positioned see stronger growth in value terms % growth, constant value

20 PET CARE MARKETPLACE Product development continues to support growth 20 Nutrience Original, Venezuela Ø Dry dog food Ø Formulated for specific breeds and sizes of dogs Ø Competitive pricing to domestic products Cat Chow Vida Sana, Chile Ø Dry cat food Ø Claims to contain natural ingredients Ø Priced competitively to premium products but is at the higher end of midprice range Jumbo Snacks by Cencosud, Chile Ø Private label cat treats Ø Competitive pricing Ø Among the first entrants into the cat treats category Ø Backed by familiarity with Jumbo private label Royal Canine Diabetic DS 46, Argentina Ø Dry cat food Ø Formulated for cats with diabetes Ø Distributed through specialized retailers: pet shops and veterinarian clinics

21 PET CARE MARKETPLACE Asia Pacific: Japan remains weak while emerging markets drive growth 21 Japan remains the largest market in terms of actual dollar value, but continues to experience difficulties Emerging economies drive growth in the region, led by India and Hong Kong double digit growth in value terms China sees healthy growth of 6% and reaches over US$452 million in dog and cat food sales % growth, constant value Polarization in food sales by price points: e.g. India sees the strongest growth in economy brands while China sees the strongest growth in premium

22 PET CARE MARKETPLACE Ongoing product development 22 Friskies by Nestlé (China) Ltd, China Ø Dry cat food Ø Fortified with Omega 3 and 6 as key functional ingredients Ø Overall 24 vitamins and minerals Ø Positioned as midpriced, with wide retail distribution Rena Pizza by Pet Treats Ltd, Thailand Ø Dog treats Ø Packaged in carton box that looks like pizza box Ø Dog biscuits with tomatoe sauce looka-like, real chicken pieces and cheese on top Ø Positioned as premium, but fairly large retail distribution Hill s Science Diet Small & Toy Breed Adult by Hill's Pet Nutrition, Singapore Ø Dry dog food Ø Formulated for small breeds Ø Comes in several varieties: puppies, adults, adult 1-6 years and mature adults Ø Positioned as premium and sold through specialized retailers

23 Distribution Slowly Shifts to Modern Grocery Formats % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Global Pet Care Distribution: 2007 vs 2012 Others Non-Store Retailing Veterinary clinics Pet shops Pet superstores Discounters Supermarkets Hypermarkets Hypermarkets gaining share globally, creates opportunity for mass premium but bigger challenge for therapeutic manufacturers Pet Specialist channel still holding up, sustained by emerging markets Internet offers good potential for specialised brands without undermining brand equity

24 Internet Retailing: The Way Forward? 24 % retail value growth Key Markets for Pet Care Internet Retailing South Korea Finland Ireland Denmark USA Social media becomes more relevant for informed purchasing Price comparison and independent reviews also become more important Bridging logistical obstacles is one of internet s advantage in emerging markets Preserving brand equity whilst providing expanded distribution

25 Growth ahead in dog and cat food driven by emerging economies 25 Slow growth Strong growth NA +3% in value +0.9% in volume LA +4.8% in value +3.6% in volume EE +5.8% in value +5.9% in volume WE +1.1% in value +0.6% in volume MEA +3% in value +2.7% in volume AP +2% in value +2.9% in volume BUT: China +7.6% / + 7.5% India % / % Australasia +0.4 in value +0 in volume % growth CAGR Value growth in constant US$, at fixed exchange rate

26 Global Dog Food Prospects by Price Platform 26 US$ billion Global Dog Food Retail Value Prospects: Economy Premium Mid-Priced Treats/Mixers

27 Global Cat Food Prospects by Price Platform Global Cat Food Retail Value Prospects: US$ billion Economy Premium Mid-Priced Treats/Mixers

28 RETAILERS: FOOD FOR THOUGHT?

29 ..Beyond Traditional Retail Development? 29 Hundehi or doggy den in Norway By Hundeparkering Ø Outside of select stores Ø Safe, dry and warm place to park a dog while shopping Ø The idea is to prevent dog theft and issues with people being injured by dogs Ø Implications: more time spent by dog owners in stores, more spending in store, customer loyalty?

30 PET CARE MARKETPLACE New Regulatory Environment: Platform for Product Launches in Canada 30 NA retail sales of pet health care are worth estimated US$2.4 billion and dietary supplements US$ 693 million in 2012, with Canada accounting for US$312 million Growth is positive in 2012 in both US and CA, with US seeing somewhat stronger growth rate in both healthcare and supplements Unlike in dog and cat food, pet specialized retailers account for over a half of all health care and supplement sales in both US and CA Strict regulatory environment for pet supplements in Canada (regulated as new drugs by Health Canada), but new pilot program affords opportunities to ease market entry New line of Jamieson Natural Sources PetCare Euromonitor Photo

31 Summary 31 Products Premium and midpriced food will continue to drive value, but there is room for value products as market uncertainties persist in developed markets Polarization between economy and premium segments in many emerging markets Focus remains on natural and functional ingredients Human-like food packaging and lifestyle/bonding moments make an appearance across markets Retail Distribution Expansion of grocery retailers and modern pet superstores creates a good venue to drive sales of mass premium products in both developed and emerging economies Opportunities exist in the development of exclusive brands and retail brands, with multi-tier approach to retail brands to drive value Internet retail remains underdeveloped in many markets and hence offers further opportunities to grow retail distribution and reach more customers Pet ownership challenge Rise of pet ownership, along with incomes, in emerging economies will help drive demand, while developed ageing nations will be faced with a challenge Participation in community initiatives and adoption efforts can help encourage pet owners Focus on younger generation

32 THANK YOU FOR LISTENING Svetlana Uduslivaia Senior Research Analyst Euromonitor International Chicago ext