GLOBAL MARKETPLACE UPDATE: 2013 AND BEYOND PFAC ANNUAL CONFERENCE, MONTREAL, NOVEMBER 8, 2013
WORLD OF PET FOOD IN 2013 AREAS OF GROWTH PET POPULATION PRODUCT STRATEGIES GREEN PET FOOD TRENDS (FROM EUROMONITOR GLOBAL CONSUMER SURVEY) LOOK AT CANADA PACKAGING TRENDS RETAIL DISTRIBUTION LOOK AHEAD
World of pet food in 2013 Ø Areas of growth Ø Pet population Ø Product strategies Ø Green pet food trends (from Euromonitor global consumer survey)
Pet food volumes move at different speeds across the globe in 2013 4 EE +5% NA +2% WE +0.5% MEA +3% Asia Pacific +1.5% LatAm +8% Australasia +0.5% Volume grows 2% in 2013, slightly up from 2012, supported by dog and cat food Other pet food grows less than 1% in volume Value sales at US$75 billion in 2013, a 3% rise in constant value terms (fixed US exchange) Return to stronger trends in Germany; continuing weakness in Japan Latin America and Eastern Europe show stronger than average performance
Pet Care Sales by Type 5 Global Pet Care Value Sales 2013 Dog Food Cat Food Other Pet Food Pet Products
Volume performance by pet food category 6 2012-13, % volume growth 0 1 2 3 4 5 6 Cat Treats and Mixers Dog Treats and Mixers Premium Dog and Cat Food Economy Dog and Cat Food Mid-Priced Dog and Cat Food Other Pet Food Cat and dog treats as well as premium dog and cat food continue to see good growth in volume Tendency towards mass premium affects pace of growth in dollar value Small and slow growth in Other pet food, but opportunities exists helped by urbanization
15million SMALL MAMMAL IN USA 20million BIRDS IN BRAZIL 1.8million REPTILES IN FRANCE
Largest dog populations 8 29% 18% 15% 25% 28% 35% 50% 53% 20% 21% 19% 30% 49% Small Medium Large 25% 56%
Largest cat populations (in million and % of household owning) 9 73.6 32% 8.3 16.7% 20.9 37.1% 21.7 20% 11.4 1.4%
Increasing urbanisation: small breeds and other urban pets prosper 10 30 25 20 Small Dogs Population Ireland: 2008-2013 drop in large dog population Increase in cat population and small dogs Product development focuses on cat and small dog food: Million 15 10 5 0 2008 2009 2010 2011 2012 2013 US Brazil Mexico China Philippines Japan India United Kingdom Whiskas Indoor by Mars Foods Ireland Ltd Ireland, 2012 Cesar Lightly Grilled by Mars Foods Ireland Ltd Ireland, 2012
Still on agenda: premiumization and human trends in pet food 11 100% 80% 60% 40% 20% 0% 100% 80% 60% 40% 20% 0% Developed countries 44.8% 47.1% 50.7% 39.4% 37.7% 35.5% 15.8% 15.2% 13.8% 2008 2013 2018 Emerging countries 17.6% 18.8% 19.2% 51.7% 50.9% 51.0% 30.7% 30.3% 29.7% 2008 2013 2018 MeraDog Breeder Puppy by MERA Tiernahrung GmbH Egypt, 2012 Fancy Feast Royale by Nestle Purina UAE, 2012
Sharing and bonding: human trends in pet food development 12 Sheba Amuse, Mars Japan Ltd, Launched March 2012 Nyan Nyan Nouveau B & H Lifes Wine for cats Launched 2013 Japan Shake & Bake H von Gimborn GmbH Germany
Natural, Organic and Fresh 13 US: Natural Balance (acquired by Del Monte in 2013) and Blue Buffalo among top 3 of best performing brands in 2007-12 Growth of Carnivora in Canada (Western Canada in particular) Growth of US based Freshpet, with over US$ 100 million in sales in 2013 (seven years in operation)
Buying Environmentally-friendly Food For Self, Family, and Pets 14 BUT: most pet owners consider their pet to be a beloved member of the family (68%) AND: pet owners who perceive their pets to be part of the family are 60% more likely to buy green pet food than those do not Source: Euromonitor International Consumer survey; Middle Class Home, 2013 Note: Showing share of respondents who consider green features to be very or most important when buying each type of food product. Pet food only displayed as option to those who reported owning pets. Results shown give equal weight to each of the 16 markets surveyed.
Willingness to Buy Green Human and Pet Food, by Region 15 Pet owners in emerging markets are twice as likely as their developed market counterparts to purchase organic or environmentally-friendly food for their pets!
Pet Owners `Green` Attitudes vs. Green Pet Food Purchase Decisions, by City size 16 Pet owners in more densely populated municipalities are more likely to go `green` when it comes to their pet`s nutrition (even when income and country are taken into account).
17 Look at Canada
Canada: overcoming challenges to growth 18 Challenges: Dogs & cats, 000 animals, 2008-2018 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 Cautious attitude of pet owners in 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 Pet care products and services aside from food 16,000.0 14,000.0 12,000.0 10,000.0 8,000.0 6,000.0 4,000.0 2,000.0 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Dog Population Cat Population
19 Packaging trends
Western Europe leads in pouches, but developing markets see growth 20 Dog and Cat Food Pouches by Region 8 10 Billion units 6 4 2 8 6 4 2 % CAGR Felix by Nestlé Purina Petcare Deutschland GmbH, Germany, 2013 0 0 2012 % CAGR 2012-2017 Minino Plus Malta Clayton SA de CV Mexico
Smaller packaging gains 21 Global Dog and Cat Food Packaging by Pack size 40 35 30 Billion units 25 20 15 10 5 0 2007 2008 2009 2010 2011 2012 0-100g 101-400g 401-1,000g 1,000g +
22 Retail Environment
Shopping experience 23 100% Global Pet Care Distribution 90% Others Education Multichannel 80% 70% 60% 50% Veterinary Clinics Non-Store Retailing Pet Shops Vet clinics potential and caveats Experience 40% 30% 20% Pet Superstores Supermarkets Hypermarkets 10% 0% 2008 2013 Discounters
Pet shops in the UK adding value and growth through acquisitions 24
What s next? Time-savvy and on-the go 25 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
26 Look ahead
Latin America and Eastern Europe will lead growth in pet care 27 Premium segment will continue to outpace mid-priced and economy in developed and many emerging markets, supporting dollar growth
Future category performance, by volume 28 2013-18 CAGR % 0 0.5 1 1.5 2 2.5 3 3.5 4 Cat Treats and Mixers Dog Treats and Mixers Premium Dog and Cat Food Mid-Priced Dog and Cat Food Economy Dog and Cat Food Other Pet Food Still evolving cat treats will continue to see best performance, but remain small in actual volume Dog treats will see healthy growth but leveling off as developed markets close to saturation Premium dog and cat food supported by mass premium in developed markets and strengthening demand in developing markets
Pet population remains key to growth but challenges ahead 29 Dog and cat population, in 000 of animals 140000 120000 100000 80000 60000 40000 20000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Brazil Russia Japan 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
Some takeaways 30 Regions and pets Products Retail distribution Degree of recovery in Western Europe Strong growth in emerging economies Modest increases in North American markets Challenges: Watching pet population dynamic as urbanization will increasingly put pressure on the number and size of households pets across markets Premium still on the agenda; human trends in pet food Opportunities in green food; emphasis in advertising on pets as family members to encourage purchases Opportunities in products for urban pets Challenges: Mass premium shows more strength compared to super premium, affecting value growth Shift to smaller pets affects volume demand Rise of mass market modern channels and chains Opportunities for multichannel listing Online shops as opportunity for small/niche brands Eyes on acquisitions, with emphasis on services Challenges: Specialized retailers, especially small pet shops and veterinarian clinics, feel increasing pressure from mass channels across markets
THANK YOU FOR LISTENING Svetlana Uduslivaia Senior Research Analyst Euromonitor International Chicago 1-312-922-1115 ext. 8302 E-mail: Svetlana.Uduslivaia@Euromonitorintl.com