NTRIBUTION OF THE PET CARE INDUSTRY TO THE AUSTRALIAN ECONOMY CONTRIBUTION OF TH

NTRIBUTION OF THE PET CARE INDUSTRY TO THE AUSTRALIAN ECONOMY CONTRIBUTION OF TH TO THE AUSTRALIAN ECONOMY CONTRIBUTION OF THE PET CARE INDUSTRY TO THE AUSTRALIA ION OF THE PET CARE INDUSTRY TO THE AUSTRALIAN ECONOMY CONTRIBUTION OF THE PET CAR OMY CONTRIBUTION OF THE PET CARE INDUSTRY TO THE AUSTRALIAN ECONOMY CONTRIBUTIO USTRY TO THE AUSTRALIAN ECONOMY CONTRIBUTION OF THE PET CARE INDUSTRY TO THE AU NTRIBUTION OF THE PET CARE INDUSTRY TO THE AUSTRALIAN ECONOMY CONTRIBUTION OF TH TO THE AUSTRALIAN ECONOMY CONTRIBUTION OF THE PET CARE INDUSTRY TO THE AUSTRALIA T CARE INDUSTRY TO THE AUSTRALIAN ECONOMY CONTRIBUTION OF THE PET CARE INDUSTRY T AUSTRALIAN COMPANION ANIMAL COUNCIL INC. CONTRIBUTION OF THE PET CARE INDUSTRY TO THE AUSTRALIAN ECONOMY Proudly supported by 6 TH EDITION

PURPOSE The Australian Companion Animal Council Incorporated is a non-profi t organization. It is the peak body representing pet ownership and the pet industry in Australia. The purpose of the ACAC is to provide a forum for the pet care industry to promote the benefi ts of socially responsible companion animal ownership to the wider community. MEMBERSHIP Animal Health Alliance of Australia (AHAA) Australian National Kennel Council (ANKC) Australian Small Animal Veterinary Association (ASAVA) Australian Veterinary Association Ltd (AVA) Delta Society Australia Pet Food Industry Association of Australia (PFIAA) Pet Industry Association of Australia Ltd (PIAA) Petcare Information and Advisory Service Pty Ltd (PIAS) Veterinary Manufacturers and Distributors Association (VMDA) Veterinary Nurses Council of Australia (VNCA) OBJECTIVES To achieve this purpose the Australian Companion Animal Council will: Promote socially responsible pet ownership by endorsing or implementing community education programs and conferences. Provide an effective voice against those who oppose socially responsible companion animal ownership. Publicise the benefits to the community of socially responsible companion animal ownership. Organise, co-ordinate and publicise studies and surveys about companion animal ownership. Be a spokes body for socially responsible companion animal ownership. Participate in the legislative process where it affects companion animal ownership. Endorse or conduct national events promoting socially responsible companion animal ownership. Seek and maintain affi liation and co-operation with national and international organizations with similar objectives. The Australian Companion Animal Council Incorporated acknowledges people may not want to interact with companion animals. This should be respected. BIS Shrapnel Pty Limited September, 2006 Note: Although great care has been taken to ensure accuracy and completeness in this project, no legal responsibility can be accepted by BIS Shrapnel Pty Limited for the information and opinions expressed in this report. All rights reserved. Job No. M4612/MH BIS Shrapnel contact: Gary Tilsley BIS Shrapnel Pty Limited Level 8, 181 Miller St North Sydney NSW 2060 Australia Tel. +61 (0)2 9959 5924 Fax +61 (0)2 9959 5795 e-mail: gtilsley@bis.com.au This report was prepared by Michael Hill, research analyst of BIS Shrapnel Pty Ltd. Additional research and administrative support was provided by Gary Tilsley, Jan Roach, and Roslyn Bush.

Content 1 Executive Summary... 1 2 INTRODUCTION... 7 3 Market Overview... 9 3.1 Pet population trends... 9 3.1.1 Dogs... 12 3.1.2 Cats... 14 3.1.3 Other pets... 16 3.2 International comparison... 20 3.3 Australian pet care market... 24 4 Consumer expenditure...27 4.1 Dogs... 27 4.2 Cats... 30 4.3 Other pets... 32 4.4 The integration of pets into family lifestyles... 33 5 Pet food...35 5.1 Consumer expenditure... 35 5.2 Major Beneficiaries... 39 5.3 Balance of payments... 42 5.4 Advertising expenditure... 50 6 Veterinary Services...51 6.1 Consumer expenditure... 51 6.2 Major beneficiaries... 52 6.3 Manufacturing of veterinary products... 55 7 Pet care services and products...59 7.1 Consumer expenditure... 59 7.2 Major beneficiaries... 60 7.3 Service providers... 62 7.4 Local council expenditure... 66 8 Dogs in the service of HUMANS...71 9 Pets and Community Health...73 10 Conclusions...77 appendix...79 Sources of data...80

1 Executive Summary Population trends The incidence of pet ownership in Australia is one of the highest in the world, with an estimated 63% of households owning some kind of pet (53% owning a cat or dog). There are over 38 million pets of various species throughout Australia. The current estimate of cat and dog populations is 2.43 and 3.75 million respectively. In addition, there are roughly 20 million fish, 9 million birds and 3 million other pets. The population of dogs in Australia has been in an overall decline since 2002 according to data from Market Research company TNS. The number of dogs per dog owning household has also declined slightly to 1.43 dogs in 2005. Dog population trend line estimates, 1998-2005 (million) 4.2 4.0 3.8 3.6 3.4 3.2 1998 1999 2000 2001 2002 2003 2004 2005 Source: TNS Data: Year end June The cat population has been in a state of decline for over a decade. The number of cats per cat owning household has also declined to 1.40 cats per household from a high 1.48 in 2003. While the population of cats and number of cats per household has been in decline, the percentage of households with cats has increased over the past few years (from 23% in 2003 to 25% in 2005). Cat population trend line estimates, 1998-2005 (million) 3.0 2.8 2.6 2.4 2.2 2.0 1998 1999 2000 2001 2002 2003 2004 2005 Source: TNS Data: Year end June Page 1

Expenditure on pet care products and services In calendar year 2005, we estimate that total consumer expenditure on pet care products and services is $4.62 billion. All states and territories benefited from the total expenditure, with their market share roughly equal to their proportion of the pet population. Summary of Australian expenditure on pet care, by state, 2005 ($ million) State Dogs Cats Other pets Total % of total New South Wales / ACT 958 417 237 1,612 34.9 Victoria 679 295 168 1,142 24.7 Queensland 536 233 133 902 19.5 Western Australia 272 119 67 458 9.9 South Australia / NT 235 103 58 396 8.6 Tasmania 65 28 17 110 2.4 Total 2,745 1,195 680 4,620 100 Source: BIS Shrapnel estimates Summary of Australian expenditure on pet care by state, 2005 (Percentage of total) NSW/ACT 35% Victoria 25% Queensland 20% Western Australia 10% South Australia / NT 9% Tasmania 2% Page 2

Expenditure on pet care by pet type, 2005 (Percentage of total) Dogs 59% Cats 26% Other pets 15% There are three main market segments which account for the total expenditure on pet care products and services. The 2005 total of $4.62 billion is a 15.5% increase on the 2002 figure of $4.0 billion. Pet care summary of expenditure ($ million) Market Segment Consumer Expenditure Pet food 2,011 Vet services and products 1,065 Other services and products 1,544 Total 2005 4,620 Total 2002 4,000 Total 1998 3,326 % variation 2002-2005 15.5 % Source: BIS Shrapnel estimates Pet care summary of expenditure, 2005 (Percentage of total) Pet food 44% Vet services and products 23% Other services and products 33% Page 3

Employment in the pet care industry We estimate that the pet care industry gives employment to some 44,700 people, both directly and indirectly. Pet care industry summary of employment, 2005 Activity Direct employment Indirect employment Total Veterinary services 13,400 13,400 Pet service providers 11,800 11,800 Retailing pet products 8,500 8,500 Pet food manufacture 3,350 3,350 6,700 Veterinary products 2,000 1,000 3,000 Pet accessory manufacturing 950 250 1,200 Veterinary education and training Veterinary Science 100 100 Total 40,100 4,600 44,700 Source: BIS Shrapnel estimates Number of people employed in the pet care industry, 2005 Veterinary services 30% Pet services providers 26% Retailing pet products 19% Pet food manufacture 15% Veterinary products 7% Pet accessories manufacturing 3% Veterinary education/training 0% Page 4

The social benefits of pets Pets today are being treated more like one of the family than in any previous generation. With an enormous array of products on the market aimed at improving a pet s lifestyle, the transference of parenting instincts onto family pets is increasingly easier. Numerous studies have been conducted on the social and physical benefits of pet ownership, the outcomes confirm that not only do pets make us feel good, they are actually beneficial for us, both physically and mentally. Pets provide companionship, improve feelings of safety, increase social interaction, encourage exercise and improve psychological and physical health. A study conducted by the Baker Medical Research Institute in Melbourne revealed that pet owners had lower risk factors for cardiovascular disease and lower cholesterol than non-pet owners. German, Australian and Chinese data has confirmed that pet owners visit the doctor less often and spend less money on medication than non-pet owners. The Australian National People and Pets Survey revealed that pet owners value the friendly companionship of their dog or cat. 58% of pet owners say they got to know people and made friends through having pets 62% of pet owners say that having a pet around when people visit makes it easier to get into a conversation and create a friendly atmosphere 79% of owners find it comforting to be with their pet when things go wrong 91% felt very close to their pet almost as many as feel close to their family. This reinforces that pets are integral members of the family however constituted. Page 5

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2 INTRODUCTION Despite declining populations of dogs and cats, Australia still has a high level of pet ownership. This has allowed the pet care industry to grow to its current size with further expansion and growth expected over the coming years. There are many areas which make up the pet care industry including pet food, various pet products and services as well as veterinary services and the associated production of medicines/vaccines. This is the sixth edition of our study entitled Contribution of the Pet Care Industry to the Australian Economy. Within the report, we provide an updated assessment on the importance of the pet care industry through consumer expenditure, employment and social benefits. The various sections covered are outlined below: The market overview provides a picture of the pet care industry, including ownership trends, international comparisons of cats and dogs in the US, UK and European markets as well as a look into the other animals segment. Consumer expenditure provides a breakdown of what pet owners spend on their pets. This is analysed by dogs, cats and other pets. The chapter on pet food provides a look into this segment of the industry including balance of payments data and advertising expenditure. The veterinary services chapter identifies the expenditure on veterinary products and who is involved in this area. Pet care services and products analyses the size of this segment and the various areas involved, including the amount spent through the local governments of Australia. Dogs in the service of humans provides a glimpse into the number of dogs working alongside humans in various roles. The social and health benefits of pets are described with reference to how pets have changed over the years and their role in keeping us happy and healthy. Finally we provide our overall conclusions on the pet care industry. In the appendix we provide the key assumptions used in our market estimates, with reference to the relevant section of the report. Page 7

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3 Market Overview This section provides an overview of the pet care market in Australia, including the pet population (in total and by state), historical trends and overall expenditure on pet care products and services. We have also reported data for overseas markets to provide a context for the Australian data. 3.1 Pet population trends Throughout Australia there are an estimated 38.2 million pets. In 2005 the population of dogs was 3.75 million, while the cat population was 2.43 million. In addition there are roughly 20 million fish, 9 million birds and around 3 million other pets including pleasure horses, rabbits, guinea pigs and other small animals. Estimated Australian pet population, 2005 Pet type Million Dogs 3.75 Cats 2.43 Fish 20.00 Birds 9.00 Other pets 3.00 Total 38.18 Source: TNS and BIS Shrapnel estimates New South Wales and Victoria (the two most populated states) account for 58.5% of all pets throughout Australia. New South Wales has the most pets with a total of 13.19 million pets while Victoria has the second highest number of pets with 9.16 million. Pet population by state, 2005 (percentage of total number) NSW/ACT 35% Victoria 24% Queensland 18% South Australia / NT 11% Western Australia 10% Tasmania 3% Estimated pet population by state, 2005 ( 000) State Dogs Cats Fish Birds Other pets New South Wales / ACT 1,219 804 7,091 2,957 1,117 13,188 34.5 Victoria 894 599 4,874 2,045 744 9,156 24.0 Queensland 819 443 3,530 1,714 521 7,027 18.4 Western Australia 338 261 2,016 1,126 298 4,039 10.6 South Australia / NT 373 227 1,984 900 245 3,729 9.8 Tasmania 111 92 505 258 75 1,041 2.7 Total 3,754 2,426 20,000 9,000 3,000 38,180 100.0 Source: TNS and BIS Shrapnel estimates Total pets % of total Page 9

The national average of cat ownership has decreased slightly to 12 cats per 100 people since 2002. The national average of dog ownership per 100 people has also decreased to 18 dogs. Tasmania is the leading state for dog and cat ownership per 100 people. The state average for dogs is 23 and 19 for cats. Both Queensland and Western Australia are the next highest states for dog ownership, with 21 dogs per 100 people; Western Australia and South Australia/Northern Territory are second highest for cat ownership with 13 cats per 100 people. Number of pets per 100 head of population, by state, 2005 Number per 100 people State Population ( 000) Dogs Cats New South Wales / ACT 7,114 17 11 Victoria 5,038 18 12 Queensland 3,981 21 11 Western Australia 2,019 17 13 South Australia / NT 1,748 21 13 Tasmania 486 23 19 2005 Total 20,385 National Average 18 National Average 12 2002 Total 19,705 National Average 20 National Average 13 1998 Total 18,748 National Average 20 National Average 13 Source: TNS, ABS and BIS Shrapnel estimates New South Wales / ACT Victoria 11 12 17 18 Queensland South Australia / NT Western Australia 11 13 13 17 21 21 Tasmania 19 National average 12 18 Dogs Cats Page 10

It is estimated that around 63% of Australian households own some type of pet (53% owing a cat or dog). This is a decrease on previous estimates of 64% in 2002; however the current rate of pet ownership in Australia is still one of the highest in the world. Estimated number of households with dogs and cats (million) Pet type 2001 2002 2003 2004 2005 Dogs 2.7 2.8 2.7 2.8 2.8 Cats 1.7 1.7 1.7 1.8 1.9 Dog and/or Cat n/a 3.9 n/a 4.3 4.0 Total Australian Households 6.9 7.1 7.2 7.3 7.5 Source: TNS and BIS Shrapnel estimates Proportion of households with dogs and cats (percentage of total) Pet type 2001 2002 2003 2004 2005 Dogs 39.6 39.0 37.6 38.2 37.8 Cats 25.0 24.4 23.0 24.6 25.0 Dog and/or Cat n/a 54.9 n/a 58.9 53.3 Source: TNS and BIS Shrapnel estimates Page 11

3.1.1 Dogs According to research conducted by TNS, the number of dogs per dog owning household has been decreasing over the past three years, with the percentage of households owning a dog also in decline overall. As higher density dwellings become more popular we estimate that the percentage of households owning a dog and the incidence of multiple dog ownership will decrease, continuing the overall decline in the dog population. Dog population, 2000 2005 2000 2001 2002 2003 2004 2005 Dog Population (million) 3.91 4.02 4.03 4.01 3.93 3.75 Dog Ownership (% households) 39.1 39.6 39.0 37.6 38.2 37.8 Dogs per dog owning household 1.45 1.45 1.46 1.47 1.45 1.43 Source: TNS Dog population, 2000 2005 (million) 3.91 4.02 4.03 4.01 3.93 3.75 2000 2001 2002 2003 2004 2005 Page 12

Dog ownership, 2000 2005 (percentage of households) 39.1 39.6 39.0 37.6 38.2 37.8 2000 2001 2002 2003 2004 2005 Dog population Trend line estimates, 1998 2005 (million) 4.2 4.0 3.8 3.6 3.4 3.2 1998 1999 2000 2001 2002 2003 2004 2005 Source: TNS Data: Year end June Page 13

3.1.2 Cats The cat population has been in a state of decline for over a decade. The number of cats per cat owning household has also declined to 1.40 cats per household from a high 1.48 in 2003. While the population of cats and number of cats per household has been in decline, the percentage of households with cats has increased over the past three years. This suggests that single cat ownership is increasing. It should be noted that the underlying reason behind the decline in cat numbers is an increase in the number of cats which are desexed. This is the result of a long campaign to encourage pet owners to de-sex their pets. For several years now the desexing rate of pet cats of breeding age has exceeded the threshold for zero population growth, where insufficient kittens are born each year in owned populations to replace those that die each year. The current age structure of the pet cat population means that continued decline in owned cat numbers is inevitable. Despite long term trends, the availability of kittens fluctuates throughout the year as cats are seasonal breeders, resulting in supply-demand mismatches across a 12 month period. Further, at least one large city animal welfare shelter is finding a decline in animals being euthanased, and brings dogs and cats from country shelters to city shelters to supply the demand for pets. This shelter has also found that few surrendered animals were suitable for placement in homes, the remainder not being suitable for adoption. This indicates that high desexing rates of pet cats have minimised the flow of animals to welfare shelters from owned cat populations. Cat population, 2000 2005 2000 2001 2002 2003 2004 2005 Cat Population (million) 2.57 2.56 2.56 2.46 2.49 2.43 Cat Ownership (% households) 25.5 25.0 24.4 23.0 24.6 25.0 Cats per cat owning household 1.47 1.47 1.47 1.48 1.43 1.40 Source: TNS Cat population, 2000 2005 (million) 2.57 2.56 2.56 2.46 2.49 2.43 2000 2001 2002 2003 2004 2005 Page 14

Cat ownership, 2000 2005 (percentage of households) 3.0 2.8 2.6 2.4 2.2 2.0 1998 1999 2000 2001 2002 2003 2004 2005 Source: TNS Data: Year end June Cat population Trend line estimates, 1998-2005 (million) 3.0 2.8 2.6 2.4 2.2 2.0 1998 1999 2000 2001 2002 2003 2004 2005 Source: TNS Data: Year end June The ratio of dogs to cats peaked in 2003 with 1.63 dogs per cat. Since 2003, this ratio has been in decline. It was 1.55 in 2005, suggesting that the dog population is falling faster than the cat population. Ratio of number of dogs to cats, 2000 2005 Year Ratio 2000 1.52 2001 1.57 2002 1.57 2003 1.63 2004 1.58 2005 1.55 Source: BIS Shrapnel Page 15

3.1.3 Other pets Pleasure horses At present there is no data on the number of horses throughout Australia. The Australian Horse Industry Council is attempting to collect this information through an emergency database encouraging owners to register themselves and the number of horses they have. However, this is in its infancy. Collecting population information is extremely difficult as some councils throughout the country have restrictions on the number of horses allowed to be kept within a given area. Many people exceed this number and are not willing to give accurate information. In a study into the horse industry in 2001 (The Horse Industry Contributing to the Australian Economy, Centre for International Economics), it was estimated that horse numbers could be as high as 1.5 million or as low as 0.9 million. For the report, a figure of 1.2 million was used. Since there is no data to suggest any changes in the horse population, we have continued to use this figure. The Australian Horse Industry Council estimates that approximately 70% of the horses in Australia are pleasure horses as opposed to working horses. This suggests that the population of pleasure horses in Australia is roughly 800,000. Pony clubs in Australia State Member numbers Annual membership costs ($) Riding New South Wales 18,000 35 25 Victoria 8,500 60 Nil Queensland 12,000 37 6.50 South Australia 1,500 62.40 under 26 Nil Non-riding Western Australia 5,500 55 15.40 Tasmania 1,000 50 Nil Total 46,500 Note: ACT included in NSW, NT included in South Australia Source: State Pony Club of Australia branches Membership to Pony Clubs in Australia also covers insurance costs. On top of this there are additional annual fees for each individual club. These range from about $55 in Western Australia, to between $80 and $200 in Victoria. For horses kept in cities, the greatest expense for owners is the cost of stabling, with feed for the horse being the second highest expense. Most recreational horse owners estimate they spend $150 per year in veterinary costs. Another large area of expense for horse owners is pharmaceuticals. These total about $200 per year for recreational horses. Supplements given to horses range from $20 to $200 per horse per year. Expenditure on rugs, bandages, harnesses and saddlery can be up to $400 per year for horses which compete in events. For each horse, The Centre for International Economics estimated that $3,000 to $5,000 is initially spent on riding gear, with recreational riders spending roughly $200 per year on appropriate clothing and footwear. Page 16

The table below is based on both recreational horses and horses used in events. Horse maintenance costs and services Expense Cost per year ($) Cost of metropolitan stabling and feed 6,500 Cost of feed and accommodation on acreage 1,300 Cost of paddock only 104 Cost of agistment and feed (country) 728 Farrier costs event horses 600 Farrier costs recreation 120 Veterinary services Horse dental technicians Source: The Horse Industry Contributing to the Australian Economy Reptiles 300 (3 times per year) 100 (2 times per year) In recent times the market for reptiles has increased dramatically. This is due mainly to changes in the legislation of New South Wales and Western Australia allowing people to keep more varieties of reptile without a licence than previously. In New South Wales the number of registered keepers of reptiles rose from negligible numbers to 8,000 after the change in licensing system. Queensland pet shops are now allowed to sell small animals which was not the case previously, making it easier for people to buy reptiles. A basic set-up cost for keeping a reptile is about $200 including the cage and accessories. However as with aquariums, the more expensive set-ups can cost thousands of dollars. Purchasing a reptile will cost from $100 to $300 for the more common species. Feeding is fairly cheap, with bags of feed pellets for turtles and lizards sold in pet shops. Rats, a common food for snakes, are also sold frozen in pet shops and are fed to the snake every one to two weeks. For all reptiles, food costs are between $5 and $15 per week. Every week approximately 200 reptiles, including turtles, lizards and snakes are sold throughout Australia. There is an increasing number of reptiles being kept in apartments. Reptiles are becoming more popular through the increase in higher density dwellings and the associated reduction in the household s available space. Reptiles do not need much attention and are seen as a unique pet. Birds According to various bird associations, it is estimated that one in five people in Australia own a bird. There are approximately 186 bird clubs across Australia (Yellow Pages, various websites and BIS Shrapnel estimates) covering a wide range of species. Two of the biggest selling birds in Australia are budgerigars and canaries. A budgerigar costs between $20 and $30 for a multi coloured variety, while a canary sells for between $30 and $50. Throughout the world, the most common bird kept as a pet is the cockatiel. These are more expensive and cost a minimum of $100. There are around four large companies in Australia who produce feed for birds. In 2005, 27.1 million tonnes of bird seed was sold in supermarkets across Australia (Retail World, 2006). By adding seed sold in pet shops, we estimate that approximately 40 million tonnes of bird seed was sold throughout the country in 2005. Page 17

Fish Each year there are approximately 15 million fish sold in Australia. Historically the wholesale price of fish has averaged $1.50 per fish, with the current market value slightly under this. Therefore the total expenditure on the purchase of fish each year is $22.5 million in wholesale prices. By taking an average price for fish sold in a pet shop at $4, the total market for fish purchases is $60 million per year. Aquariums can cost thousands of dollars; however for a basic set-up of the tank, filter and accessories, the cost is about $250. There are 879 registered aquarium and supply shops in Australia, which compete in a market worth approximately $100 million annually. Native animals In Australia some native animals are allowed to be kept as pets. These include some species of bird, reptile and mammal. In New South Wales for example, there are two classes of licence: Class 1 is for common species which are easy to look after, such as a common blue tongue lizard or carpet python. Class 2 is for species which are difficult to keep, rare in the wild, or dangerous/venomous such as the lace monitor or frilled lizard. Tasmania does not encourage the keeping of native animals as pets. Some reptiles are allowed to be kept with no yearly charge; however, keeping other native animals is discouraged. Licence (class 1) costs, by state, 2005 State Costs ($) per year New South Wales $30 Victoria $57.60 Queensland $11.60 South Australia $51.50 Western Australia Birds $10-$20, reptiles from $20 Australian Capital Territory $11- $15 per year Tasmania No charge Northern Territory No charge Source: State government environmental departments Page 18

The number of licence and permit holders in Australia is approximately 44,851. Each licence or permit allows the keeping of multiple animals. Based on information available we estimate that there are roughly 224,000 animals kept under licence in Australia with the annual cost of licence renewals totalling $2.3 million. Number of licences and permits, June 2005 State Amphibians Birds Mammals Reptiles Total New South Wales 683 4,610 53 10,188 15,534 Victoria 751 2,965 298 3,518 7,532 Queensland 380e 2,570e 5,690e 8,640e South Australia 282 1,905 22 4,211 6,420 Western Australia 70 2,833 85 1,131 4,049 Tasmania 50 600 100 750 ACT 50 650 300 1,000 NT 10 161 755 926 Total 2,276 16,294 458 25,823 44,851 e = estimate Source: State environmental government departments and BIS Shrapnel estimates Page 19

3.2 International comparison Pet ownership trends in Australia can be more effectively gauged in relation to the levels of pet ownership experienced overseas. For the purposes of our comparisons we have chosen the USA, a nation frequently used for benchmarking Australia s performance, and the UK, a nation quite similar to Australia in terms of pet ownership and trends. Information on pet ownership in Europe is also included where available. Australia continues to have one of the highest rates of pet ownership in the world, with around 63% of households owning some type of pet. This is equal with the USA (63%), while in the UK 53% of households own a pet. The number of dogs per 100 people has risen in the USA, from 22 in 2001 to 25 in 2005. This is in contrast to both Australia and the UK, where the number of dogs per 100 people has fallen slightly since 2002. This same trend can be seen with cat ownership. The number of cats per 100 people has increased in the USA from 28 in 2001 to 31 in 2005, while Australia and the UK have shown reduced rates since the 2002 report. International comparison of pet ownership Pet type Australia (2005) USA (2005) UK (2003) Dogs: - % households with dogs 38 40 24 - Number of dogs/100 people 18 25 9 Cats: - % households with cats 25 34 21 - Number of cats/100 people 12 31 10 Any pet type: - % households with pets 63 63 53 Note: Data available are for different years Source: TNS, APPMA(US), PFMA(UK), BIS Shrapnel estimates International comparison of pet ownership (Percentage of households) 63 63 53 38 40 34 25 24 21 Australia (2005) USA (2005) UK (2003) With any pet type With dogs With cats Page 20

Trends in the USA The pet industry in the USA is a significant contributor to the economy, with growth reported each year. According to the American Pet Products Manufacturers Association, it is estimated that US$35.9 billion will be spent in 2005 by the 69.1 million pet owning households. This equates to US$519 annual expenditure per pet owning household. In 2005, the total dog population in the USA grew to almost 74 million, and the cat population jumped to over 90 million. The dog population in the US has increased by 23% since 2001. There has also been an increase in the percentage of US households owning dogs: up from 36.9% in 2001 to 39.7% in 2005. The cat population in the US has also experienced exceptional growth, with a 20% increase in population compared with 2001. However, the percentage of households owning cats remained steady at 34% of total households. USA pet ownership trends, 1994-2005 Dogs: Cats: 1994 1996 1998 2000 2001 2005 - Number of dogs ( 000) 54,999 55,796 57,611 59,351 60,182 73,900 - % of households owning 38.2 37.6 37.8 37.3 36.9 39.7 - Number of cats ( 000) 63,821 67,935 70,942 75,046 75,601 90,500 - % of households owning 32.3 33.4 34 34.5 34.2 34.4 Both dog(s) and cat(s): - % of households owning both dog(s) 14.6 and cat(s) 15.6 15.9 16.0 15.7 15.2 Other pets: - Number of other pets ( 000) n/a n/a n/a n/a n/a 194,400 - % of households owning n/a n/a n/a n/a n/a 7.1 n/a: data not available Source: The American Pet Products Manufacturers Association, US Pet Food Institute The breakdown of the US pet care market for 2005 is estimated as follows: US pet care market, 2005 (US $ billion) Type Value Food 14.5 Vet care 8.6 Supplies/Medicine 8.8 Live animal purchases 1.6 Pet Services: grooming and boarding 2.4 Total 35.9 Source: US Pet Food Institute Page 21

Trends in the UK Research conducted by the Pet Food Manufacturers Association shows that in 2003, 52.7% of UK households owned a pet of some kind, equating to roughly 13 million households. This included 6 million cat owning households, 5.15 million dog owning households and 8 million fish, rodent or bird owning households. UK pet ownership trends, 1994-2003 Type 1994 1996 1998 2000 2001 2003 Number of households owning: (Million) - Dogs 5.3 5.4 5.4 5.1 4.8 5.2 - Cats 4.7 4.9 5.1 5.0 4.8 6.0 % of households owning: - Dogs 25 24 23 21 19.5 24.4 - Cats 22 22 21 20 19.5 20.9 Source: The Pet Food Manufacturers Association, BIS Shrapnel estimates In 2003 the total population of cats and dogs increased. The population of dogs has increased to 6.5 million from 6.1 million in 2001. The cat population in the UK has also risen, with 9.2 million cats in 2003 compared with 7.5 million in 2001. This figure is well above the previous peak of 8 million in 1998 and 2000. Although the cat population has increased, the number of people living in the UK has increased at a greater rate. This means that looking at the number of cats per 100 people we see a decline occurring. UK main pet types population 1994-2003 (million) Pet type 1994 1996 1998 2000 2001 2003 Dogs 6.7 6.6 6.9 6.5 6.1 6.5 Cats 7.2 7.7 8.0 8.0 7.5 9.2 Budgerigars 1.4 1.3 1.1 1.0 0.8 n/a Total 15.3 15.6 16.0 15.5 14.4 15.7 n/a: data not available Source: The Pet Food Manufacturers Association The value of prepared pet food in 2004 for the UK market was just over 1.5 billion and 1.2 million tonnes of product. These figures are similar to those for 2000, even though the number of pets in the UK has risen. This suggests pet owners are starting to move away from prepared pet foods towards other varieties of pet food. UK market for prepared pet food, 2004 Food type Volume ( 000 tonnes) Value ( million) Dog food: - Moist 325 291 - Complete Dry 329 357 - Mixers 56 33 - Treats 51 148 Subtotal 761 829 Cat food: - Moist 366 516 - Dry 79 169 Subtotal 445 685 Total 1,206 1,514 Source: The Pet Food Manufacturers Association Page 22

UK pet food market, 1996-2004 Year Volume ( 000 tonnes) Value ( million) 1996 1,380 1,398 1997 1,357 1,484 1998 1,334 1,496 1999 1,397 1,474 2000 1,291 1,519 2001 1,274 1,460 2004 1,206 1,514 Source: The Pet Food Manufacturers Association Trends in Europe Across Europe there are around 55 million pet owning households. These households consume 5 million tonnes of pet food each year, at a cost of 8.5 billion. According to the European Pet Food Industry Federation there are 47 million cats and 41 million dogs throughout Europe, along with 80 million other pets. Source: European Pet Food Industry Federation Pet type Number (million) Cat 47 Dog 41 Bird 35 Aquaria 9 Other 36 Total 168 Source: European Pet Food Industry Federation Page 23

3.3 Australian pet care market For 2005, we estimate that total consumer expenditure on pet care products and services in Australia was $4.62 billion. For comparison purposes, sales of other major Australian food product industries are given below. The last available data from the Australian Bureau of Statistics (ABS) refers to the period 2002/03. Our pet food estimates have been altered to enable a comparison of this table data. Australia major food product sales, 2003 Products $ million Meat for human consumption 4,856 Poultry & poultry products 3,196 Cheese and curd 1,953 Pet food 1,880 Bread 1,661 Chocolate confectionery 1,514 Source: ABS Catalogue 8365.0, 2002-03 and BIS Shrapnel estimates Details of expenditure by main pet types and industry segments are reported in the following sections. A summary is provided below. Expenditure on pet care, 2005 ($ million) Expenditure type Dogs Cats Other pets Total Food: - Manufactured 865 490 156 1,511 - Non-manufactured 300 200 500 Subtotal 1,165 690 156 2,011 Veterinary charges 700 240 125 1,065 Products & Equipment 220 95 225 540 Services 395 135 530 Pet purchases 110 23 162 295 Other expenses 155 12 12 179 Total 2,745 1,195 680 4,620 % of total 59 26 15 100 Source: BIS Shrapnel estimates Expenditure on pet care by pet type, 2005 (Percentage of total) Dogs 59% Cats 26% Other pets 15% Page 24

The following allocation of total expenditure to individual states is based on the distribution of the Australian pet population by state and the assumption that generally, the expenditure per pet is fairly evenly distributed across the country. Summary of Australian expenditure on pet care, by state, 2005 ($ million) State Dogs Cats Other pets Total % of total New South Wales / ACT 958 417 237 1,612 34.9 Victoria 678 295 168 1,142 24.7 Queensland 536 233 133 902 19.5 Western Australia 272 118 67 458 9.9 South Australia / NT 235 102 58 396 8.6 Tasmania 65 28 16 110 2.4 Total 2,745 1,195 680 4,620 100.0 Source: BIS Shrapnel estimates Summary of Australian expenditure on pet care by state, 2005 (Percentage of total) NSW/ACT 35% Victoria 25% Queensland 20% Western Australia 10% South Australia / NT 9% Tasmania 2% Page 25

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4 Consumer expenditure We estimate that in 2005, total consumer expenditure on pet care services and products in Australia to be $4.62 billion. 4.1 Dogs Consumer expenditure on pet care, 2005, by pet type ($ million) Pet type $ million % of total Dog 2,745 59 Cat 1,195 26 Other pets 680 15 Total 4,620 100 Source: BIS Shrapnel estimates In the following section, we provide an analysis of expenditure related to the three major market segments: dogs, cats and other pets. Dog related expenses represent 59% of total consumer expenditure on pet care products. In 2005 this totalled $2.7 billion or $732 per dog. The largest component of this figure was generated by food sales ($1.17 billion, or 42%), including manufactured and non-manufactured processed foods. The second largest level of expenditure was associated with veterinary charges ($700 million, or 26%). This category includes the cost of veterinary consultation fees, prescribed drugs and other veterinary goods and services offered. Page 27

Consumer expenditure on dogs, 2005 Expenditure on $ million % total Food: - Manufactured/processed 865 - Non-manufactured/processed 300 Subtotal 1,165 42 Veterinary charges (including fees, cost of prescribed drugs and other goods and services provided) 700 26 Dog products: - Health care products (flea control, worming products, vitamins, shampoos, etc.) 80 - Dog accessories (collars, leads, bowls, bedding, etc.) 110 Subtotal 190 7 Dog equipment: - Household dog kennels 30 1 Dog services: - Boarding, walking and minding 240 - Clipping and grooming 130 - Training 25 Subtotal 395 14 Pet purchases: 110 4 Other expenses: - Registration fees 50 - Dog show competition fees 5 - Transport 30 - Burial 30 - Micro-chipping 30 - Insurance 5 - Dog show/canine councils administration 5 Subtotal 155 6 Total 2,745 100 Yearly expenditure per dog ($) 732 Source: BIS Shrapnel estimates Consumer expenditure on dogs (Percentage of total) Food 42% Veterinary charges 26% Services 14% Products 7% Other expenses 6% Pet purchases 4% Equipment 1% Page 28

Comparing the change over the period 2002 to 2005, we can see that total expenditure on dogs has increased by 4.0% ($105 million). Consumer expenditure on dogs, 1998 2005 1998 2002 2005 % change, 2002 2005 Total expenditure ($ million) 2,167 2,640 2,745 4.0 Number of dogs (million) 3.71 3.97 3.75 5.5 Cost per dog ($) 584 664 732 10.2 Source: BIS Shrapnel estimates Note: In previous reports, dog population data was sourced from AC Neilson and may differ to current TNS data. Page 29

4.2 Cats In 2005, total consumer expenditure on cats is estimated at just under $1.2 billion, which accounts for 26% of total pet care consumer expenditure. The majority of this is generated through food and drink (58% or $690 million). Veterinary charges account for 20% ($240 million), while cat services make up 11% ($135 million). Consumer expenditure on cats, 2005 Expenditure on $ million % total Food and drink: - Manufactured/processed 490 - Non-manufactured/processed 200 Subtotal 690 58 Veterinary charges (including fees, cost of prescribed drugs and other goods and services provided) 240 20 Cat products: - Cat accessories and health care products 50 - Cat litter 45 Subtotal 95 8 Cat services: - Boarding and minding 75 - Grooming 40 - Transport 20 Subtotal 135 11 Pet purchases: 23 2 Other expenses: - Registration fees 7 - Cat show fees 2 - Insurance 3 Subtotal 12 1 Total 1,195 100 Yearly expenditure per cat ($) 492 Source: BIS Shrapnel estimates Consumer expenditure on cats (Percentage of total) Fooc 58% Veterinary charges 20% Services 11% Products 8% Pet purchases 2% Other expenses 1% Page 30

Compared with 2002, total consumer expenditure on cats for 2005 has increased by 17.7% ($180 million). This increase is mostly attributable to a rise in the cost of pet food as well as an increase in the other services category, which has had insurance included for the first time. Consumer expenditure on cats, 1998 2005 1998 2002 2005 % change, 2002 2005 Total expenditure ($ million) 865 1,015 1,195 17.7 Number of cats (million) 2.51 2.47 2.43 1.6 Cost per cat ($) 345 411 492 19.7 Source: BIS Shrapnel estimates Note: In previous reports, cat population data was sourced from AC Neilson and may differ to current TNS data. Page 31

4.3 Other pets Other pets include pleasure horses, birds, fish, reptiles, rabbits and other small animals. Total expenditure on other pets generates 15% of total consumer expenditure on pet care in Australia. In 2005 it is estimated at $680 million. Consumer expenditure on other pets, 2005 Expenditure on $ million % total Food: - Bird seed 70 - Fish food 60 - Other pets 26 Subtotal 156 23 Veterinary charges (goods and services provided by vets) 125 18 Health care products 50 7 Equipment and accessories: - Bird cages and accessories 55 - Aquariums and related equipment 100 - Other pet equipment 20 Subtotal 175 26 Pet purchases: - Birds 72 - Fish 60 - Other pets 30 Subtotal 162 24 Other expenses: - Horse stables 5 - Pony and associated club memberships 5 - Bird and reptile licences 2 Subtotal 12 2 Total 680 100 Source: BIS Shrapnel estimates Consumer expenditure on other pets (Percentage of total) Equipment & accessories 26% Pet purchases 24% Fooc 23% Veterinary charges 18% Health care products 7% Other expenses 2% Page 32

4.4 The integration of pets into family lifestyles Pets today are being treated more like one of the family than in any previous generation. With an enormous array of products on the market aimed at improving your pets lifestyle, the transference of parenting instincts onto family pets is increasingly easy. An Australian study conducted by Newspoll, explored the concept of being a pet parent as opposed to a pet owner. The study indicated that a significant proportion of pet owners appear to be responsible, loving, caring and protective of their pet, sharing a close emotional bond as one would with a family member. 85% of pet owners agreed their pet is part of the family, like a child 57% of pet owners agreed their pet is their best friend 81% of pet owners agreed they never feel alone when they are with their pet 38% of pet owners often/sometimes let their pet sleep in their bed or bedroom 21% of pet owners often/sometimes celebrate their pet s birthday 44% of pet owners give their pet presents for Christmas or other special occasions Similar studies have been conducted in other countries with similar results, indicating that this is a worldwide trend. Page 33

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5 Pet food 5.1 Consumer expenditure Manufactured/processed pet food is the most significant sector of the pet care market. In calendar year 2005, grocery sales of pet food through supermarkets reached $1.3 billion. After the inclusion of other manufactured pet foods sold through pet shops as well as the market for non-manufactured foods (fresh meat/fish, food scraps), total consumer expenditure on pet food exceeds $2.0 billion. Consumer expenditure on pet food, 2005, by pet type ($ million) Pet type $ million % of total Dog food: - Manufactured/processed 865 - Non-manufactured/processed 300 Subtotal 1,165 58 Cat food: - Manufactured/processed 490 - Non-manufactured/processed 200 Subtotal 690 34 Food for other pets (birds, fish, reptiles) 160 8 Total 2,015 100 Source: BIS Shrapnel estimates Consumer expenditure on pet food, 2005 by type of pet (Percentage of total) Dogs 58% Cats 34% Other pets 8% Page 35

In 2005, the pet food industry has increased its grocery sales by 4.7% on 2004 figures and by 15.2% on 2002 figures. This is despite the fact that both dog and cat populations have declined. Grocery sales of pet food ($ million) Type 1998 2002 2004 2005 Dog food: - Canned 297.5 280.0 269.0 269.0 - Packet (dry) 153.4 155.5 173.0 181.8 5.1 - Treats 38.7 75.2 94.7 106.9 12.9 - Chilled n/a 64.5 85.1 96.2 13.0 Total dog food 489.6 575.2 621.8 653.9 5.2 Cat food: - Canned 228.5 244.9 255.6 263.6 3.1 - Packet (dry) 84.7 89.2 103.0 111.6 8.3 - Treats n/a 4.3 3.6 n/a n/a - Chilled n/a 30.5 36.9 44.3 20.1 - Drinks n/a 7.6 9.6 10.1 5.2 Total cat food 313.2 376.5 408.7 429.6 5.1 Bird seed 39.3 42.0 54.9 52.7 4.0 Poultry & rodent n/a n/a 8.4 8.8 4.8 Total 842.1 993.7 1,093.8 1,145.0 4.7 % change 2004 2005 n/a: data not available. Source: Retail World Year Book and BIS Shrapnel estimates Note: 2002 data on chilled pet food has been re-proportioned for dogs and cats to allow a better indication of the market Grocery sales of pet food ( 000 tonnes) Type 1998 2002 2004 2005 Dog food: - Canned 162.0 149.0 142.2 138.8 2.4 - Packet (dry) 89.0 95.9 99.0 100.6 1.6 - Treats 4.1 6.2 7.0 7.5 7.1 - Chilled n/a 32.4 38.9 39.1 0.5 Total dog food 255.1 283.5 287.1 286.0 0.4 Cat food: - Canned 86.3 83.4 81.4 78.3 3.8 - Packet (dry) 28.8 27.9 28.8 29.5 2.4 - Treats n/a 0.3 0.5 n/a n/a - Chilled n/a 9.6 9.0 8.8 2.2 - Drinks n/a 2.9 3.0 3.5 16.7 Total cat food 115.1 124.1 122.7 120.1 2.1 Bird seed 28.0 27.7 27.6 27.1 1.8 Poultry & rodent n/a n/a 5.0 5.0 Total 398.2 435.3 442.4 438.2 0.9 n/a: data not available Source: Retail World Year Book and BIS Shrapnel estimates Note: 2002 data on chilled pet food has been re-proportioned for dogs and cats to allow a better indication of the market. % change 2004 2005 Page 36

Grocery sales of dog food by brand, 2002 2005 Value share (%) Volume share (%) Brand 2002 2004 2005 2002 2004 2005 Canned dog food: - MasterFoods 71.1 72.8 72.0 65.7 65.4 65.7 - Bush s 9.2 7.7 7.9 10.2 8.0 7.8 - Natures Gift 1.9 2.3 3.2 1.4 1.5 2.1 - Chubpak 3.8 3.5 - Greens 0.9 0.6 - House brands/generics 12.9 17.2 16.9 18.6 25.1 24.4 - Other 0.1 Total 100.0 100.0 100.0 100.0 100.0 100.0 Dry dog food: - MasterFoods 51.5 53.6 51.7 45.0 47.9 46.0 - Nestlé Purina 25.0 15.1 14.6 26.6 12.7 12.7 - Greens 8.9 11.4 13.8 7.6 9.5 11.8 - House brands/generics 13.7 19.2 18.7 18.9 29.3 28.7 - Other 0.9 0.7 1.2 0.9 0.6 0.8 Total 100.0 100.0 100.0 100.0 100.0 100.0 Dog treats: - MasterFoods 56.2 57.3 55.5 34.3 38.2 37.8 - Nestlé Purina 20.6 18.6 16.8 41.7 41.4 37.1 - Trisum 3.7 5.9 5.7 0.5 0.3 0.3 - Show Em Go 4.4 5.3 4.9 1.4 1.9 1.8 - Natures Gift 4.2 3.1 3.3 2.6 2.9 3.8 - Greens 4.0 1.9 2.2 11.3 7.1 8.0 - House brands/generics 3.6 3.9 5.9 6.7 6.6 8.3 - Other 3.3 4.0 5.7 1.6 1.6 2.9 Total 100.0 100.0 100.0 100.0 100.0 100.0 Source: Retail World Year Book, 2003, 2005 and 2006 Grocery sales of cat food by brand, 2002 2005 Value share (%) Volume share (%) Brand 2002 2004 2005 2002 2004 2005 Canned cat food: - MasterFoods 66.1 61.8 61.3 68.4 65.2 64.7 - Nestlé Purina 10.1 14.2 15.7 3.5 4.5 5.3 - Safcol 9.0 8.2 8.0 7.9 6.9 7.1 - Bush s 2.9 1.6 1.5 3.0 1.7 1.9 - Chubpak 0.4 0.5 - House brands/generics 11.5 14.2 13.5 16.7 21.7 20.9 Total 100.0 100.0 100.0 100.0 100.0 100.0 Dry cat food: - MasterFoods 45.8 47.5 48.6 40.4 44.5 45.6 - Nestlé Purina 48.5 46.9 45.3 50.7 45.0 43.9 - House brands/generics 5.1 5.6 6.1 8.3 10.4 10.5 - Other 0.7 0.6 Total 100.0 100.0 100.0 100.0 100.0 100.0 Source: Retail World Year Book, 2003, 2005 and 2006 Page 37

Due to the increasing integration of pets into family lifestyles, pet food companies are producing more premium brand foods which are higher in price than general pet food. These premium foods are sold as being better for your pet with a higher nutritional content. Gourmet pet foods are increasingly being bought by households where the pet is treated more as a child than animal. This helps to explain the value growth in the pet food market despite a plateau in the amount of pet food sold. Organic pet foods are becoming increasingly popular throughout the US, Europe and Australia. In 2004 total sales of organic food totalled $141 million. Of this, an increasing percentage is attributable to pet food. Through the introduction of a national accreditation standard for organic foods, this figure is expected to rise. According to The Australia Institute (TAI), some pet owners are spending up to $1,000 a year on special pet foods sold by veterinarians. These premium brands cost up to six times as much as those sold through supermarkets. They cost between $3.50 and $5.65 per kilogram, whereas more generic brands cost between $0.90 and $1.75 per kilogram. These foods are generally recommended by veterinarians to address medical conditions which may be assisted by nutritional management, rather than owners seeking out these foods. Page 38

5.2 Major Beneficiaries Employment A comprehensive list of Australian pet food manufacturers and distributors is provided below. Pet food manufacturers and distributors Company Owner Location Advanced Pet Care Appetite Foods Aussie Pet Health Treats Australian Pet Supplies Australian Speciality Pet Foods Bucket O Beef Bush s Dry Pet Foods Bush s Pet Foods CopRice Grainfeeds Hill s Pet Nutrition IAMS Australia/New Zealand Katz Petfoods Perth, WA Port Melbourne, Vic Young, NSW Smithfield, NSW Pyramid Hill, VIC SA, Qld & NSW Forbes, NSW Ingleburn, NSW Leeton, NSW Wagin, WA Baulkham Hills, NSW Frenchs Forest, NSW Spotswood, VIC Lovitts Lilydale 15 MasterFoods Petcare Nature s Gift Australia Nestlé Purina Consumer Services Mars Group Nestlé Australia Wodonga, VIC Moorabbin, VIC North Ryde, NSW No. of employees 11 10 17 16 Products Dried dog, cat and fish food Long life milk, dog biscuits Dried dog & cat treats Aquarium foods & accessories 35 Canned dog food 30 Fresh pet food 35 Dried pet food 160 Canned pet food Medium Dried pet food 10 Dog & cat food 35 Dog & cat food 60 Dog & cat food medium 1,330 50 420 Dog & cat food Bird seed, fish, rabbit, guinea pig food Dog & cat foods & treats Dog & cat food & biscuits Dog & cat food & treats Comments Manufacture & export Manufacture Manufacture & export Manufacture Manufacture & export Manufacture & home distribution Manufacture & export Manufacture & export Manufacture & export Manufacture & export Import & distribute Import & distribute Manufacture & export Manufacture Manufacture & export Manufacture & export Manufacture & export Page 39

Pet food manufacturers and distributors continued Company Owner Location No. of employees Peters Pure Animal Foods Premier Stock Feeds Four Legs Pet Care Prota Pet Food Ridley AgriProducts Royal Canine Australia Safcol Scotty s Premium Pet Foods Supercoat Petcare Takari Seeds Tucker Time for Pets Treats for Pets Vet s Best Products VIP Pet Food Gamma Investments Inc. Green s Foods Ltd Source: Various directories and industry information Campbellfield, VIC McGraths Hill, NSW Sunshine, VIC Wangara, WA Pakenham, VIC Keysborough, VIC Elizabeth South, SA Underwood, QLD Inverell, NSW Toowoomba, QLD Canningvale, WA Wingfield, SA Gosford, NSW Ormeau, QLD Products Comments Small Rodent pet food Manufacture 40 Various pet foods Manufacture & export 30 Fresh pet food Manufacture 55 Fresh dog & cat food Manufacture 20 Dry pet food Manufacture & export 17 Dry dog & cat food Import & distribute 20 Cat food Manufacture & export 80 Fresh rolls for dogs & cats Specialise in naturally manufactured dog food. Franchise outlets are in QLD, NSW, VIC & NT 100 Dried dog & cat foods, Manufacture & baked & meat treats export 25 Bird seed & treats & cat litter 12 Fresh dog & cat food & biscuits Manufacture Manufacture & export 6 Treats & fish food Manufacture & export 15 Dog & cat treats Manufacture & export 85 Fresh & dry dog & cat food Manufacture & export Prepared animal and bird feed manufacturing, employment (persons) 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 Total 9,400 7,900 8,500 8,300 8,900 9,600 Source: ABS Catalogue 8221.0 Data on the number of employees in the prepared animal and bird feed manufacturing unit was last published in 1999/00 when there were 9,600 employed persons. From the period 1996/97 to 1999/00, the number of employed persons had been rising at an average rate of 5% per annum. In 1995/96 the industry shrank by 1,500 employees. Based on wages expenditure data the industry shrank again in 2000/01. This may have been caused by companies merging or leaving the industry. In 2002/03 the expenditure on wages and salaries had risen by 5% on the previous 12 months and by 21% on 2000/01 indicating a slowdown in wages growth. We estimate that based on the growth in wages and salaries, the number of employed persons in prepared animal and bird feed manufacturing is approximately 7,900. It should be noted that this category includes employment relating to commercial manufacturing such as food for farm animals. We therefore have reduced this figure to better represent only pet food manufacturing. Page 40

We estimate that based on company employment figures and ABS statistics, total direct employment in pet food manufacturing is 3,350 persons. Using a conservative multiplier effect of 1:1, we can estimate that another 3,350 people are indirectly employed by the pet food manufacturing industry. This includes: Primary producers providing input into the pet food industry of meat, fish and grains Packaging suppliers the pet food industry is a major user of metal cans, folding cartons, laminated bags and corrugated containers Transport and other industries, such as electricity and fuel Retailers in 2005, grocery sales of pet food reached $1.3 billion, placing this category well ahead of other major grocery segments Page 41

5.3 Balance of payments The export of processed cat and dog food makes a significant contribution to the Australian balance of payments. In 2004/05, the total export of processed foods was almost $337 million. Although this figure is down on 2003/04, it is $58.5 million greater than 2001/02. Exports of pets and pet-related products ($ million) Type 1997/98 1999/00 2001/02 2003/04 2004/05 Dried dog or cat food 143.9 155.7 201.6 197.1 187.5-4.9 Canned dog food 109.7 101.3 45.3 131.8 99.9-24.2 Dog or cat food (excl. canned & dried) 5.3 1.8 2.7 33.9 33.1-2.4 Canned cat food 22.1 21.4 28.7 17.4 16.3-6.3 Live ornamental fish n/a n/a 0.3 1.0 0.6-40.0 Total 281.0 280.2 278.6 381.2 337.4-11.5 n/a: data not available Source: ABS - 0205., 0301., 2309 % variation 2003/04-2004/05 Exports of pets and pet related products, 2004/05 ($ million) Dried dog or cat food 55.6% Canned dog food 29.6% Dog or cat food (excl. canned & dried) 9.8% Canned cat food 4.8% Live ornamental fish 0.2% Exports of pet foods ($ million) 281 280.2 278.6 381.2 337.4 1997/98 1999/00 2001/02 2003/04 2004/05 Other Canned Dried Page 42

For 2004/05, Japan was the top destination (kg) for exports of dried dog and cat food, canned dog food as well as other types of dog and cat food. New Zealand led exports (kg) for canned cat food. Country of destination for exports of pets and pet-related products, 2004/05 (value) Country of destination Value ($ 000) % share Dried dog or cat food, put up for retail sale: - Japan 122,861 65.5 - New Zealand 19,943 10.6 - Malaysia 8,903 4.7 - Thailand 6,852 3.7 - Taiwan 6,669 3.6 - South Korea 5,946 3.2 - China 4,320 2.3 - Other 12,003 6.4 Subtotal 187,498 100.0 Canned, pressure or vacuum sealed dog food, put up for retail sale: - Japan 70,340 70.4 - Taiwan 7,914 7.9 - Thailand 3,602 3.6 - Malaysia 3,114 3.1 - New Zealand 2,706 2.7 - South Korea 2,477 2.5 - Hong Kong 1,210 1.2 - South Africa 1,125 1.1 - Other 7,437 7.4 Subtotal 99,924 100.0 Dog or cat food (excl. canned and dried), put up for retail sale: - Japan 14,379 43.4 - Taiwan 6,075 18.3 - South Korea 3,521 10.6 - New Zealand 1,534 4.6 - Hong Kong 1,471 4.4 - Thailand 1,389 4.2 - Switzerland 1,003 3.0 - Singapore 1,001 3.0 - Other 2,749 8.3 Subtotal 33,122 100.0 Canned, pressure or vacuum sealed cat food, put up for retail sale: - New Zealand 9,508 58.5 - South Africa 1,129 6.9 - Japan 776 4.8 - Germany 626 3.9 - Saudi Arabia 601 3.7 - United Arab Emirates 478 2.9 - Turkey 457 2.8 - Other 2,684 16.5 Subtotal 16,259 100.0 Page 43

Country of destination for exports of pets and pet-related products, 2004/05 (value) continued Country of destination Value ($ 000) % share Live ornamental fish: - United States 255 41.9 - Taiwan 141 23.2 - Japan 88 14.4 - China 45 7.4 - Other 80 13.1 Subtotal 609 100.0 Total 346,861 Source: ABS 0301., 2309 Page 44

Country of destination for exports of pets and pet-related products, 2004/05 (volume) Country of destination Volume (kg) % share Dried dog or cat food, put up for retail sale: - Japan 104,217,651 67.6 - New Zealand 14,986,379 9.7 - Malaysia 7,746,728 5.0 - Taiwan 5,473,919 3.6 - Thailand 5,228,344 3.4 - South Korea 4,483,088 2.9 - China 3,774,253 2.4 - Other 8,248,664 5.4 Subtotal 154,159,026 100.0 Canned, pressure or vacuum sealed dog food, put up for retail sale: - Japan 49,805,956 67.1 - Taiwan 6,532,047 8.8 - Thailand 3,485,215 4.7 - New Zealand 2,273,643 3.1 - Malaysia 2,193,052 3.0 - South Korea 1,583,976 2.1 - Hong Kong 1,027,205 1.4 - South Africa 1,016,952 1.4 - Other 6,292,300 8.5 Subtotal 74,210,346 100.0 Dog or cat food (excl. canned and dried), put up for retail sale: - Japan 3,821,991 40.2 - Taiwan 1,874,940 19.7 - South Korea 989,442 10.4 - New Zealand 887,589 9.3 - Hong Kong 446,595 4.7 - Thailand 435,082 4.6 - Singapore 260,741 2.7 - Switzerland 173,324 1.8 - Other 628,131 6.6 Subtotal 9,517,835 100.0 Canned, pressure or vacuum sealed cat food, put up for retail sale: - New Zealand 7,480,879 60.6 - South Africa 924,144 7.5 - Saudi Arabia 557,042 4.5 - United Arab Emirates 437,899 3.5 - Turkey 382,642 3.1 - Malaysia 285,066 2.3 - Germany 278,901 2.3 - Other 2,003,873 16.2 Subtotal 12,350,446 100.0 Page 45

Country of destination for exports of pets and pet-related products, 2004/05 (volume) continued Country of destination Volume (kg) % share Live ornamental fish:* - Singapore 25,050 59.0 - United States 10,219 24.1 - Japan 4,284 10.1 - United Kingdom 1,233 2.9 - Other 1,650 3.9 Subtotal 42,436 100.0 Total (excluding ornamental fish) 250,237,653 * Quantities expressed are actual numbers of live ornamental fish Source: ABS 0301., 2309 In 2004/05, the import value of pets and pet-related products reached $127.5 million. Imports in this area have been rising since 1997/98, and in 2004/05 increased by 18% on 2003/04. Imports of pets and pet-related products ($ million) Type 1997/98 1999/00 2001/02 2003/04 2004/05 Canned cat food 42.6 38.6 53.0 41.0 59.0 43.9 Dog or cat food (excl. canned cat food) 16.2 23.6 24.2 51.4 53.2 3.5 Fish food 4.7 6.1 9.4 11.6 10.5-9.5 Live ornamental fish n/a 2.3 3.5 4.1 4.8 17.1 Total 63.5 70.6 90.1 108.1 127.5 17.9 n/a: data not available Source: ABS 0205., 0301., 2309 % variation 2003/04-2004/05 Imports of pets and pet-related products, 2004/05 ($ million) Dog or cat food (excl. canned cat food) 41.7% Canned cat food 46.3% Fish food 8.2% Live ornamental fish 3.8% Page 46

Imports of pets and pet-related products, 2004/05 ($ million) Although the value of imports is increasing, the overall balance of payments for pets and pet-related products provides a positive contribution to the Australian economy. Total exports exceeded total imports by $203 million in 2004/05. 90.1 108.1 127.5 63.5 70.6 1997/98 1999/00 2001/02 2003/04 2004/05 Page 47

Country of origin for imports of pets and pet-related products, 2004/05 (value) Country of origin Value ($ 000) % share Canned cat food, put up for retail sale: - Thailand 32,407 54.9 - United States 25,680 43.5 - Malaysia 526 0.9 - New Zealand 268 0.5 - Other 133 0.2 Subtotal 59,015 100.0 Dog or cat food, put up for retail sale (excl. canned cat food): - United States 25,411 47.7 - New Zealand 19,778 37.2 - France 1,866 3.5 - Canada 1,590 3.0 - Germany 1,380 2.6 - Thailand 1,230 2.3 - Hungary 1,153 2.2 - Other 826 1.6 Subtotal 53,234 100.0 Fish food: - Thailand 3,286 31.4 - Chile 1,528 14.6 - Taiwan 1,176 11.2 - United States 1,063 10.2 - Germany 670 6.4 - Seychelles 625 6.0 - China 613 5.9 - Japan 342 3.3 - Papua New Guinea 316 3.0 - Other 839 8.0 Subtotal 10,456 100.0 Live ornamental fish: - Singapore 1,449 30.5 - Indonesia 1,015 21.4 - Malaysia 624 13.1 - China 426 9.0 - Thailand 365 7.7 - Sri Lanka 292 6.1 - Germany 212 4.5 - Vanuatu 117 2.5 - Other 250 5.3 Subtotal 4,750 100.0 Total 127,456 Source: ABS 0205., 0301., 2309 Page 48

Country of origin for imports of pets and pet-related products, 2004/05 (volume) Country of origin Volume (kg) % share Canned cat food, put up for retail sale: - Thailand 18,762,885 60.3 - United States 12,103,516 38.9 - Malaysia 166,320 0.5 - Australia (Re-Imports) 95,366 0.3 - Other 8,885 0.0 Subtotal 31,136,972 100.0 Dog or cat food, put up for retail sale (excl. canned cat food): - United States 9,731,644 47.7 - New Zealand 7,548,229 37.0 - France 1,062,470 5.2 - Canada 596,615 2.9 - Thailand 419,344 2.1 - Australia (Re-Imports) 327,648 1.6 - Hungary 242,037 1.2 - Other 461,651 2.3 Subtotal 20,389,638 100.0 Fish food: - Thailand 2,782,116 38.8 - Chile 1,279,320 17.8 - Seychelles 1,272,412 17.7 - Papua New Guinea 509,210 7.1 - Taiwan 490,764 6.8 - Indonesia 237,850 3.3 - China 175,607 2.4 - United States 113,904 1.6 - France 95,318 1.3 - Other 221,407 3.1 Subtotal 7,177,908 100.0 Live ornamental fish:* - Singapore 4,610,041 31.1 - Indonesia 3,214,340 21.7 - China 1,969,949 13.3 - Malaysia 1,940,306 13.1 - Thailand 1,401,755 9.5 - Sri Lanka 1,167,274 7.9 - Hong Kong 299,816 2.0 - Germany 117,009 0.8 - Other 98,351 0.7 Subtotal 14,818,841 100.0 Total (excluding ornamental fish) 58,704,518 * Quantities expressed are actual numbers of live ornamental fish Source: ABS 0205., 0301., 2309 Page 49

5.4 Advertising expenditure The most recent year for which data on advertising expenditure was available was 2001, when advertising expenditure on the pet care industry was almost $28 million. Of this, 50% was used for dog food advertising, 29% for cat food, while the remaining 21% was used for general pet care advertising. We estimate, based on the increasing transference of parenting instincts onto family pets and increased expenditure on premium goods and services, the amount spent on advertising in 2005 to be closer to $40 million. Page 50

6 Veterinary Services 6.1 Consumer expenditure In 2005 the cost to pet owners of veterinary services is estimated at $990 million. This figure includes prescribed drugs as well as other products and services offered by veterinarians. The treatment of dogs accounts for the majority (71%) of the total figure. Cats make up one quarter (24%) and the residual represents the expenditure on other pets. The sales of veterinary chemical products have continued to increase. During 2005, sales associated with companion animals were estimated to be $308 million. Consumer expenditure on veterinary services*, 2005 Expenditure for $ million % total Dogs 700 71 Cats 240 24 Other pets 50 5 Total 990 100 * including consultation fees, prescription drugs, other veterinary products and services Source: BIS Shrapnel estimates Consumer expenditure on veterinary services, 2005 (percentage of total) Dogs 71% Cats 24% Other pets 5% Page 51

6.2 Major beneficiaries There are currently five universities offering Veterinary Science degrees in Australia, with a total of 1,941 students enrolled in 2005. In 2006, James Cook University in Queensland will offer a Veterinary Science degree due to extra funding from the federal government in 2004. The course will be 5 years and the university expects to have 60 students in the first year. Veterinary students, 2005 Location Number University of Sydney 569 University of Queensland 548 University of Melbourne 379 Murdoch University 400 Charles Sturt University 45 Total Australia 1,941 Source: Individual Universities Veterinary students, 2005 University of Sydney University of Queensland University of Melbourne* Murdoch University Charles Sturt University 1st year 124 120 109 71 45 469 2nd year 111 120 95 88 414 3rd year 124 108 89 80 401 4th year 110 100 86 82 378 5th year 100 100 79 279 Total 569 548 379 400 45 1,941 * The University of Melbourne offers the Bachelor of Veterinary Science, which consists of a four-year degree course and oneyear pre-veterinary course which is part of a general science degree. Source: Individual Universities The nationally endorsed Certificate IV in Veterinary Nursing is the industry s recognised standard for someone who is to provide competent support in a veterinary practice. Certificate I in Animal Studies is available for VET in Schools programmes and Certificate II in Animal Studies is delivered by Registered Training Organisations across Australia. The Certificate II in Animal Studies forms part of the Certificate IV in Veterinary Nursing. Diplomas in Veterinary Nursing (Critical Care and Emergency, Dental or Surgical) are also delivered nationally. There is a requirement for students to gain competence through employment within the industry when undertaking the Certificate IV and Diploma qualifications. These qualifications are part of the Animal Care and Management Training Package which is overseen by the Agri-Food Industry Skills Council. In 2005, there were 9,435 registered veterinary surgeons/specialists practising in 2,166 licensed veterinary hospitals. The Veterinary Services Board in each state/territory is responsible for registering veterinarians and specialists and investigating complaints about the practise of veterinary science. In some state they also licence veterinary hospitals. Total Page 52

Veterinary Surgeons Board registrations, 2005 Category Surgeons/Specialists Practices/Hospitals New South Wales 3,000 690 Victoria 2,137 460 Queensland 2,273 455 South Australia 500 200 Western Australia 950 250 Australian Capital Territory 259 21 Tasmania 150e 51e Northern Territory 166 39 Total 9,435 2,166 e: estimate Source: Veterinary Surgeons Board in each state/territory, BIS Shrapnel estimates In 2000 the ABS published a report on veterinary services throughout Australia and found that veterinary science is a female dominated occupation, with 73% of all persons working in veterinary practices being female. Of veterinary nurses, 97% are female, as are 86% of all managerial and administrative staff. Veterinary specialists and general veterinary practitioners on the other hand are male dominated, with 77% and 58% respectively being male. We estimate that based on registration numbers and anecdotal evidence, total employment is 13,400. The Australian Veterinary Association (AVA) is the professional association for veterinarians that are eligible for registration in Australia. National Australian Veterinary Association (AVA) membership Category 2006 New South Wales 1,610 Victoria 1,131 Queensland 1,063 Western Australia 406 South Australia 281 Australian Capital Territory 108 Tasmania 112 Northern Territory 46 Overseas 103 Students 609 Total 5,469 Source: AVA As of May 2006 there were 1,319 members of the Veterinary Nurses Council of Australia, of which 701 are full members and 618 are associate members. Full membership is available to those who have obtained the National Certificate IV in Veterinary Nursing (or another equivalent qualification or overseas qualification recognised by the VNCA). Associate membership is available to those who are not eligible to be full members, but who either: a) work in veterinary practice, animal welfare organisations, research & teaching institutions, appropriate government bodies or related employment; or b) are enrolled as students in veterinary nursing courses recognised by the VNCA. Page 53

Veterinary nurses / support staff in Australia, 2006 State Full member Associate member Total New South Wales 221 158 379 Victoria 118 191 309 Western Australia 154 41 195 South Australia 98 95 193 Queensland 77 92 169 Australian Capital Territory 18 16 34 Northern Territory 6 13 19 Tasmania 6 4 10 Overseas 3 8 11 Total 701 618 1,319 Source: The Veterinary Nurses Council of Australia Note: This table does not include all veterinary nurses and support staff, only members of The Veterinary Nurses Council of Australia. Page 54

6.3 Manufacturing of veterinary products According to the Australian Pesticides and Veterinary Medicines Authority Gazette, the total market for veterinary chemical products in 2004 was $607.7 million. Australian sales of veterinary chemical products, 2000 2004 ($ million) Product type 2000 2001 2002 2003 2004 Parasiticides 267.8 269.0 274.8 301.4 300.9 Immunotherapy 76.4 75.7 83.6 90.5 85.9 Nutritional & metabolism 75.8 89.2 92.2 90.4 71.2 Antibiotics & related 34.8 35.2 35.8 38.5 42.7 Other 56.7 71.1 65.3 77.0 107.0 Total 511.5 540.2 551.7 597.8 607.7 Source: Australian Pesticides and Veterinary Medicines Authority Number of veterinary chemical products registered, 2000 2004 Product type 2000 2001 2002 2003 2004 Parasiticides 998 1,039 1,069 1,081 1,061 Immunotherapy 223 222 228 219 209 Nutritional & metabolism 660 667 685 709 349 Antibiotics & related 327 328 355 384 385 Other 936 937 959 956 1,214 Total 3,144 3,193 3,296 3,349 3,218 Source: Australian Pesticides and Veterinary Medicines Authority After excluding large animal products, as well as other products not associated with companion animals, we estimate that the total market for veterinary chemical products for companion animals to be $212 million in 2004. Based on an average increase of 4%, we estimate that in 2005, the total market approached $220 million. It should be noted that this figure is a wholesale figure and does not represent retail sales. It is the price at which pharmaceutical companies sell their products. Employment We estimate that there are approximately 2,000 people working directly in the veterinary pharmaceutical/ research sector. Including indirect employment associated with this sector, through working in packaging, transport and retail industries, total employment is estimated at around 3,000 people. Some of the pharmaceutical, research and distribution companies who have interest in the pet care industry, are listed below. Page 55

Veterinary pharmaceutical, research and distribution companies Company Owner HQ Location No. of employees Products Comments Apex Laboratories Animal Supplies P/L Bayer Animal Health Boehringer Ingelheim Centre for Animal Biotechnology Private ownership Private ownership Bayer, Germany Private ownership, Germany Somersby, NSW Toongabbie, NSW Pymble, NSW North Ryde, NSW Parkville, VIC Cenvet Australia Vetstar P/L Kings Park, NSW Delvet P/L Elizabeth Macarthur Agricultural Institute Private ownership Seven Hills, NSW NSW Department of Menangle, Primary Industries NSW 14 Veterinary pharmaceuticals 60 Pharmaceuticals & accessories 73 Veterinary pharmaceuticals 22 Veterinary pharmaceuticals 13 est. Animal Health disease models 40 Veterinary pharmaceuticals, vaccines & accessories 12 Veterinary pharmaceuticals 198 Agriculture: diagnostic tests & vaccines Fort Dodge (Australia) Wyeth Baulkham Hills, 166 Veterinary NSW pharmaceuticals & vaccines Intervet Australia Jurox Lyppard Australia Merial Australia Novartis Animal Health Akzo Nobel, Netherlands Private ownership Private ownership A Merck Sharpe & Dohme and Sanofi- Aventis Co. Novartis, Switzerland Bendigo, VIC Rutherford, NSW Keysborough, VIC Parramatta, NSW North Ryde, NSW Peptech Animal Health Peptech Ltd North Ryde, NSW Pfizer Animal Health Pfizer Inc, USA North Ryde, NSW Provet Group Schering Plough Private Ownership Schering Plough, USA Banyo, QLD 110 Veterinary pharmaceuticals & vaccines 90 Veterinary pharmaceuticals 108 Veterinary pharmaceuticals, vaccines & accessories 80 Veterinary pharmaceuticals 105 Veterinary pharmaceuticals 5 Veterinary pharmaceuticals 100 Veterinary pharmaceuticals & vaccines Import, manufacture & export Import, manufacture & distribute Import & manufacture Import & manufacture Research, manufacture & export Import & local distribution Import, manufacture & export Research & development Import, manufacture & export Import, manufacture & export Import, manufacture & export Import & local distribution Manufacture & import Manufacture & import Manufacture & import Manufacture & import 150 Veterinary Import & local distribution pharmaceuticals, vaccines and accessories Baulkham Hills, 40 Veterinary NSW pharmaceuticals & vaccines Manufacture & import Page 56

Veterinary pharmaceutical/research companies. continued Company Owner HQ Location No. employees Products Comments Therapon Troy Laboratories Vetafarm Private ownership Private ownership Private ownership Burwood, VIC Smithfield, NSW Wagga Wagga, NSW Virbac Australia Virbac, France Peakhurst, NSW 30 Veterinary Distribute pharmaceuticals, vaccines and accessories 37 Veterinary pharmaceuticals 15 Mainly bird veterinary pharmaceuticals 70 Veterinary pharmaceuticals & vaccines Manufacture and export Manufacture and export Import, manufacture & export Source: Individual companies Page 57

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7 Pet care services and products 7.1 Consumer expenditure Total expenditure in 2005 for items included under this heading was $1,544 million. Included are products such as flea and tick control, grooming products and services, registration and insurance. Expenditure on services remains the largest item, accounting for $530 million (34%) of total consumer expenditure on pet products and services. The majority (75%) of this comes from services to the dog market. Consumer expenditure on pet products and services, 2005 ($ million) Expenditure type Dogs Cats Other pets Total % total Services* 395 135 530 34 Equipment and other accessories 140 45 175 360 23 Pet purchase 110 23 162 295 19 Other expenses** 155 12 12 179 12 Health care products 80 50 50 180 12 Total 880 265 399 1,544 100 * Includes services not provided by veterinarians (e.g. grooming, boarding, etc.) ** Registration, transport, insurance, etc. Source: BIS Shrapnel estimates Consumer expenditure on pet products and services (Percentage of total) Services 34% Equipment & other services 23% Pet purchase 19% Other expenses 12% Health products 12% t Page 59

7.2 Major beneficiaries Manufacturing of pet accessories The size of the pet accessory market is in continual growth, as are the companies that service this market. In 2005, supermarket sales of pet accessories reached $65 million (Retail World 2006), which is a marked increase on the 1998 figure of $6.6 million. As well as through supermarkets, pet accessories are sold in pet shops across Australia. Pet accessories include items such as leashes, collars, play toys, beds, aquariums, etc. A comprehensive list of Australian pet accessory companies is provided below. Pet accessory companies Company ALLPET Products Aristopet Aquacenta Aquasonic Aquatic Solutions Aquatopia Australia Aristopet Auspet & Vet Australian Pet Supplies Beau Pet Challenge Complete Pet & Vet Coprice Dalbarb Express Pet Supplies Fibrecycle Ltd Flea Free Dog Beds Geo Flex Innotek International Animal Health Products Location Welshpool, WA Brisbane, QLD Kingsgrove, NSW Wauchope, NSW Yagoona, NSW Narangba, QLD Brisbane, QLD Hindmarsh, SA Smithfield, NSW Mulgrave, VIC Brookvale, NSW Brisbane, QLD Leeton, NSW Minto, NSW Braeside, VIC Towong, Qld Lonsdale, SA Peakhurst, NSW Robina, QLD Worongary, QLD Huntingwood, NSW No. employees 20 52 Products Aquarium, pet & veterinary products Pet accessories & veterinary pharmaceuticals Comments Manufacture, import, export & distribute Manufacture, import & export 10 Aquarium equipment Import & distribute 20 Aquarium equipment 9 Aquariums & accessories Wholesaler 60 Aquarium equipment Import Manufacture, import, export & distribute 52 Pet care products Manufacture, import & export 14 Pet & veterinary products Manufacture & distribute 14 Pet supplies Manufacture & distribute 11 Dog & cat collars and harnesses Manufacture, import & export 2 Pet grooming products Manufacture, import & export 20 Pet accessories Distribute & import 3 Cat litter Manufacture & distribute 40 Aquariums & related products, reptile enclosures, pet food & supplies 3 Pet & aquarium products Distributor Manufacture, distribute & export 20 Cat litter Manufacture & distribute 5 Dog beds Manufacture 2 Aquarium equipment Manufacture, import & export 7 Dog behavioural products Import & distribute 25 Pet accessories & nutrients Manufacture Page 60

Pet accessory companies continued Company Location K 9 Homes Heidelberg West, VIC Kong s Australia Ltd Kra Mar Pet Supplies Marsue Pet Supplies MAS Imports MasterFoods / Exelpet Nestlé Purina Go Pet Division OSI Pet Pet Pacific Petras Fisheries Platypus Aquarium & Pet Supplies Prestige Pets Products Rudducks Supersorb Minerals Symonds Seeds Snooza Pet Products Woofer Wares Source: Individual companies Ingleburn, NSW Villawood, NSW Wetherill Park, NSW Coburg North, VIC Wodonga, VIC No. employees Products Comments 6 Pet products Manufacture & distribute 40 Pet accessories Import & distribute 70 Pet collars, leads & other accessories Manufacture, import & export 10 Pet accessories Manufacture & distribute 5 Pet & aquarium products Import 100 est Pet care products Manufacture & distribute NSW 75 Pet accessories Manufacture, distribute, import & export Kedron, QLD Emu Plains, NSW Middle Dural, NSW Clontarf, QLD Caboolture, QLD Keysborough, VIC Albany, WA Osborne Park, WA Braeside, VIC Seaford, VIC 50 Pet products Manufacture, import & export 40 Pet supplies Import & distribute 10 Goldfish & aquarium products Importer & wholesaler 2 Pet & aquarium products n.a 20 High quality dog, cat & bird products Manufacture, import & export 30 Pet accessories Import & distribute 59 Cat litter Manufacture, distribute & export 24 Pet accessories, some pet food Manufacture 16 Pet bedding Manufacture 2 Pet grooming products Manufacture, import & export Employment Direct employment is estimated to be approximately 950 people. Additionally, 250 people are estimated to be employed indirectly in support industries (e.g. transport, packaging, distribution, etc.). In total 1,200 people are estimated to be employed in pet accessory companies. Page 61

7.3 Service providers The service industry in relation to pets is in high growth, due to more owners wanting their pet looked after. Dog grooming is one area that is expected to remain strong. Instead of washing dogs at home, many owners are taking their pets to grooming centres where the average groom costs more than $50. Some grooming salons are seeing the same dogs every two weeks for a bath. There are also mobile dog groomers who will come to the house to wash and groom your dog. These are generally cheaper than grooming centres, with a basic wash costing from $15. Dog walking is also a big segment of the market. With the increase in dogs living in apartments without exercise yards, there are more and more owners taking up the services of dog walking companies who can charge up to $40 per walk. According to the Yellow Pages on-line, in 2005 the total number of establishments providing pet services is 7,872. This figure is 11% higher compared with 2002 figures. Dog training has shown the highest growth rate at almost 22% over the three year period. We should note that these figures do not include all pet service providers. The pet industry has many small operators relying on word of mouth and community based advertising. Therefore the figures in the following three tables do not necessarily reflect the total number of pet service providers. Pet service providers, 2005 (number of establishments) Item NSW VIC QLD SA WA TAS ACT NT Total Animal clinics / hospitals 260 94 72 23 49 12 6 3 519 Animal welfare organisations 99 76 68 25 32 17 2 4 323 Bird breeders / dealers 32 16 22 17 8 95 Cat boarding / breeding 373 289 261 110 133 49 35 11 1,261 Dog and cat clipping / grooming 506 445 355 142 217 39 35 15 1,754 Dog boarding kennels 325 240 232 94 124 40 21 14 1,090 Dog breeders 210 141 136 54 56 14 18 3 632 Dog supplies 48 54 38 32 19 5 4 3 203 Dog training 178 146 136 44 47 16 14 5 586 Pet care services 350 224 294 67 116 28 33 27 1,139 Pet cemeteries, crematoriums and supplies 30 21 33 6 11 4 3 3 111 Pet transport services 46 27 43 7 23 5 4 4 159 Total 2,457 1,773 1,690 621 835 229 175 92 7,872 Source: Yellow Pages Employment Total direct employment in this sector of the pet care market, is conservatively estimated at 11,800. Page 62

Retailers In 2005 there are 3,395 establishments listed as suppliers/retailers of pet products. The majority of these are pet shops. Pet product suppliers / retailers, 2005 (number of establishments) Item NSW VIC QLD SA WA TAS ACT NT Total Pet shops 388 273 268 110 123 25 22 18 1,227 Pet foods and / or supplies 272 200 176 96 93 20 14 7 878 Aquariums and supplies 285 176 208 70 93 20 21 6 879 Pet shop supplies 121 90 96 38 51 3 6 6 411 Total 1,066 739 748 314 360 68 63 37 3,395 Source: Yellow Pages Employment Including other pet product suppliers not mentioned above, we would estimate employment in this sector of the pet care market to be 8,500. Industry sources have previously indicated that the average pet shop employing 3 4 people has an annual turnover in the range of $500,000 $700,000. There are also specialist on-line pet accessory companies operating within Australia. These companies sell all pet related products including foods, veterinary pharmaceuticals and accessories. Clubs Throughout Australia there are an estimated 852 pet clubs operating. The majority of these are dog clubs. Pet clubs, 2005 Type NSW VIC QLD SA WA TAS ACT NT Total Dogs 114 147 54 49 38 9 10 4 425 Cats 27 24 13 4 3 2 4 77 Birds 54 30 42 21 11 20 7 1 186 Other 56 46 25 9 11 5 11 1 164 Total 251 247 134 83 63 36 32 6 852 Source: Yellow Pages, various web sites and BIS Shrapnel estimates Page 63

The number of members of the Australian National Kennel Council has been in continual decline over the past ten years. South Australia, Tasmania and the Australian Capital Territory are the only state bodies to show a recent increase in their member numbers. Australian National Kennel Council (ANKC) membership statistics, 1995-2005 Member body 1995 1996 1997 1998 1999 2000 2001 2002 2005 NSW - RNSWCC 16,366 16,345 14,674 14,098 13,992 13,583 13,016 12,482 11,000 VIC - VCA 14,550 14,000 13,986 13,599 13,010 13,349 12,607 10,678 10,000 QLD - CCCQ 10,990 11,202 10,972 10,327 9,591 9,180 8,482 8,037 7,500 SA - SACA 3,927 4,176 4,176 2,987 3,564 3,303 3,277 3,136 3,500 WA - CAWA 4,951 4,812 3,723 3,251 3,331 3,287 3,063 2,752 2,300 TAS - TCA 2,513 2,197 1,700 1,534 1,537 1,201 1,038 1,197 1,250 ACT - ACTCA 795 967 859 932 836 902 869 782 840 NT - NACA 498 469 328 407 471 442 397 412 400 Total 54,590 54,168 50,418 47,135 46,332 45,247 42,749 39,476 36,790 Source: Australian National Kennel Council (ANKC) Publishers There are various publications on the subject of pets and pet care. The following is a selected list: Animals (RSPCA Quarterly magazine) Australian Bird Keeper (Bi-monthly magazine published by ABK Publications) Canine Journal (Monthly magazine published by The Royal NSW Canine Council) Dogs Life (Bi-monthly magazine published by Universal Magazines) National Dog (Monthly magazine published by SAHJOBE Pty Ltd) Pet Industry News (Quarterly magazine published by Annandale Publishing) Pets Playground News (Bi-monthly e-magazine) South Australian Canine Journal (Monthly journal published by The South Australian Canine Association) VicDog (Monthly magazine published by The Victorian Canine Association) Urban Animal (Quarterly magazine published by IMMEDIA Free to Sydney Metro only) Insurance There are currently only a few companies acting as administrators and underwriters to the pet insurance industry, covering different brands of insurance. For example PetSure has six brands; each brand has its own distribution channel and has product differences to suit that channel. The six PetSure insurance brands are: AFS-PetMed Marketed by Amway of Australia Vets Own Marketed by Vet Insurance Pty Ltd RSPCA Pet Insurance Marketed by RSPCA Australia Incorporated PetSecure Marketed by Marshall Laurence Pty Ltd Page 64

Perfect Partners / Pet Cover Marketed by Merial Australia Pty Ltd InsuranceLine Marketed by InsuranceLine Pty Ltd An example of what some of the brands offer pet owners is given below. AFS-Pet Med covers pets of any age, breed and size for basic accident cover. Only animals over 8 weeks and under 8 years of age qualify for illness cover. Petsecure offers similar cover to AFS-Pet Med, but will cover pets up to 12 years of age. Petsecure allows owners to use any licensed veterinarian in Australia and will pay up to $5,300 per year to cover expenses. Pet insurance is a growth market in Australia. The number of new policies being taken out for pets each year in Australia is growing. We estimate that the current expenditure on insurance for cat and dog owners to be approximately $8 million. Page 65

7.4 Local council expenditure There were 721 local councils around Australia in 2003/04. In New South Wales the Companion Animals Act, introduced in 1998, includes major reforms regarding the keeping and control of companion animals. The Act was developed with the understanding that all sectors of the community will benefit from having more proactive and enforceable laws, and that Councils will provide quality services relating to companion animal control. The aim of this legislation is to protect the rights of animals and their owners in balance with the rights and needs of others in the community. Each state and territory has its own legislation covering companion animals. Urban councils generally spend more for companion animals in the community than their regional/rural counterparts, and provide better facilities and services. A breakdown of the split between urban and regional/rural councils is given below. Number of councils throughout Australia, by type, 2003/04 State Urban Regional/Rural Total New South Wales 44 131 175 Victoria 33 47 80 Queensland 32 125 157 Western Australia 29 113 142 South Australia 19 55 74 Tasmania 2 27 29 Northern Territory 2 62 64 Total 161 560 721 Source: Commonwealth Department of Transport and Regional Services Note: ACT has no local governments, rather one territory government To see how councils are dealing with animal management, we have taken a sample of rural and urban councils from around Australia. Some councils provided information on the animal management services they offer and also provided figures, where available, of income and expenditure in this area. From other councils we were able to obtain information from their annual and financial reports. Councils expenditure on animal management services is greater than the annual related income received each year. Throughout Australia there are only a handful of councils who claim to receive more than they spend on animal management services. Local councils are not able to balance their animal management services. The cost of salaries for rangers, maintenance of the pound and other operating expenses far outweigh the revenue received (mainly through registrations and fines). This means that for the year to June 2004, we estimate expenditure on animal management services outweighed income by $34.69 million. Page 66

Profit (loss) through animal management services, by state/territory, June 2004 ($ 000) State Urban Regional/Rural Total New South Wales ($3,184) ($9,478) ($12,662) Western Australia ($1,325) ($5,162) ($6,487) Queensland ($1,226) ($4,788) ($6,014) Victoria ($1,450) ($2,065) ($3,515) South Australia ($1,181) ($1,289) ($2,470) Northern Territory ($52) ($1,602) ($1,654) Tasmania ($101) ($1,361) ($1,462) Australian Capital Territory ($423) ($423) Total ($8,942) ($25,745) ($34,687) Note: ACT has no local governments, rather one territory government Source: BIS Shrapnel estimates Total loss through animal management services, June 2004 (Percentage of total) NSW 37% WA 19% Qld 17% Vic 10% SA 7% NT 5% Tas 4% ACT 1% Page 67

Expenditure The majority of councils spend more on animal management services than they receive through registrations and fines. There are three main areas of expense for councils: salaries, expenses on pound maintenance and operating expenses (vehicle running costs, training, maintenance of dog parks, etc). Not all councils run their own pound and in these cases an annual fee is paid to a private shelter to act as the official pound for the local council. Councils provide extra services to their communities, such as education programs for schools, hosting pet days in the community and other initiatives such as providing plastic bags and scoops at dog parks for local owners. In 2003/04, we estimate that councils spent a total of $82.76 million on animal management services. Expenditure of local councils, by state/territory, June 2004 ($ 000) State Urban Regional/rural Total Queensland $6,222 $24,305 $30,527 New South Wales $4,944 $14,719 $19,663 Victoria $4,037 $5,750 $9,787 South Australia $4,655 $3,716 $8,378 Western Australia $1,495 $5,825 $7,320 Tasmania $255 $3,443 $3,699 Northern Territory $74 $2,306 $2,381 Australian Capital Territory $1,008 $1,008 Total $22,690 $60,064 $82,763 Note: ACT has no local governments, rather one territory government Source: BIS Shrapnel estimates Local council expenditure, June 2004 (Percentage of total) Qld 37% NSW 24% Vic 12% SA 10% WA 9% Tas 4% NT 3% ACT 1% Page 68

Income In most instances councils are not able to achieve incomes to match their expenditure for animal management services. The majority of local council revenue for this area comes from the registration of animals and fines given to owners. A small percentage of income comes from services provided through council controlled pounds, and for a small number of councils, from fund raising events throughout the year. Councils understand that the majority of their income is through the registration of animals, mainly dogs. To raise their revenue, councils actively seek out unregistered dogs, through letter box drops or notices in the community. In 2003/04, local councils received $48.07 million in revenue through their animal management services. Income of local councils, by state/territory, June 2004 ($ 000) State Urban Regional/Rural Total Queensland $4,996 $19,517 $24,513 New South Wales $1,760 $5,241 $7,001 Victoria $2,587 $3,685 $6,272 South Australia $3,474 $2,427 $5,901 Tasmania $154 $2,083 $2,237 Western Australia $170 $663 $833 Northern Territory $23 $704 $727 Australian Capital Territory $586 $586 Total $13,750 $34,320 $48,070 Note: ACT has no local governments, rather one territory government Source: BIS Shrapnel estimates Local council income, June 2004 (Percentage of total) Qld 51% NSW 15% Vic 13% SA 12% Tas 5% WA 2% NT 2% ACT 1% Pet ownership is a significant community interest involving the majority of Australians. Despite animal management expenditure frequently exceeding revenue, it is nonetheless an important and valid community service that should not necessarily be self-funding. Page 69

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8 Dogs in the service of HUMANS In 2005, Australia had over 83,000 working dogs carrying out various duties in a wide range of areas. Of these, 98% were sheep dogs. Dogs in the service of humans 2005 NSW VIC QLD SA WA TAS ACT NT Total Guide dogs 210e 148 71 43 35 26 * 5 328 Seeing eye dogs 21 20 20 61 Delta society 125 125 100 75 75 500 Lions hearing dogs 91 109 80 107 6 4 6 2 405 Police dogs 59 40 80 15 15 2 211 Federal Police dogs 10 10 Prison dogs 37 30 69 9 13 15 173 Customs sniffer dogs 16e 13e 9e 2e 7e 2e n/a 1e 50e Quarantine dogs - passive response 15 9 13 2 11 1 51 - active response 20 6 3 3 32 Cattle/Sheep dogs 30,214 19,414 4,932 12,486 12,954 1,418 * # 81,418 Total 30,808 19,914 5,368 12,739 13,044 1,525 16 26 83,440 * NSW figure inclusive of ACT # SA figure inclusive of NT e = estimate Source: See appendix Note: The above table is an example of some organisations which exist. Other organisations not listed above, also provide animals for assistance purposes. There are three main types of working dogs with the vast majority being sheep dogs. The rest are split between assistance dogs for the disabled and dogs which help police in various roles throughout the country. There have been many studies into the use of dogs as therapy providers. It is widely believed that the presence of a companion animal leads to a significant improvement in the lives and health of the sick and elderly. Companion animals provide a living, non-judgmental companion who will listen and stay with their owners. Some organisations in Australia aim to promote the health benefits of companion animals. These organisations run programs which include companion animals and their owners visiting children and adults in hospital, physical rehabilitation and mental health units, children with special needs, adult day care and nursing homes. Schools are also targeted to teach positive and proactive ways to reduce the incidence of dog bites in toddlers, pre-school and junior primary school children. Dogs used by police and other high security institutions such as prisons, military bases and airports are specially trained to assist in the detection of prohibited substances through their heightened sense of smell. Many detector dogs are trained to alert handlers to the presence of prohibited substances in two ways, either through the passive response, where the dog sits quietly next to the prohibited item, or through active response, where the dog will paw and muzzle at the prohibited item. Page 71

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9 Pets and Community Health Physiological effects and cardiovascular health There have been numerous studies conducted over the years on the benefits of pet ownership. In multiple clinical trials conducted in the US and Australia, it has been shown that after adjusting for social factors, having a pet reduces blood pressure in pet owners compared to those without pets. Dog owners tend to have increased levels of exercise and increased social interaction, as a result of taking dogs for walks. Psychological health: loneliness and companionship Pet ownership has been linked to a reduction in mental stress. This knowledge has been applied to therapy where the introduction of a dog was found to relax patients and improved their therapy sessions. Animal Assisted Therapy (AAT) and Animal Assisted Activities (AAA) are currently used in a wide range of therapeutic and institutional settings. Where a person has suffered the loss of a spouse, the incidence of pet ownership and strong attachment to pets were associated with significantly less depression. People who have pets are generally less lonely than those without pets. Children, social development and family life Pets do not judge owners on their mistakes; they will always listen and never criticise. In Friends and pets as companions, L. Rew showed that homeless adolescents with a dog as a companion felt less lonely than those without dogs. The family pet is a great addition to a child s life. It has been shown that growing up with a dog (and other pets to a lesser extent) during infancy helps to strengthen the immune system and reduces the risk of allergies linked to asthma. A report from Deakin University, states that A child who grows up with a pet is likely to develop better socially and have a greater respect for other animals because the child learns about the responsibilities involved in caring for another living creature and because of the loving relationship that can develop between a child and their pet. Research conducted by the University of Warwick in the UK found that children repeatedly turned to their pets when they needed a friend, confidant or protector. In some cases dogs rated as more important than the humans in their lives. Pets and the elderly Pets have been shown to greatly increase quality of life for the elderly. Research undertaken in nursing homes and private residences shows that elderly people having pets delays the aging process. This was achieved through increased physical exercise looking after certain pets, increased socialisation associated with having a pet and increased mental functioning attained through talking to pets and having the responsibility of caring for them. Page 73

General health People with pets are regarded as healthier than non pet owners. Studies in Australia and Germany have shown that after controlling for multiple factors, pet owners make fewer doctor visits each year than nonpet owners. It was also shown that those people who continuously own a pet are healthier than those who acquire a pet after not previously having one. With dogs especially, people receive more exercise through pet ownership due to daily walks. This is regarded as one of the main contributors to better health outcomes. A recent report from Deakin University identified that: 57% of families with young children walk their dog as a family, at least once a week 74% of 10 to 12 year old children indicated that they liked playing outside with pets. Through walking dogs in the local area, owners have greater interaction with other members of the community. It has been shown that dogs increase the number and length of conversations with others in the community. Dogs provide a common interest which will start the conversation. This allows pet owners to feel more involved through greater contact with others around them, reducing any isolation they might feel. A recent study by the University of Western Australia s School of Population Health found that: over 50% of dog owners and 40% of pet owners in general meet people in their neighbourhood as a result of their pet over 80% of dog owners talk to other people when out walking their dogs. Another study conducted for an on-line shopping website in 2005 by Biz-Rate Research found that both men and women have strong relationships with their pets. 56% of women and 41% of men said their pet is more affectionate than their partner 99% of women and 95% of men said they often talk to their pet 93% of women and 87% of men said their pet communicates with them 72% of women and 60% of men said their pet makes them happier than their jobs do. Health care savings In 2001, the results of a national survey on pet owners in Australia and Germany by the International Social Science Survey Australia (ISSS-A) and the German Socio-Economic Panel Survey (GSOEP), were linked to data on health expenditure. The estimated increase in health expenditure was calculated using a model where nobody had long periods of pet ownership. For the financial year 1999/00 it was suggested that if this was the case, national health expenditure of $53.7 billion would rise by $3.86 billion dollars. ISSS-A estimated that between 1996 and 2001 there was a drop of 7.3% in pet ownership which may have cost $495 million in increased health expenditure. Page 74

The human/animal bond It is clear from the studies that have been conducted that having a pet in the home is beneficial. Regardless of a person s age or health status, a pet can provide constant companionship and love, reduce stress and improve the quality of life for pet owners. Much research has been conducted over the years and throughout the world on the links between pets and humans. Some examples of papers on the social and health benefits of companion animals are listed below: Heady, B, Grabka, M et al (2002) Pet ownership is good for your health and saves public expenditure too: Australian and German longitudinal evidence, Australian Social Monitor, V.5, N.4, 93 99. Allen, K, Shykoff, B.E. et al (2001) Pet ownership but not ace inhibitor therapy, blunts home blood pressure responses to mental stress, Hypertension, V.38, 815 820. Kingwell, B.A., Lomdahl, A, Anderson, W.P. (2001) Presence of a pet dog and human cardiovascular responses to mild mental stress, Clin. Auton. Res., V.11, 313 317. Anderson, W.P., Reid, C.M. et al (1992) Pet ownership and risk factors for cardiovascular disease, The Medical Journal of Australia, V.157, N.5, 298 301. Serpell, J.A. (1991) Beneficial effects of pet ownership on some aspects of human health, Journal of the Royal Society of Medicine, V.84, 717 720. Garrity, T.F., Stallones, L, et al (1989) Pet ownership and attachment as supportive factors in the health of the elderly, Anthrozoos, V.3, 35 44. Bolin, S.E. (1987) The effects of companion animals during conjugal bereavement, Anthrozoos, V.1, 26 35. Gern, J.E., Reardon, C.L. et al (2004) Effects of dog ownership and genotype on immune development and atopy in infancy, Journal of Allergy and Clinical Immunology, V.113, N.2, 307 314. Salmon, J, Telford, A, Crawford, D (2004) The children s leisure activities study: summary report, Deakin University Centre for Physical Activity and Nutrition, July 2004. Wood, L, Giles-Corti, B, Bulsara, M (2005) The Pet Connection: pets as a conduit for social capital?, Social Science & Medicine, V.61, N.6, 1159 1173. Messent, P.R. (1983) Social Facilitation of contact with other people by pet dogs, New Perspectives on our lives with Companion Animals, University of Pennsylvania Press. Rogers, J, Hart, L.A., Boltz, R.P. (1993) The role of pet dogs in casual conversation of elderly adults, Journal of Social Psychology, V.133, 265 277. Rew, L (2000) Friends and pets as companions: strategies for coping with loneliness among homeless youth, Journal of Child and Adolescent Psychiatry, Vol.13, 125 132. Raina, P, Waltner-Toews, D et al (1999) Influence on companion animals on the physical and psychological health of older people: an analysis of a one-year longitudinal study, Journal of American Geriatric Society, V.47, 323 329. Page 75

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10 Conclusions In 2005, the total contribution to the economy of the pet care industry was $4.62 billion. With a continued trend towards increased parenting of family pets and awareness of the social and health benefits of owning pets, we expect to see this industry grow further in the future. Australia has one of the highest levels of pet ownership in the world, with 63% of households owning some kind of pet (53% owing a cat or dog). Even though traditional pets (dogs and cats) are declining in numbers, the proportion of households owning these pets is not declining by as much and is actually increasing for cat ownership. This suggests that we are moving towards owning fewer pets, but spending more on each of these pets. All states benefit from expenditure on pets. The main stakeholders of the pet care industry are: Main stakeholders, products / services Farmers / primary producers Pet food suppliers Manufacturers Wholesalers / importers / distributors Retailers Animal service providers General service providers Government and private associations Meat, fish and other raw materials for pet food manufacturing Dogs, cats, fish, birds, reptiles and other pets Pet food, pet accessories and veterinary pharmaceuticals Pet food, pet accessories and veterinary products Pet stores, supermarkets, aquariums, pet supplies Transport, insurance, boarding, training, grooming Publishers, printers, advertisers Local council, state and federal bodies, RSPCA and animal welfare groups, animal clubs and associations. There are three main market segments which account for the total expenditure on pet care products and services. The 2005 total of $4.62 billion is a 14.8% increase on the 2002 figure of $4.0 billion. Pet care summary of expenditure Market Segment Consumer expenditure ($) Pet food 2,011 Veterinary services and products 1,065 Other services and products 1,544 Total 2005 4,620 Total 2002 4,000 Total 1998 3,326 % variation 2002-2005 14.8% Source: BIS Shrapnel estimates In addition, exports of pet food provided a positive contribution of $203 million to the Australian balance of payments. Page 77

We estimate that the pet care industry gives employment to some 44,700 people, both directly and indirectly. Pet care industry summary of employment, 2005 Activity Direct employment Indirect employment Total Veterinary services 13,400 13,400 Pet service providers 11,800 11,800 Retailing pet products 8,500 8,500 Pet food manufacture 3,350 3,350 6,700 Veterinary products 2,000 1,000 3,000 Pet accessory manufacturing 950 250 1,200 Veterinary education and training Veterinary Science 100 100 Total 40,100 4,600 44,700 Source: BIS Shrapnel estimates Number of people employed in the pet care industry, 2005 Veterinary services 30% Pet services providers 26% Retailing pet products 19% Pet food manufacture 15% Veterinary products 7% Pet accessories manufacturing 3% Veterinary education/training 0% There are numerous studies that have been conducted on the benefits of pet ownership. It has been shown that owning a dog reduces both blood pressure and mental stress in dog owners. Pets also help to improve wellbeing through their non-judgmental nature. This is a common trait of pet ownership across both young and elderly, resulting in a better quality of life. The pet care industry is a large contributor to the Australian economy and an important source of employment. The social and health benefits of pet ownership, which have previously been identified in dollar terms, make the pet industry a valuable contributor to the economic and social health of the nation. Page 78

APPENDIX SOURCES AND MAIN ASSUMPTIONS FOR MARKET ESTIMATES Page 79