private label petfood market update

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PRIVATE LABEL PETFOOD MARKET UPDATEPETFOOD FORUM 2011PETFOOD FORUM 2011LEE LINTHICUM – HEAD OF GLOBAL FOOD RESEARCH

APRIL 13 2011APRIL 13, 2011

© Euromonitor International

2ABOUT EUROMONITOR INTERNATIONALPRIVATE LABEL: PETFOOD MARKET UPDATE

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GLOBAL MARKET OVERVIEW

KEY TRENDS AND MARKET DRIVERS

PRIVATE LABEL PET CARE

FINAL CONCLUSIONS

Q&A


4EUROMONITOR INTERNATIONAL PET CARE COVERAGEGLOBAL MARKET OVERVIEW

SEGMENTS COVERED:Dog food

ALL CHANNELS COVERED:Supermarkets/HypermarketsDog food

Cat foodBird foodFish food

Supermarkets/HypermarketsDiscounters

Pet superstoresPet shops

Small mammal/reptile foodCat litterPet healthcarePet dietary supplements

Veterinary clinicsHomeshopping

Internet retailingDirect sellingPet dietary supplements

Other pet care products CONSUMER INSIGHTS:Pet indicatorsSocial trends

Direct sellingOther grocery and non-

grocery retailers

DemographicsMacro-economics

Pet expenditure in 52 markets = 98% of total global expenditure© Euromonitor International

p g p

52010: RETAIL SALES REMAIN POSITIVELY RESILIENT GLOBAL MARKET OVERVIEW

7.0%90Global Pet Care Retail Value Sales: 2005-2010

5.0%

6.0%

0%

60708090

owth

(%)

on

2 0%

3.0%

4.0%

30405060

valu

e gr

o

US$

bill

io

0.0%

1.0%

2.0%

0102030

Y-on

-y U

0.0%02005 2006 2007 2008 2009 2010

Retail value sales Year-on-year value growth (%)


6GLOBAL PET CARE VALUE SHARE BY CATEGORY: 2005-2010GLOBAL MARKET OVERVIEW

13%

Cat Food

Dog Food

Cat Food - 1%

28%4%

1%

13% 27%

5%

1% Bird Food

Fi h F d

Pet healthcare+ 1%

2%2%

5%

4%

2%

5%Fish Food

Small Mammal/Reptile Food

2%2%

1%2%

Cat Litter

Pet Healthcare

Bird Food- 1%

43% Pet Dietary Supplements

Note: Inner ring: 2005Outer ring: 2010

© Euromonitor International44% Other Pet Products

Outer ring: 2010Dog Food + 1%

72009-2010: ECONOMY DOG/CAT FOOD STANDING OUTGLOBAL MARKET OVERVIEW

Global Dog and Cat Food by Price Platform

Global Dog and Cat Food Growth by Price Platform

60%

80%

100%

alue 7

89

owth

20%

40%

60%

% re

tail

va

3456

val

ue g

ro

0%

20%%

0123

%

reta

il

Economy Mid-pricedPremium

02006 2007 2008 2009 2010

Economy Mid-pricedPremium


Premium

8FASTEST GROWTH IN EASTERN EUROPE, LATIN AMERICAGLOBAL MARKET OVERVIEW

Eastern 16%

Overall Sales Growth and Per Household Spending in Pet Care 2010

Europe

L ti A i10%12%14%16%

ouse

hold

5-

10)

AustralasiaLatin America

Middle East and Africa North America

Western Europe

4%6%8%

10%

owth

in h

otu

re (2

005

Asia Pacific

North America

2%0%2%4%

50 0 50 100 150 200 250 300CA

GR

gro

expe

ndit

-4%-2%-50 0 50 100 150 200 250 300

% C

Per household expenditure (US$)Note: The area of each bubble relates to the retail value of the market in 2010


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FINAL CONCLUSIONS

Q&AQ&A


10KEY PET CARE GLOBAL GROWTH DRIVERSKEY TRENDS AND MARKET DRIVERS

Pet ownership Pet humanisation

PremiumisationPremiumisation

Health and Luxury pet Pet Travelwellness

y ppampering Pet Travel


11AGEING CONSUMERS PROMOTE PET POPULATION GROWTHKEY TRENDS AND MARKET DRIVERS

Ageing Consumers and Dog/Cat Population Growth in G7 Markets: 2003-2010

250

255

120

125

on (m

n)

+ (m

n)

235

240

245

110

115

popu

latio

umer

s 65

+

225

230

235

100

105

g an

d ca

t

Con

s u

2003 2004 2005 2006 2007 2008 2009 2010 Dog

Consumers 65+ (millions) Dog and cat population (millions)


12URBAN CULTURE WILL SOON DOMINATE THE WORLDKEY TRENDS AND MARKET DRIVERS

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

Half the world’s Half the world s population

© Euromonitor International urban by 2015

13CHANGING DEMOGRAPHICS AND CULTURAL ATTITUDESKEY TRENDS AND MARKET DRIVERS

Ageing consumers

Y t i i l / hildl lYounger consumers staying single/childless longer

Rising disposable incomes in emerging markets

Increasingly urban populations

B lif t l d l ki hBusy lifestyle and longer working hours

Pet humanisation influencing purchase decisions

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


14DOG AND CAT FOOD: KEY GROWTH SEGMENTS KEY TRENDS AND MARKET DRIVERS

Fastest growing segments globally: 2000-2010 Retail Value CAGR

Cat treats and mixers : 12%Premium dog food: 9%Premium cat food: 8%Pet healthcare 8%Dog treats and mixers: 7%Economy dog food: 6%Dietary supplements: 5%Mid-priced dog food: 5%Mid-priced cat food: 5%Economy cat food: 4%

Treats, premium food, pet healthcare driving global growth!


15PREMIUMISATION: HUMAN-LED INGREDIENTS, APPLICATIONSKEY TRENDS AND MARKET DRIVERS

Humane Choice by Humane Society (USA) Gourmet Gold Soufflé by Nestlé (France)

Bowser Beer for Dogs (USA and UK) Sheba Essence Paté by Mars (Germany)Bowser Beer for Dogs (USA and UK) Sheba Essence Paté by Mars (Germany)


16DOG/CAT FOOD HEALTH & WELLNESS PRODUCT EXAMPLESKEY TRENDS AND MARKET DRIVERS

All Natural and Organic Fortified and Functional

W i ht M t F d All i d H ll iWeight Management Food Allergies and Hypoallergenic


17US$600 BILLION GLOBAL “HEALTH AND WELLNESS” MARKET KEY TRENDS AND MARKET DRIVERS

Global Health & Wellness Human Food and Beverage Retail Value Sales: 2004-2014

200250300

llion

050

100150

US$

Bi

0

2004 2009 2014© Euromonitor International

18HEALTH AND WELLNESS DOG AND CAT FOOD TRENDSKEY TRENDS AND MARKET DRIVERS

Pet humanisation leads to specialised formulas addressing:Weight loss and managementA h i i li fArthritis reliefSensitive skinDiabetesDi i / U i h l hDigestive / Urinary tract healthHeart healthImmune system supportM l d l d h l hMental development and health


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FINAL CONCLUSIONS

Q&AQ&A


20BENEFITS OF PRIVATE LABEL FOR SUPPLIERSPRIVATE LABEL PET CARE

Economies Simplified logistics andEconomies of scale

Simplified logistics and supply chain

SustainableGrowth

No direct advertising

Growth

No listing fees No direct advertising investment required


21BENEFITS OF PRIVATE LABEL FOR RETAILERSPRIVATE LABEL PET CARE

20-30% cost savings for retailers relative to brands

Lower retail prices

retailers relative to brands

Savings only partially passed on to consumers

Strategiccontrol

on to consumers

Higher control of shelf-space and delivery schedules

Higher mark-ups

y


22THE NATURE OF PRIVATE LABEL PET FOOD IS CHANGING...PRIVATE LABEL PET CARE


23GLOBAL PET FOOD COMPETITIVE LANDSCAPE: 2005 VS 2009PRIVATE LABEL PET CARE

28 1%90%

100%

3 2%11 5% 11.6%

31.0% 28.1%

60%

70%

80%

ue

Others

Private Label

5.6% 5.9%6.2% 5.8%2.3% 3.2%11.5%

40%

50%

60%

reta

il va

l Del Monte

Procter & Gamble

Colgate Palmolive

21 8% 23 0%

21.6% 22.4%

20%

30%% Colgate-Palmolive

Nestlé SA

Mars Inc21.8% 23.0%

0%

10%

2005 2009© Euromonitor International

24PRIVATE LABEL PET FOOD RETAIL SHARE BY REGIONPRIVATE LABEL PET CARE

20

25

e

10

15

20

etai

l val

ue

0

5

10

% re

0


25GLOBAL PET CARE RETAIL DISTRIBUTION BY CHANNELPRIVATE LABEL PET CARE

19.3% 18.3%90%

100%

19 6% 20 4%

7.7% 7.3%0.5% 1.3%

60%

70%

80%

ue

OthersInternet Retailing

3.1% 3.6%12.0% 12.2%

19.6% 20.4%

40%

50%

60%

reta

il va

l Internet RetailingVeterinary clinicsPet shopsPet superstores

37.8% 36.9%

3.1% 3.6%

20%

30%% Pet superstores

DiscountersSuper/Hypermarkets

0%

10%


26PET CARE RETAIL DISTRIBUTION VARIES BY REGIONPRIVATE LABEL PET CARE

100%

Regional Pet Care Retail Sales by Channel Format: 2009

60%70%80%90%

valu

e

Others

20%30%40%50%

% re

tail Internet Retailing

Veterinary clinicsPet shops

0%10%

pPet superstoresDiscountersSuper/Hypermarketsp yp


27PRIVATE LABEL PET FOOD GLOBAL STATUS REPORTPRIVATE LABEL PET CARE

Value-minded private label pet food increasingly bringing new consumers into the global pet food markets in developing markets

Asia PacificAsia PacificLatin AmericaEastern Europe

This trend bolstered by expansion of supermarkets/hypermarkets

Private Label pet food becoming more premium mindedPrivate Label pet food becoming more premium-minded

Global expansion of Pet Superstores creating new opportunities for private label pet foodlabel pet food

What can US retailers learn from this to bolster private label appeal?


pp

28ADDING VALUE TO PET FOOD IN EMERGING MARKETSPRIVATE LABEL PET CARE

Economy dry cat food

C bi h l h d ll

Maxx Cat from India’s Petsmart Pet Products Pvt

Combines a health and wellness positioning with a more affordable retail price point

Key ingredients include:Taurine (heart health)AntioxidantsAntioxidantsOmega-3 fatty acids (healthy skin and coat)


29DOG/CAT FOOD GROWTH PROSPECTS IN BRIC MARKETSPRIVATE LABEL PET CARE

Dog and Cat Food Retail Value Prospects by Price Band in Brazil, Russia, India and China: 2009-2015

10

12

wth

6

8

-o-y

gro

w

2

4

% y

-

02009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Economy Mid-Priced Premium© Euromonitor International

y

30BRANDED VS PRIVATE LABEL PET FOOD: UNITED KINGDOMPRIVATE LABEL PET CARE

Sheba RSP: £0.59 per 100 grams (£5.90 per kilo) at Tesco

Tesco Finest RSP: £0.69 per 80 grams (£8.63 per kilo) at Tesco© Euromonitor International

p g ( p )


Tesco Enhanced Nutrition Senior Cat Tesco Enhanced Nutrition Kitten



14Top 5 UK Dog and Cat Food Brands: 2005-2009

81012

valu

e

2468

% re

tail

02

2005 2006 2007 2008 2009

Whiskas (Mars Inc) Felix (Nestlé SA)Pedigree (Mars Inc) Tesco (Private Label)Bakers (Nestlé SA)


( )

33BRANDED VS PRIVATE LABEL PET FOOD: GERMANYPRIVATE LABEL PET CARE

18Top 5 German Dog and Cat Food Brands: 2005-2009

10121416

valu

e

468

10

% re

tail

02

2005 2006 2007 2008 2009

Fressnapf (Private Label) Whiskas (Mars Inc)Rewe (Private Label) Aldi (Private Label)Pedigree (Mars Inc)


g ( )

34PREMIUM PRIVATE LABEL: FRESSNAPF IN GERMANYPRIVATE LABEL PET CARE

25Top Premium Dog and Cat Food Brands in Germany

192123

5

ail v

alue

151719

% re

ta

2005 2006 2007 2008 2009

Fressnapf (Private Label) Whiskas (Mars Inc)

C i i iti i• Carries super-premium positioning• Many products made from 100% all-natural ingredients• Exclusive distribution of such premium product bolsters Fressnapf’s overall image in the eyes of German consumers


overall image in the eyes of German consumers

35PREMIUM PRIVATE LABEL PET FOOD: BURP! IN SINGAPOREPRIVATE LABEL PET CARE

Hill’s vs Burp! in Singapore Dog/Cat Food

Burp! Super-Premium Dog Food from Singapore’s The Pet Safari

pet superstore

10121416

alue

pet superstore

468

10

% re

tail

va

02

Hill's Science Burp!

%

Diet

2005 2006 20072008 2009


36CASE STUDY: PRIVATE LABEL MILK FORMULA IN THE USPRIVATE LABEL PET CARE

Success depends on strong equity

Leverage equity of retailer

US Private Label Milk Formula Retail Share: 2007-

2009Leverage equity of retailer

Specialist retailers better positioned than supermarkets and discounters

8

10

alue

2009

Babies ‘R’ Us milk formulaProduct packaging closely mirrors leading brands

4

6

% re

tail

va

leading brandsVariety of added value offeringsTrusted “brand” name 0

2

2007 2008 2009%

Positive consumer comments:www.buzzillions.com: 75 positive comments versus less than 10 negative postings

2007 2008 2009


postings

37




FINAL CONCLUSIONS

Q&A


38GLOBAL DOG AND CAT FOOD PROSPECTS: 2009-2015FINAL CONCLUSIONS

3 5

470

2.5

3

3.5

60

65

thon

1.5

2

50

55

% G

row

US$

bill

i o

0.5

145

50

0402009 2010 2011 2012 2013 2014 2015

Dog and Cat Food Retail Value % Growth© Euromonitor International

g

39DOG AND CAT FOOD: LARGEST VS FASTEST GROWING MARKETS

FINAL CONCLUSIONS

MARKETS

2015 US$ 2010-2015

10 Largest Markets in 2015

Country 2015 US$ 2010-2015

10 Fastest Growing Markets to 2015

Country Millions CAGRUSA 23,060 4.7

Brazil 5,857 6.2

Millions CAGRIndia 82 13.8

Saudi Arabia 28 9.8

Japan 4,435 0.2

France 4,219 1.6

UK 4,171 1.1

Russia 2,161 8.7

Thailand 456 8.3

Turkey 220 8.3UK 4,171 1.1

Germany 3,970 2.3

Italy 2,380 1.3

R i 2 161 8 7

u ey 0 8 3

Romania 246 8.2

China 476 7.7

Uk i 304 7 6Russia 2,161 8.7

Canada 1,681 3.1

Australia 1,675 1.9

Ukraine 304 7.6

Morocco 57 7.5

Poland 685 7.5


40PRIVATE LABEL PET FOOD CHALLENGES, OPPORTUNITIESFINAL CONCLUSIONS

Private label pet food maintaining prominent position globally…… But value share expansion still lagging behind that of the “Big 5”

Premiumisation trend undermining private label growthPrivate label claims 40% of global economy dog and cat food retail valueBut onl accounts for 4% of global premium dog and cat food retail alueBut only accounts for 4% of global premium dog and cat food retail value

Particularly notable in developed economies, where private label focuses mainly on the economy/value end of the market

Global position undermined by lack of strong presence in the USUS private label mainly focuses on economy/value: Ol’ Roy

US has limited premium private label presencePet superstores could do more with private label premium offeringsCan PetSmart move from Great Choice to Authority?


Can PetSmart move from Great Choice to Authority?

41GLOBAL PET CARE STRATEGIC RECOMMENDATIONSFINAL CONCLUSIONS

Leverage strong and trusted recommendations

Upscale, premium looking packaging

R l bl k i

AL CONCLUSIONS

Packaging

Distribution

recommendations through pet specialists

Maximise distribution through pet

t

Resealable packaging for better storage

Sustainability

Segmentation

superstores

MarketingContinued segmentation by age, breed and lifestyle

Consumer education via online forums and social networking sites

Organic, natural and functional food and beverages

Reinforce brand awareness through pet events


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THANK YOU FOR LISTENINGLee LinthicumHead of Global Food ResearchHead of Global Food ResearchEuromonitor [email protected]


private label petfood market update

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