PRIVATE LABEL PETFOOD MARKET UPDATE PETFOOD FORUM 2011 PETFOOD FORUM 2011 LEE LINTHICUM – HEAD OF GLOBAL FOOD RESEARCH APRIL 13 2011 APRIL 13, 2011 © Euromonitor International
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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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3
GLOBAL MARKET OVERVIEW
KEY TRENDS AND MARKET DRIVERS
PRIVATE LABEL PET CARE
FINAL CONCLUSIONS
Q&A
© Euromonitor International
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 (%)
© Euromonitor International
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
© Euromonitor International
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
© Euromonitor International
9
GLOBAL MARKET OVERVIEW
KEY TRENDS AND MARKET DRIVERS
PRIVATE LABEL PET CARE
FINAL CONCLUSIONS
Q&AQ&A
© Euromonitor International
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
© Euromonitor International
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)
© Euromonitor International
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
© Euromonitor International
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!
© Euromonitor International
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)
© Euromonitor International
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
© Euromonitor International
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
© Euromonitor International
19
GLOBAL MARKET OVERVIEW
KEY TRENDS AND MARKET DRIVERS
PRIVATE LABEL PET CARE
FINAL CONCLUSIONS
Q&AQ&A
© Euromonitor International
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
© Euromonitor International
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
© Euromonitor International
22THE NATURE OF PRIVATE LABEL PET FOOD IS CHANGING...PRIVATE LABEL PET CARE
© Euromonitor International
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
2005 2009© Euromonitor International
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%
2005 2010© Euromonitor International
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
© Euromonitor International
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?
© Euromonitor International
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)
© Euromonitor International
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 )
31BRANDED VS PRIVATE LABEL PET FOOD: UNITED KINGDOMPRIVATE LABEL PET CARE
Tesco Enhanced Nutrition Senior Cat Tesco Enhanced Nutrition Kitten
© Euromonitor International
32BRANDED VS PRIVATE LABEL PET FOOD: UNITED KINGDOMPRIVATE LABEL PET CARE
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)
© Euromonitor International
( )
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)
© Euromonitor International
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
© Euromonitor International
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
© Euromonitor International
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
© Euromonitor International
postings
37
GLOBAL MARKET OVERVIEW
KEY TRENDS AND MARKET DRIVERS
PRIVATE LABEL PET CARE
FINAL CONCLUSIONS
Q&A
© Euromonitor International
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
© Euromonitor International
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?
© Euromonitor International
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
© Euromonitor International
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THANK YOU FOR LISTENINGLee LinthicumHead of Global Food ResearchHead of Global Food ResearchEuromonitor [email protected]
© Euromonitor International