11

IVPD Congress04/05/2009

22

Objective

33

8%

21%

29%

38%

4%60%

50% - 59%

40% - 49%

30% - 39%

20% - 29%

What % of Sales in your practise comes from What % of Sales in your practise comes from Retail?Retail?

Vet Med Retail Survey – Dec 2009

For 58% of vet clinics, retail constitutes more than 40% of their revenues

44

7 million dogs 1.5 million cats

The South African Pet food Market

A – Pet Population

B. ... Important potential on nutritional market

Total calories needs

SPT42000 T

Total dry petfood 247, 000 T

Health Nutritional dry : Health Nutritional dry : 17000T17000T

55

Calorie Conversion

= Calories from Prepared Petfood as % of Total Calorie Requirementof Pet Population

Dog and Cat Calorie Conversion

W. Europe

Comparison:

S Africa

21

41

57

67

Catalyst

66

S Afr

Kuwait

UAE

KSA

IndiaTurkey

Poland

UK

Germany

France

Brazil

USA

0

10

20

30

40

50

60

70

80

90

100

0 10000 20000 30000 40000 50000 60000

Calorie Conversion correlates to Income per HeadCalorie Conversion%

Developed Markets

Dog Cat

Catalyst

GDP/head(nominal) in $

77

Only 18% of households own a Dog in SA and spend circa R110 per month

Canada

USA

Argentina

Brazil

Chile

Colombia

Costa Rica

Mexico

Peru

Venezuela

Austria

Belgium

France

GermanyGreece

IrelandItaly

Netherlands

Portugal

Spain

Switzerland

United Kingdom

Finland

Estonia

LatviaLithuania

Czech Republic

Hungary

Poland

Slovakia

Russia

Ukraine

Kazakhstan

Australia

New Zealand

Japan

China

Hong Kong

Indonesia

Malaysia

Philippines

Singapore

South Korea

Taiwan

Thailand

Vietnam

Romania

Bulgaria

Croatia

Slovenia

Egypt

Morocco

Turkey

LebanonIndia

Saudi ArabiaUAE

Kuwait

South Africa

0%

10%

20%

30%

40%

50%

60%

0 5000 10000 15000 20000 25000 30000 35000 40000 45000

% Owners of dogs or cats (2005)

GDP/headin $ (at PPP)

88

Summary

• The South African Pet Food market is emerging• Pet ownership should increase with GDP per capita• Responsible pet ownership increases $ spent/pet• Opportunity for the veterinary profession to accelerate the market potential

99

A – Market by Channels B – Numerical Distribution

The South African Pet food Market Specifics

25%

65%

10%

Vet/Breeder

Supermarkets

Coops/POS

• Vet Clinics: 700

• Vet Shop: 150

• Pet Shops: +/-250

15%

70%

15%

Nutritional Health

Premium

Standard/Eco

Total dry Value market share (%)

Total Value market share (%)

1010

What’s new in the South African Pet Food Business (1)

• For the 1st time in 2008, Grocery grew faster vs Specialised Trade.

+27% in Grocery vs +17% in SPT

1111

What’s new in the South African Pet Food Business (2)

0

1000

2000

3000

4000

5000

2003 2004 2005 2006 2007 2008

Cat Food Sales - Vet Market - in Tones

• Premiumisation of the Grocery Channel (products)

-8%

1212

• Premiumisation of the Grocery Channel (Service)

What’s new in the South African Pet Food Business (3)

1313

What’s new in the South African Pet Food Business (4)

• Retail Price increase in all channel

+/- R 23.5/kg

+/- R 27.5/kg

+/- R 22.75/kg

1414

The Specialised Trade will need to change too!

But their “premium” product market is at risk…

Vets Petfood Retail relies for >50% on “Premium” products

Vet Food Sales Mix - 2008

60%

40%Mainstream Vet

Health Nutrition

1515

Analysis of the Value Chain differences: SPT vs Grocery

RRP VAT excl: 150 ZAR

RRP: 117 ZARVet average Markup: 35%

WRP: 111 ZAR Retail Markup: 17%

WRP: 100 ZARDistribution Costs: 15%

COGS: 97 ZAR

Distribution Costs: 6%

WRP: 94 ZAR

The Solution?:

SPT Grocery

1616

Key Success Factor: Differentiation

Differentiation in Products: Health Nutrition

The right precise nutritional answer for the specific nutritional requirements of each dogs and cats

Differentiation in Service: Advice, Expertise, Merchandising…

1717

7

Differentiation according to the consumer expectations

Low High Pre-sold products, Price, PURCHASE PROCESS Advice, service. expertiseconvenience

Grocery PLACE OF PURCHASE Prescribers (Breeders + Vets) Specialized Distribution

Wet food (canned) PRODUCT Dry, technical, nutritional food, preciseStandard dry

Market Size Market Size Europe : 6 b€ Europe : 2 b€ USA : 6.5 b€ USA : 3 b€

Growth Rate : -10% to +5% / year Growth Rate : +8 to +15% / yearRoyal Canin 03/93 : +28,4% / year

Pedigree, Wiskas, Friskies, locals…Royal Canin, Eukanuba

Hill’s

CONSUMER Nutritional sensitivity

Push BusinessPush BusinessPull BusinessPull Business