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PET CARE ANNUAL UPDATE:TRENDS AND GROWTH OPPORTUNITIES
JARED KOERTEN
SENIOR ANALYST
PIJAC, TORONTO, SEPTEMBER 21, 2015
4
$20
$0
Pet Food
$40
© Euromonitor International
$60
Global Spending on Pet Care: 2010-2015
$120
$100
$80
Pet Products
2010 2011 2012 2013 2014 2015 (p)
Sale
s(U
S$,b
n,Fi
xed
E-R
)GLOBAL OVERVIEW
A Large and Growing Market
6
Asia Pacific
Australasia
Eastern Europe
Pet Care: Per Household Sales and Growth, 2010-1518%
16%Latin America
14%
12%
Middle East & Africa
North America
Western Europe
0%
2%
4%
6%
8%
10%
$0 $50 $100 $150 $200
Per Household Sales, 2014
$250 $300 $350
CA
GR
,201
0-15
GLOBAL OVERVIEW
Growth Continues Across All Regions
© Euromonitor International
7
NoviPet Magic Treats by BioPet Ltd Dog TreatsSingapore, 2015
Fortified with DHA, Omega 6 and Multivitamins, Omega 3, Prebiotics or Glucosamine
Available in blister and strip packs to maximize freshness
GLOBAL OVERVIEW
New Product Trends: Fortified Foods for Better Health
Finikee by Bharat International Pet Foods Premium Wet Cat FoodIndia, 2014
Fortified with Taurine (amino acid) to aid with heart health, muscle function and allergy control
Artistic packaging, modern design
Gourmet flavors
© Euromonitor International
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Milk-Bone Brushing Chews by Big Heart Pet Brands Dog TreatsUSA, 2014
Helps clean teeth while chewed
Veterinary Oral Health Council’s (VOHC) seal of approval
Packaging looks like premium toothpaste
Petys Paños húmedos para perros by Familia SA Pet WipesColombia, 2015
Portable way to clean your pet
Value with refill pouches
Stand-up pouch packaging to maximize visibility and shelf-space
GLOBAL OVERVIEW
New Product Trends: Improved Hygiene
© Euromonitor International
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Dreamies by Mars Japan Ltd Cat TreatsJapan, 2014
Two-layers: cream covered with a crispy layer for better taste
Like Whiskas Temptations in the US; appeal as a foreign brand
Purina Dog Chow Abrazzos Integral Snaps by Nestlé Dog TreatsMexico, 2014
Made with whole wheat flour
Baked – reduced fat content
Fortified with essential vitamins and minerals
GLOBAL OVERVIEW
New Product Trends: Snacking
© Euromonitor International
11NORTH AMERICA: GROWTH CONTINUES
Values over Volumes
Canada - Volume2%
USA - Value1%
USA - Volume0%
-1%
-2%
3%
North American Pet Food Growth: 2010-146%
5%
4%
2010-11 2011-12 2012-13 2013-14
Canada - Value
12
0
20
40
60
80
100
120
140
160
180
2010 2011 2012 2013 2014 2015
Popu
lati
on(i
nm
illio
ns)
North American Dog and Cat Population: 2010-15
USA Canada
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Shar
eof
Tot
alPo
pula
tion
Dogs in North America by Size: 2010-15
Large Dogs (Over 23 kg)
Medium Dogs (9 to 23 kg)
Small Dogs (up to 9 kg)
NORTH AMERICA: GROWTH CONTINUES
Weak Population Growth Hurts Volumes
13NORTH AMERICA: GROWTH CONTINUES
Growth: A Story of Premiumisation
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
0
100
200
300
400
500
600
700
800
900
1,000
Economy Mid-Priced Premium
2010 2012 2014 CAGR 2010-14
CAG
R,2
010-
14
Sale
sin
CAD
(Mil)
Canada: Dog and Cat Food by Price Tier, 2010-14
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Economy Mid-Priced Premium
2010 2012 2014 CAGR 2010-14
CAG
R,2
010-
14
Sale
sin
USD
(Mil)
USA: Dog and Cat Food by Price Tier, 2010-14
14NORTH AMERICA: GROWTH CONTINUES
Canada Continues to Grow
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
0
200
400
600
800
1000
1200
Dog Food Cat Food Other Pet Food
Cat Litter Pet Pet Dietary Healthcare Supplements
CAGR 2010-14
Other Pet Products
CAG
R, 2
010-
14
Sal
esin
CA
D (M
il)
Canada: Pet Care Spending by Category, 2010-14
2010 2012 2014
16PREMIUM PRODUCTS LEAD THE WAY
New Products in Canada Go Upscale
Caru Naturals Stews by Caru Pet FoodPremium Wet Dog Food Launched June 2014
Resembles a stew that humans would eat: instantly-recognizable ingredients
Premium packaging: Recyclable Cartons; BPA-Free
All-Natural Formulation: No Artificial Colors, Flavors or Preservatives
Grain-Free, Gluten-Free, Soy-Free, No Animal By-Products
Fromm Four Star Beef Liva‘ttini Veg by Fromm Family FoodsPremium Dry Cat Food Launched April 2014
Grain-Free Recipe featuring beef liver, eggs, cheese, tomato, spinach, eggplant, zucchini
Premium packaging: Stand-Up pouch designed with fancy colors
Part of the company’s “Four Star Nutritionals” line
“An Italian Experience You Won’t Soon Forget”
“Pairs well with Chicken Duck and Salmon Pâté”
18PREMIUM PRODUCTS LEAD THE WAY
Premium Manufacturers Gain Share
Canada: Dog & Cat Food Share by Company, 2009-14
30.8 30.3
22.4 26.9
7.1
9.98.1
3.53.6
2.84.5
12.02.5
3.4
11.5
9.0 11.7
10%
0%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2009 2014
Val
ue S
hare
Others
Private Label
Blue Buffalo Co Ltd
Champion Petfoods LP
Colgate-Palmolive Co
Big Heart Pet Brands
Procter & Gamble
Mars Inc*
Nestlé SA
© Euromonitor International
*Note: Mars acquired Procter & Gamble’s Pet Business in April 2014
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19.3 19.5
23.1 18.8
8.06.0
6.3
6.4
20.123.1
6.15.6
4.8 6.5
5.91.3 3.3
5.95.1 4.9
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2009 2014
Val
ue S
hare
PREMIUM PRODUCTS LEAD THE WAY
Specialty Channels Excel
North America: Pet Food Share by Channel, 2009-14
Others
Veterinary clinics
Internet Retailing
Home and Garden
Pet shops
Pet superstores
Warehouse Clubs
Mass Merchandisers
Supermarkets
Hypermarkets
© Euromonitor International
22THE FUTURE
A Strong Outlook for the Canadian Market
-1.0%
0.0%
1,0003.0%
8002.0%
600
1.0%400
4.0%
5.0%
0
200
1,200
1,400
Dog Food Cat Food Other Pet Food
Cat Litter Pet Healthcare
Pet Dietary Supplements
Other Pet Products
CAG
R, 2
015-
20
Canada: Forecast Pet Spending by Category, 2015-2020
2015 2020 CAGR 2015-20
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Global
• The global pet care market stands out for its consistent growth• Most regions trail North America by a wide margin - strong potential• Humanisation trends are evident worldwide – becoming a global trend
North America
• Stagnant pet populations and smaller breeds limiting volume growth• Value sales growing as consumers shift from economy to higher-end• The relatively smaller pet products market is booming in Canada
Canada
• New premium products driving growth with significant implications for the competitive landscape, retail environment and company strategy
• Strong growth is expected from premium foods and pet products• Manufacturers must find ways to appeal to a new generation of pet parents
THE FUTURE
Conclusion
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THANK YOU FOR LISTENINGJared Koerten
Senior Analyst
Euromonitor Chicago
224 S. Michigan Ave, 15th fl Chicago, IL 60604