Jan 30, 2013
By Debbie Phillips-Donaldson
A new global feed tonnage report from Alltech, combined with 2012 data from Euromonitor, speaks volumes about growth in the global petfood market. (Cue groans at that "volume" pun now.) And it shows that, as with petfood sales, the markets growing the fastest are those in Latin America, Eastern Europe and, to a lesser extent, Asia.
The Alltech report, released January 28, comprises data gathered as of December 2012 and includes petfood for the first time, showing a global total of 20.5 million tons produced last year. For the record, that total pales in comparison to totals in other feed sectors, such as poultry (411 million tons), ruminant (254 million tons) and even aqua (44.8 millions). The petfood tonnage is larger than that for equine, at 10.9 million tons.
Alltech's figure doesn't quite match up with data provided by Euromonitor in late November 2012. At that point, the research firm was projecting the year to end with a total of 21.3 million tons of petfood produced globally.
Looking at a country breakdown in the Alltech report, it's easy to see why its number is lower than Euromonitor's. For one thing, not all countries were surveyed by Alltech; and for petfood, no data is reported for several countries, including ones known to have relatively significant petfood production -- such as Russia, which Euromonitor named in 2011 as one of the largest petfood markets at US$2.16 billion in sales and also one of the fastest growing, at 8.7% compound annual growth -- as well as other countries known to be growing in petfood sales, such as South Korea and Ukraine.
But Alltech does agree with Euromonitor in naming the US as the largest petfood producer by far, at 8 million tons in 2012. Add Canada's 1.2 million tons, and you actually get a larger total for North America than Euromonitor shows (8.4 million tons). Alltech puts the US's market share at 40%; Euromonitor gives North America overall a share of 39.5%, very close. The second largest petfood tonnage in the Alltech report is for Brazil, at 2.5 million tons, with Canada third, followed by fast riser China at 1 million tons (the same production reported for France).
Yet with its more complete global data and comparisons with 2011, Euromonitor provides a better picture of the world's petfood market. That large market share for North America belies the fact that the region's production grew only 1.45% in 2012, even less than its 3.6% increase in value sales. On the other hand, Eastern Europe's production grew 5.7% from 2011 to 2012 (more than half of its 11.7% growth in sales), while Latin America grew 4.1% in production (about one third of its gaudy 12.4% sales growth). Asia Pacific grew 2.6% in production and 3.5% in sales.
What's interesting is how the growth rates for production and sales are becoming closer in more developed regions and countries, such as the US and Canada; in recent years, sales gains in those markets seemed to come mainly from price increases. Perhaps the convergence in rates means the growth is based on a healthier foundation of more products actually being sold, though the increases are still fairly anemic. (They're even worse for regions such as Western Europe and Australasia; the former posted growth of less than 1% for both production and sales in 2012, while Australasia saw declines in both.)
The variance in growth rates between production and sales in developing regions for petfood, such as Eastern Europe and Latin America, seem to reflect that pet owners are starting to move up from buying mostly value-priced (so-called economy) products to mid-level and, in some countries such as Brazil, even premium and superpremium petfoods. Asia Pacific is more of a mixed bag: Japan, which still owns much of the share in that region, is a fully developed petfood market with lower growth (at least it seems to have rebounded from the 2011 earthquake and tsunami), but the region also includes many booming pet markets like China and, to a lesser extent, Thailand, South Korea, Indonesia and others.
Make no mistake: Growth in the rising petfood markets will continue to outpace that in the more established regions. The developed regions are already starting to lose sales share on a global level -- North America's global market share declined from 31.8% in 2010 to 29.8% in 2012, while Western Europe's fell from 33% in 2010 to 31.5% in 2012 -- as the developing regions rise (from 15% in 2010 to 16.5% in 2012 for Latin America and 5.3% in 2010 to 6.6% in 2012 for Eastern Europe). Trends in production shares, while less noticeable now, are not far behind.
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