The September 2016 issue of Petfood Industrycovers Hugo & Celine, a Swedish specialty pet treat company that began with ice cream, but has expanded to meet the demands of a growing humanization trend in Europe.
A report on the global animal feed ingredients market released last week offers a few tidbits of data and information regarding petfood ingredients, with the highlight that the overall market as well as the segment that includes companion animal food are both growing strongly. That growth is projected to continue at a compound annual rate of 5% to 7.5% through 2019.
First, though, a caveat: The report comes from Virgo, a media and events company that has traditionally covered human health and nutrition -- for example, it's the organizer of the Supply Side ingredients shows -- and has just started dabbling in animal nutrition in the last few years. Thus, its definition of the market does not necessarily match up with that of most people in the petfood or feed industries. This new report offers a prime example: When I saw the title, I naturally assumed it would cover all types of ingredients, including what I consider primary categories such as grain-based ingredients and, for petfood, protein sources.
Yet, what the report actually covers are ingredients like amino acids, vitamins and trace minerals, enzymes, probiotics, antioxidants and the like. No doubt, those are important categories; for some species of animals, including cats and dogs, some of the ingredients that fall within those groups provide nutrients that are absolute requirements for the species. But in no way do they comprise the entire global animal feed ingredients market.
That said, we can still glean some insights from the report, which was written by Christopher Shanahan, global program manager for Frost & Sullivan's Food & Agriculture Practice, using his company's data. For starters, these particular feed ingredients make up a US$12.19 billion market (as of 2012) that's expected to climb to US$17.28 billion by 2019, a compound annual growth rate (CAGR) of 5.1% a year. In terms of volume, shipments in 2012 totaled 5.12 million metric tons; Shanahan projects that figure to hit 7.48 million tons in 2019, a 5.6% CAGR.
Specific to petfood, it falls into the "other feed ingredients" segment, which also includes aquaculture, so there is no specific data on petfood ingredients in the above described categories. This other segment accounts for 7.4% of the global market revenue (approximately US$9.02 million); in North America, the largest feed ingredients market, that segment is projected to increase 7.5% CAGR in revenue and 5.9% in volume.
For comparison, swine and poultry feed ingredients account for 73.4% of global market revenue. (It's mystifying that those are combined into one large bucket, considering how significant each segment is on its own.) Cattle feed ingredients make up 19.2% of the market's revenue. In terms of geography, no data is given for each region's share of the market; Shanahan only mentions that Europe is second in size to North America and that Asia Pacific has a high potential for growth because of the region's increasing economic development, which in turn spurs higher income levels and consumer demands for meat.
Getting back to the ingredient categories covered in the report, amino acids is the largest, at 33.8% of the market, with vitamins coming in second at 21.1% and trace minerals third at 20.7%. Enzymes get their own tiny category (1.1%), while the others (probiotics, fatty acids and shelf-life stabilizers, which includes antioxidants) are lumped into one catch-all category at 23.7%.
Perhaps the most interesting aspect of the report are the drivers Shanahan identifies behind continued growth of this market. Besides the reasons we often hear and read about as driving growth of animal feed itself (and, in some cases, affecting petfood) -- population growth and changes, increased demand for meat and rising awareness of the benefits of the ingredients -- another key factor is increasing prices of the ingredients themselves. Just as prices for grains, proteins and other types of ingredients continue to fluctuate and rise over the long term, so do the costs of these other categories.
Prices for ingredients covered in the report are expected to increase at a CAGR of 4% between 2012 and 2019, Shanahan says, with probiotics and shelf-life stabilizers leading the way at a 7% rise, followed by 3% for amino acids and trace minerals and 2% for vitamins. The most common culprit behind the increases? Raw material sourcing and competing demands from other industries -- in this case, the human nutrients industry, pharmaceutical and others.
For petfood manufacturers, that might sound depressingly familiar.Google+