Petfood leaders Mars, Hill's, Affinity and Unicharm answer questions about new products, innovation and how their companies handled the US recalls.

Mars Petcare

World headquarters: McLean, Virginia, USA (Mars Petcare: Franklin, Tennessee, USA)
Approximate 2006 global retail sales: US$10.71 billion
Officers: Doug Cahill, president, Mars Petcare US
Top brands: Pedigree, Cesar, Sheba, The Goodlife Recipe, Whiskas, Greenies, Royal Canin
New products: Cesar Gourmet Filets in sauce, WholeMeals for Dogs, Multi-pack Whiskas Favourites and Fisherman's Choice (UK)
Websites : www.mars.com ; www.marspetcare.com


Q: What new brands, products or packaging have you introduced in the past 12 months (or how many)? Can you provide information on how they are doing in the market to date?

A: In 2007, we launched The Goodlife Recipe® Brand and Cesar® Brand Gourmet Filets in Sauce product line. The Goodlife Recipe® Brand which launched in January is the largest Brand launch in Mars Petcare US history and so far, is doing well in the marketplace. The Goodlife Recipe® Brand Cat Treats have already achieved more than a 4.4% share of the market. Cesar® Gourmet Filets in Sauce launched in the third quarter has already gained 3.4% share of the wet food for dogs market. Because of high demand for the original Cesar® Brand foods and the new Gourmet Filets in Sauce, we recently announced plans to build a new manufacturing facility in Fort Smith, Arkansas, USA that will be dedicated to producing Cesar® Brand products.

In addition to innovative new products, Pedigree® Brand will introduce new and emotionally appealing graphics to the US market in 2008. We've begun shipping this new packaging to market in December of 2007 with special Pedigree® Adoption Drive graphics.

Q: What would you say are your company's keys to growth?

A: Mars Petcare US is dedicated to developing innovative products ahead of the market and delighting dog and cat owners everyday. We are dedicated to providing products with the best nutrition and taste so that owners can be happy and satisfied feeding any of the range of our products to their beloved dogs and cat family members. We are especially proud of a new innovative product that launches in January of 2008 - Wholemeals®! Wholemeals is a revolutionary product that provides dogs premium nutrition in a shape we know they will love (and is good for them) - A bone!

Q: What would you say sets your company apart from the competition? (For example: R&D, product development, product promotion, etc.)? What do you strive to be known for?

A: Mars Petcare US strives to be known for delighting dog and cat owners everyday with innovative foods ahead of the marketplace. They should be surprised and delighted when they experience our new products!

Mars has some of the most loved, well known brands in the world including Pedigree® Brand - the world's most popular food for dogs - and Whiskas® Food for cats. These brands offer consumers a variety of delicious and nutritious foods that are trusted in more markets than any other brand.

We also have the unique ability to leverage The Waltham Centre for Pet Nutrition and Mars Veterinary business in our development of the best products for dogs and cats around the world.

Q: Was your business affected by the US recalls this year? Please explain. If yes, what changes have you put in to place?

A: Petfood sales across our brands remained strong this year. This was partially due to the fact that our brands, including PEDIGREE®, CESAR®, and THE GOODLIFE RECIPE® food for dogs, and WHISKAS®, TEMPTATIONS®, SHEBA®, and THE GOODLIFE RECIPE® food for cats, in addition to our snacks and treats and various private label brands were not part of the Menu Foods (Melamine) recall.

In addition to having many industry-leading quality control programs, our products meet or exceed industry standards set by the FDA and the USDA, as well as individual states through their feed laws and the Association of American Feed Control Officials (AAFCO). Mars Petcare US brands do not include any rice protein, wheat gluten or corn gluten from the foreign suppliers affected by the Menu Foods recall and we do not source any protein meals from China. All of our suppliers are held to stringent quality control measures.

Mars Petcare is deeply committed to the quality of our supply chain and to this end we continue to maintain our longstanding quality control program. All Mars Petcare US petfood brands and our private label products undergo industry-leading product testing and quality assurance measures. Mars Petcare US has a long, successful history of making high-quality pet care products with rigorous quality control practices at every stage of the manufacturing process. The safety and nutritional quality of our petfood is our top priority because for many people, their pets are their top priorities.

Q: Where do you see your biggest opportunities?

A: The pet care category has many evolving opportunities that include providing more health benefits, more human-like foods, and better serving/storage conveniences. You can expect to see a steady stream of on-trend innovative products and programs from Mars Petcare US.

Q: Is there anything else you would like to tell Petfood Industry readers about your company?

A: Mars Petcare US is a company that is extremely passionate about providing high quality dog and cat food that is nutritional and enjoyable to our loyal canine and feline customers.

We live our culture daily by bringing our dogs to work and will never lose sight of our core beliefs or mission. We truly care about dogs and cats.

We are especially proud and passionate about The Pedigree® Adoption Drive program -- developed to raise awareness of the plight of dogs in shelters and breed rescue organizations. We know that there are more than 4 million dogs in shelters each year, and almost half will not make it out. To improve the odds, we are champions of this cause. Since its inception, we have raised more than US$3 million to help dogs find loving homes, and we are committed to this cause for the long haul. To highlight our fourth year of this program, we will kick off the 2008 Pedigree® Dog Adoption Drive with a multi-media program in January including: A full episode of the Apprentice TV show supporting the cause, followed by a big splash in TV, Print, Newspaper, Outdoor, On-Line communications, publicity about our new Pedigree Adoption Drive Foundation and our fundraising efforts. And, we will continue to partner with the Westminster Kennel Club during the show to celebrate some of the best and most fortunate dogs and at the same time use it as a platform to raise awareness and funds for the ones less fortunate.

Hill's Pet Nutrition

World headquarters: New York, New York, USA (Hill's Pet Nutrition: Topeka, Kansas, USA)
Approximate 2006 global retail sales: US$2.77 billion
Officers: Robert Wheeler, Hill's Pet Nutrition CEO; Neil Thompson, Hill's Pet Nutrition president of Americas; Janet Donlin, Chief Veterinary Business Channel
Top brands: Hill's Science Diet, Hill's Prescription Diet
New products: Science Diet Nature's Best Canine petfood, Prescription Diet Canine and Feline Treats
Websites: www.colgate.com ; www.HillsPet.com ; www.HillsVet.com
Employees: Over 2,800

Q: What new brands, products or packaging have you introduced in the past 12 months (or how many)?

A: Hill's re-launched Science Diet® Nature's Best™ Canine pet food, and introduced Prescription Diet® Canine and Feline Treats.

Q: What would you say are your company's keys to growth?

A: "Building and strengthening relationships in the veterinary profession and continuous innovations and improvements in wellness and therapeutic petfood nutrition."

Q: What would you say sets your company apart from the competition? (For example: R&D, product development, product promotion, etc.)? What do you strive to be known for?

A: Hill's Prescription Diet and Science Diet products are the petfoods most recommended by veterinarians.

Q: Was your business affected by the US recalls this year? Please explain. If yes, what changes have you put in to place?

A: Less than one percent of Hill's products were affected by the recall.

Hill's has always had high quality and safety standards. We have added additional safety checks on raw materials and finished products prior to release.

Affinity Petcare SA

World headquarters: Barcelona, Spain
Approximate 2006 global retail sales: US$0.59 billion
Officers: Carlos Argenté, CEO/VP marketing; Franc Andreu, operations managing director; Frances Blanch, VP R&D; Patricia Larumbe, VP business development
Top brands: Affinity, Ultima (UK), Brekkies, Brekkies Excel (cat), Advance, Advance Veterinary Diets, Premium Dog
New products: Special Care Urinary Tract Health, Special Care Hairball Control (both for cats)
Website: www.affinity-petcare.com
Employees: 720

Q: What new brands, products or packaging have you introduced in the past 12 months (or how many)? Can you provide information on how they are doing in the market to date?

A: We have introduced 8 new sku's for cats and 2 for dogs in different European countries. Detail follows:

CATS:
Spain and France.
Our Grocery Superpremium ULTIMA range for cats has been enlarged with 3 new dry sku's:
1. ULTIMA Cat Sterilized (for sterilized cats)
2. ULTIMA Cat Shine & Beauty (that improves skin and hair health)
3. ULTIMA Cat Duck & Rice (new flavor)

And 2 new wet sku's in pouches:
1. ULTIMA Cat Beef Chunks in jelly
2. ULTIMA Cat Tuna Chunks in jelly

Spain, France and Italy.
Our dry Premium Brekkies Excel range for cats has been enlarged with a new line: BREKKIES EXCEL CAT ORIGINAL with has been developed following the "natural" concept: no coloring, no preservatives. Two different flavors have been launched: Fish and Meat.

France, Belgium and Holland.
The Premium Brekkies Excel Rolls range for cats, which includes stuffed particles, has launched a new flavor: Rabbit.

DOGS:
Spain, France, Belgium and Portugal.
Our dry Premium Brekkies Excel Tender & Delicious range for dogs, which includes tender particles, has been enlarged with the Chicken flavor.

The dry superpremium ULTIMA LES REPAS EQUILIBRE range for dogs sold in the French market, has launched the variety: BUCCO-DENTAIRE, which helps to avoid tartar and gingivitis.

ULTIMA dry products are doing very well in the market. ULTIMA wet still have reduced distribution (will improve next year).

BREKKIES EXCEL ORIGINAL is also growing in distribution since it has had a very good acceptance by the trade.

Q: What would you say are your company's keys to growth?

A: Our keys to growth are that we have new and innovative products, and that we are focusing our efforts in geographical areas in Europe where dry products are growing the most.

Q: What would you say sets your company apart from the competition? (For example: R&D, product development, product promotion, etc.)? What do you strive to be known for?

A: Innovative products, promotional support and good advertising campaigns.

Q: Can you please provide sales estimates for 2008 - or projections for growth for the new year and beyond?

A: We estimate to close 2007 with retail sales of US$595 million. Due to cereal price increases we have been forced to increase our prices above previous year's percentages. Volume growth plus price increase make us aim 15% growth for 2008 in turnover.

Q: Was your business affected by the US recalls this year? Please explain. If yes, what changes have you put in to place?

A: No, because we are not selling in the US and Europe has not been affected.

Q: Where do you see you biggest opportunities?

A: We still see our biggest opportunities in the countries where we operate today in the European markets, also with focus in dry products.

Q: What are your most difficult challenges?

A: We still have to foresee how demand will react with the price increases that the industry has implemented in the second half of 2007 and will implement in 2008. Private label performance is always a concern.

Unicharm Petcare Corp.

World headquarters: Tokyo, Japan
Approximate 2006 global retail sales: US$0.29 billion
Officers: Toshio Takahara, chairman; Gumpei Futagami, president/CEO
Top brands: Aiken Genki Gin no Sara, Neko-Genki Silver Spoon, Gaines Pakken
New products: Ginno Sara for Dogs 10 years and older, Fukkura Dry for Dogs 10 years and older, Gainer Pakken White Meat Chicken, Ginno Spoon Retort Pouch, Ginno Sara Kyono Gohobi (treats)
Website: www.uc-petcare.co.jp
Number of employees: 180

Q: Would you please tell us the new products and/or brands introduced in the market for the past 12 months? Could you provide us with market data, if available?

A: Dog food
1. Ginno Sara for dogs 10 years and older (Launched this spring)
2. Fukkura Dry for dogs 10 years and older (Launched this spring)
3. Gaines Pakken Chicken white meat (Launched this autumn)

In Japan, the number of elderly dogs is growing. So the line of products for elderly dogs is very important. We have two elderly lines of our all dog foods brand, one is for dogs for 7 years and older, the other one is for dogs 10 years and older.

"Gaines Pakken" is our semi-moist type product brand. In Japan, pet owners look for the use of healthy materials and palatability when they choose petfoods. Semi-moist foods have high palatability and white meat chicken is good for canine health.

Cat food
1. Ginno Spoon Retort Pouch (Launched this autumn)

Last autumn we launched Ginno Spoon Can and entered into the untapped cat wet market. We pursued very high palatability and we got about10% share volume in the cat canned food market. This autumn we launched "Ginno Spoon Retort Pouch". The products have high palatability same as "Ginno Spoon Can" and the packaging is easy to dispose of.

Treats
1. Gin-no-Sara Kyo-no-Gohobi

We think healthiness and palatability are very important also in the treats category. We use white meat chicken in these products as well.

Q: What would you say are your company's keys to growth?

A: For pet ownership in Japan, there are 4 current trends:
1. Indoor pets
2. Elderly pets
3. Overweight pets
4. Small/ toy dogs

We believe that the key for growth is product development meeting the needs in line with the trends. For petfood, as the importance is placed on health, healthy premium products targeting small dogs, overweight pets and aged pets are promising. Furthermore, by increasing the food products corresponding to them as variations of existing products, we are able to respond to the needs of consumers, and are able to add value to existing products. With the increase of indoor pet ownership in Japan, as well as the increase of small dog ownership, the progress of pets being a member of the family and the humanization of pets will be made and thus the needs for gourmet food will increase, we believe.

Q: What would you say sets your company apart from the competition? (For example: R&D, product development, product promotion, etc.)? What do you strive to be known for?

A: We believe that it is finding the consumer needs, making an in-depth analysis, converting these needs into existing products, increasing the public awareness of the products by TV commercials and sales activities, and expanding sales. In terms of finding and analyzing consumer needs, we have accumulated consumer data for over the past 20 years and have been carrying out various consumer tests as well.
In terms of product development for petfood we have an independent R&D team inside our factory and we emphasize the speed of converting pet owner needs into products. In terms of technology, recent palatability enhancing technology applied for gourmet food - Ginnno Spoon (for cats) and Ginno Sara (for dogs) - is unique.

Q: Would you please tell us sales projections for 2008?

A: We do not have a concrete target plan for sales figures as a company. Sales turnover, we believe, will be the result of realizing product strategies and we have a plan for products for the year 2008. However, ever since our present president became involved in our pet business in fiscal year of 2001, we have made a growth of approximately 13-14% annually. We have big expectations for the potential of pet business in Japan and we are firmly convinced that we can continue to expand our pet care section of the company in the near future.

Q: Would you please tell us the future image of the company? Do you have a plan/ direction towards the future?

A: We carry the banner for "The expansion of market size" in our company as a corporate activity target. The meaning of this slogan is that we will not rob the existing market of pet products, but unearth new needs, sell the valuable products corresponding to that segment and aim at expanding the total market. By way of an example, in the case of Ginno Spoon (the new cat food mentioned earlier), market growth rate for other existing gourmet cat dry products that set the retail price range 4 times higher than that of standard cat dry products has been stagnant, but by setting the price range for Ginno Spoon 2 times plus the higher price against standard products, by appealing to consumers as a daily gourmet product which users can feed every day, the market has been stimulated and 2 digit growth has occurred.

Q: What are the most difficult challenges your company faces?

A: Under the current environment of steep price hikes of raw materials, keeping up good profitability is very important and our main challenge as a company. Also, the consciousness towards safety of petfood became increasingly high this year and we are focusing on improving overall product quality and safety.

Q: Do you have any comments about your company for Petfood Industry readers?

A: Judging from the fact that the pet population in Japan is 25 million compared to 150 million in the US, we believe that the pet care market in Japan still has a big potential for growth. We work hard by competing with other companies and want to contribute to the healthy growth of the pet industry in the future.