Imagine being able to take the pulse of hundreds of petfood
industry experts from around the globe, honing in on every
major market and region with all its diversity, complexity and
interconnections. Through an online questionnaire distributed
by Petfood Industry during December 2006 and January 2007,
Packaged Facts/Petfood Industry's Global Survey did just that,
compiling the responses of nearly 500 readers of the magazine,
including manufacturers, suppliers, service/consulting firms,
marketers, veterinarians and nutritionists, to gauge future
trends in the global petfood industry as well as the current
state of industry development in individual national markets.
Highlights include:
A total of 59 countries are represented in the survey, and a
majority of respondents' companies do business in multiple
regions, with the largest percentage citing involvement in the
United States/Canada (74%), followed by Western Europe (61%),
Southeast Asia (61%) and Latin America (57%). In addition,
significant proportions are associated with petfood markets in
Australia/New Zealand (48%), Eastern Europe (47%), North
Africa/Middle East (39%), India/Pakistan (33%) and
South/Central Africa (30%).
Most respondents work in general management (29%),
marketing/sales (28%) or research (14%). In terms of their
locations, half of respondents work with the US/Canadian
markets and a third with Western Europe, while one-fifth to
one-quarter work with markets in each of the other regions (see
Figure 2). In keeping with this multiregional emphasis, the
regional data reflect broad market perspectives rather than
local market performance.
The dozens of global market trends covered in the survey are
grouped under 12 broad factor headings: new product trends,
cultural shifts, product pricing, branding, globalization,
packaging trends, marketing and trade, demographic trends,
retail and supply shifts, marketer shifts, Internet use and
organic petfood.
The survey results, detailed in Packaged Facts' May 2007
Global Pet Food Industry Outlook report, further classify
national markets into three levels of development, mature,
mid-level and emerging, based on respondents' characterizations
of pet ownership rates, degree of pet pampering/humanization,
level of health/veterinary care and prevalence of mass market
and premium petfood brands in their countries of residence (see
Figure 1).
To put the survey data in context, the report also draws on
primary interviews with industry executives and professionals;
syndicated pet market reports published by Packaged Facts;
government, trade and consumer research sources; and
Datamonitor's Productscan Online service tracking new product
introductions worldwide.
Of the 12 broad factors covered in the survey, new product
trends is number one overall, with two-thirds (66.7%) of
respondents considering it very important to the development of
the global petfood industry during the next five years (see
Figure 3). The most important components of this factor
are:
Functional/condition-specific/novel ingredient foods
(lifestage, weight loss, breed-specific, therapeutic);
High-growth segments such as treats;
Hyperpremium products; and
Human-grade ingredients.
New product trends places high on the list of all
respondents, regardless of company type or professional role.
More than three-quarters (75.8%) of petfood manufacturers cite
this factor as very important, making it the top-ranked among
this group. For retailers, the factor tops out at 85%. Among
all respondent roles, new product trends ranks first except for
veterinarians and respondents holding
university/researcher/scientist positions.
Considering the nine regions in the survey, new product
trends heads the list for five and holds second place for all
but one of the othersSouth/Central Africa, where it is third.
Tellingly, this factor rates even higher in the less developed
markets of South Asia (77.4%) and North Africa/Middle East
(74.2%) than it does in the developed markets of North America
(71.6%) and Western Europe (69.7%), signaling the strong
interest in commercially prepared petfood in emerging
markets.
Cultural shifts is the other global factor cited as very
important by more than 60% of respondents. The most important
facets of this factor are the human/pet relationship and
ability of consumers to afford pet care. Of the remaining 10
factors, seven are judged to be very important by 54%-60% of
respondents, while three fall below this level. Organic petfood
comes in last at 31%, reflecting both the low penetration of
organic products in mature markets as well as the much lower
level of interest in mid-level and emerging markets.
While new product trends scores highest among the 12 broad
factors, three individual elements (specific aspects comprising
the broad factors) rate even higher. The human/pet
relationship, an aspect of the cultural shifts factor, rates as
very important among almost four-fifths (78%) of survey
respondents.
Convenience, under the packaging trends factor, and special
ingredient foods (i.e., functional/condition-specific/novel
ingredient foods), under new product trends, each garner "very
important" votes from 68%. The three elements placing lowest in
the survey, each ranked very important by less than 25% of
overall respondents, are homogenization of product preferences
(under globalization), postponing marriage (under demographic)
and global production (under organic petfood).
Looking across all four respondent classifications, company
type, professional role, level of country development and
region, an even 78% of marketers cite branding as being very
important to the petfood industry during the next five years,
making this the highest-ranking trend by this measure. More
than three-quarters of two other classifications, respondents
from South Asia and manufacturers, say new product trends is
very important, at 77% and 76%, respectively.
By index, the highest ranking factor is marketer shifts, as
rated by respondents who work in or with regions including
South Asia. These survey participants are 36% more likely than
all respondents on average (index of 136) to view this factor
as very important. As in other emerging markets, the petfood
fortunes of South Asia (i.e., India and Pakistan) depend on the
advances of Western influences into the market, via
manufacturers like Mars division Effem India Pvt. Ltd.
(Pedigree) and international retailers like Wal-Mart and
Carrefour.
Last year saw the biggest global surge of new petfood
products ever, with a growing share of the activity coming from
mid-level and emerging markets in Eastern Europe and Latin
America (see Figure 7, p. 25). During 2006, 655 new dog and cat
food products appeared globally, up from 280 in 2002, according
to Datamonitor's Productscan Online service.
In the US, which accounted for approximately half of 2006
introductions in mature country markets, marketers launched 254
new dog and cat food product lines encompassing 1,181 SKUs
(including different flavors, sizes and package variations), up
from 155 lines and 587 SKUs in 2002.
Premium petfoods cover all bases, natural/organic,
fresh/real, fortified/functional, breed/size specific, and are
increasingly being positioned not just as human style but also
human grade in terms of ingredients and manufacturing
processes. This trend seems likely to gain further steam given
the recent petfood recalls in the US and Canada.
Despite the vast differences in the three levels of market
development, the global petfood market may be smaller than one
might expect in terms of the trends expected to drive growth
through 2011. The human/pet relationship trend topping the list
in mature markets also ranks high in mid-level and emerging
markets, with at least 70% of respondents for each level of
development citing it as very important.
In mature markets like the UK and Australia, the
humanization trend will continue to involve products that more
closely resemble those for people, while the most important
aspect of the human/pet relationship in emerging markets like
China and Russia will be increased levels of pet ownership and
commercial foods penetration. In mid-level markets, this trend
will track between those two scenarios.
As major marketers continue to expand their international
presence, expect to see a rapid acceleration in global overlap
of trends like functional foods, urban-centric marketing and
Internet marketing as mature market trends trickle over into
less developed markets.
Australia ranks among the top 10 most developed markets
for petfood in the world along with the UK and other
Western European nations, Canada, the US and Japan.
Accordingly, market growth in Australia, where pet
ownership is already very high, is coming primarily from
the conversion of existing customers to higher-priced fare
targeted to specific health concerns and pet pampering.
At the same time, locally based manufacturers continue
to target multiple export markets, with the highest degree
of overlap coming from Southeast Asia, North America and
Western Europe. Half of respondents also cite involvement
in South Asia, North Africa/Middle East and South/Central
Africa, with at least one-third reporting involvement in
Eastern Europe and Latin America.
Respondents based in Australia unanimously say
high-growth segments such as treats are very important to
the development of the global petfood industry during the
next five years, with packaging convenience and the
human/pet relationship also scoring high (see Figure 4).
Reflecting the situation in most developed countries, a
sizable majority of Aussie petfood manufacturers consider
consumer advertising and promotion very important, along
with an urbanization-driven emphasis on smaller pets,
production costs and Internet usage. Such trends will
continue to shape these companies' market development
strategies. Looking ahead, expect to see growth in locally
made import replacement products in response to stricter
import requirements and Australian purchasing
preferences.
As with most other Latin American countries, Mexico is a
price-sensitive market whose fortunes fall and rise along
with the economy. Thus, 88% of respondents cite
premium/value-added vs. economy/mid pricing as a very
important trend in the development of the global industry
through 2011 (see Figure 5). Nevertheless, Mexico holds
solid market potential at all price levels. Premium product
trends including high-growth segments such as treats and
functional/condition-specific/novel ingredient foods are
tied in the survey with the premium vs. economy trend,
suggesting petfood preferences among upper-income consumers
are crossing over into the middle- and lower-income
brackets.
The survey results also confirm that educating Mexican
consumers about proper pet care will remain key to growing
the market, with an even three-quarters of respondents
considering support of manufacturer brands with consumer
advertising/promotion, trade advertising and promotion and
educational and informational programs as being very
important to future industry development. The government is
expected to take a growing role in this effort, but
promotional messages accompanying heavily advertised new
products will have the most impact.
India: set to zoom
Given these trends, it is not surprising that
India-based survey respondents unanimously say consumer
advertising and promotion are very important to the
development of the global industry during the next five
years, with 88% also identifying information flow (see
Figure 6). The other factor to get a unanimous very
important rankingone that also scores high in mature and
mid-level marketsis convenience, reflecting the growth of
dual-worker households and the time-saving benefits of
prepared petfoods.
The number four trend among India-based survey
respondentspremium/value-added vs.
economy/mid-pricedreflects both the focus on value brands
for the middle class and the growth of the tiny but rapidly
emerging superpremium segment among affluent, urban
households. This also shows in the mass market vs. pet
specialty tension reflected in trend number five.
Looking ahead, the biggest boon to petfood in this
market may involve the projected push of Wal-Mart into
India beginning in 2007, via a joint venture with Bharti
Enterprises. The other key factor in India's rapid growth
is the strong role of veterinarians in educating consumers
and selling petfood, with vets currently accounting for 44%
of sales of commercially prepared foods. Half of the
India-based respondents identify themselves as
veterinariansthe highest veterinarian skew of any
individual country in the survey.
Looking ahead, the biggest boon to petfood in this
market may involve the projected push of Wal-Mart into
India beginning in 2007, via a joint venture with Bharti
Enterprises. The other key factor in India's rapid growth
is the strong role of veterinarians in educating consumers
and selling petfood, with vets currently accounting for 44%
of sales of commercially prepared foods. Half of the
India-based respondents identify themselves as
veterinariansthe highest veterinarian skew of any
individual country in the survey.
Premium/value-added vs. economy/mid pricing;
High-growth segments such as treats;
Functional/condition-specific/novel ingredient
foods;
Educational and informational programs about pet
care;
Support of manufacturer brands with consumer
advertising/promotion; and
Trade advertising and promotion.
