Petfood sales to reach US$33 billion in 2018

Driven by increased focus on pet health and the increasing impact of the human-animal bond, US sales of petfood will rise 16% between 2015–2018 to reach US$33 billion, according to Packaged Facts in "Pet Food in the US, 11th Edition."
Packaged Facts estimates petfood sales in 2013 were US$28 billion. The petfood category experienced much of its growth outside of the core mass market, particularly in channels like farm/feed, Internet and pet specialty. Sales are expected to remain relatively flat through the rest of 2014, though opportunities exist in the premium food sector as pet owners purchase these products to protect the health of their animal companions, according to the report.
"Looking ahead, the trick will be to find ways to grow this mature market, since at its current pace pet population growth is not sufficient to drive higher levels of market growth," said Packaged Facts research director David Sprinkle. "For several years much of the dollar growth in the petfood market has come from converting pet owners to higher priced foods as part of the humanization trend."
Premium petfoods will account for 42% of petfood sales in 2014, followed by regular petfood at 30% and value petfood at 12%, with treats comprising the remaining share of sales. On both the dog and cat sides of the market, the premium share of sales has expanded, mostly as a result of growth in the superpremium segment. Treats have also grown their share of the market, primarily due to the robust interest in treats among dog owners, many of whom have turned to functional treats as a way to ameliorate pet health conditions and promote overall wellness. Cat owners, on the other hand, have not proven as likely to indulge their pets in superpremium fare, and have also been slower to embrace functional treats, suggesting areas for market expansion as cat food and treat marketers continue to trend into premium and functional fare, with products and trends often crossing over from the dog side, according to the report.

Mars to buy P&G petfood brands for US$2.9 billion

Mars Inc. is set to purchase Procter & Gamble's petfood brands, including Iams, Eukanuba and Natura, for US$2.9 billion, according to reports. P&G is leaving the pet care market to focus more on its core brands, and the transaction will solidify Mars as the world's biggest petfood company.

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Mars did not take on P&G's European business, but it has an option to buy operations in remaining markets in Asia and Africa, said P&G spokesman Paul Fox. The company plans to actively pursue the sale of its European pet care business, he said. 
"The announced deal is not a surprise in view of P&G’s declining share," said Paula Flores, head of Euromonitor International's Pet Care division. "P&G is the fourth global player with a global value share 3.6%, down from 4.2% in 2008. Despite the good position in the premium segment of the North American dog and cat food market, where it accounts for 19% of value sales in 2012, this figure stood at 24% as recently as 2008. The company faced two voluntary recalls for its superpremium Natura, Iams and Eukanuba brand during 2013. Moreover P&G has a weak performance in most emerging markets."
 The deal is expected to be complete in the second half of the year.

Procter & Gamble sees continued petfood challenges in third quarter

Procter & Gamble and Colgate-Palmolive have both been facing similar market challenges in the pet care market as of late. Mars and Nestle are consolidating their positions in the global petfood market, together accounting for 50% of value sales, and small and medium-sized companies in the industry are fragmenting the premium end of the market, where Procter & Gamble and Colgate-Palmolive have traditionally derived the bulk of their sales.
According to Euromonitor, in 2008 Procter & Gamble and Colgate-Palmolive both accounted for 6% of global sales, but their shares began to fall in 2010. However, by 2012, Colgate-Palmolive had stopped its decline, while Procter & Gamble continued to face challenges-challenges which continue into 2013. Procter & Gamble has faced voluntary recalls throughout the year due to suspected Salmonella, and net sales in the company's healthcare division (which includes petfood) were down 1% during the three months ending in September as a result. Furthermore, Procter & Gamble remains strong in the premium segment of the North American dog and cat food market, accounting for 19% of value sales in 2012, but this figure stood at 24% as recently as 2008, according to Euromonitor. The company is also weak in emerging markets, accounting for 1% of value sales of dog and cat food in the expanding Latin American and Eastern European markets in 2012. Its global market share of petfood fell from 6% to 5% between 2008 and 2012, and is expected to fall again in 2013.
Colgate-Palmolive, in contrast, has seen successes in conjunction with its challenges. The company's Hill's pet care unit saw organic sales expand by 6% year-on-year during the third quarter, with volume gains in the US and Russia partly offset by volume declines in Japan. However, higher raw and packaging material costs, as well as increased investment in customer development initiatives and advertising, saw its operating profit decrease by 6%, to US$138 million, during the quarter. Its profit margin fell by 250 basis points, to 25.3% of net sales, according to Euromonitor.
Colgate-Palmolive has credited much of its growth to the successful launch of a new natural petfood brand, Hill's Ideal Balance, in the US, in addition to the global launch of Hill's Prescription Diet Metabolic and the re-launch of Hill's Science Diet with natural ingredients and an improved taste. Unlike Procter & Gamble, which acquired Natura in 2010 to tap the natural petfood market, Colgate-Palmolive has adapted to the shift in consumer preference towards natural products in petfood. The company has reoriented its research and development and branding strategies, taking into account both changes in consumer preference and the positioning of its emerging rivals.
In 2013, the market could see Colgate-Palmolive pass Procter & Gamble to become the second largest player (behind Nestlé) in the North American premium dog and cat food market (its value share stood at 18% in 2012), and with companies like Blue Buffalo continuing to expand rapidly (increasing its share from 3% to 8% between 2008 and 2012), Procter & Gamble would seem to have more challenges ahead if it wants to remain competitive.

Central Garden & Pet reports fourth-quarter fiscal 2013 financial results

Central Garden & Pet Company has reported financial results for the fourth quarter of fiscal 2013.
The company reported net sales of US$368.8 million for the fourth quarter of 2013, a 7 percent decrease over the 14-week comparable fiscal 2012 period. Reported net sales for the pet segment for the quarter were US$220.4 million, a decline of 7 percent over the fourth quarter of 2012.
The pet segment's branded product sales for the quarter decreased US$16.1 million to US$175.6 million, while sales of other manufacturers' products were US$44.8 million, a decrease of 2 percent compared with the fourth quarter of 2012. The pet segment's operating margin improved for the quarter, aided by higher gross margins and lower marketing expenses. For the fourth quarter, the pet segment's operating income was US$24.7 million, an increase from US$16.5 million in the fourth quarter of 2012.
The company's overall fourth-quarter operating loss for 2013 was US$26.4 million compared to an operating loss of US$8.5 million in the fourth quarter of 2012. The net loss for the fourth quarter of 2013 was US$22.6 million compared with a loss of US$10.1 million in the fourth quarter of 2012.
Sales comparisons were affected by an extra week in the prior year quarter and full-year periods. 

New retail price-monitoring, analytics service offered

RetailData and Brand View have formed a new partnership called Retail View, a price-monitoring and analytics service.
RetailData, which provides CPGs with a solution to assess accurate pricing data across the country, and Brand View, a provider of real-time price and promotions tracking, have teamed up to provide this fully customizable service with actual price tracking and analysis. The Retail View service can allow price to be managed centrally with reports and analysis available to account manager;ls and analysts instantly. 

Pet owners' spending on cat, dog food up 62 percent since 2001, report says

Since 2001, pet owners' spending on dog and cat food has grown 62 percent to a record US$19 billion in 2012, according to a report. 
Euromonitor International estimated petfood spending at US$12.41 billion in 2000, measured in current prices, and says spending grew even in the recession to US$17.7 billion in 2008 and US$18.5 billion in 2009. 
The market's growth is attributed to more than just a rising number of households owning dogs and cats, as these numbers have stabilized to an estimated 75 million cats and 85 million dogs in the US.
One reason for the growth in petfood spending is the economy. “A Broadway show is really expensive for many people,” said Dr. Stephen Zawistowski, science adviser to the American Society for the Prevention of Cruelty to Animals. “But, for a couple of bucks you can buy a bag of treats for your dog or give them an extra scoop of food and feel good about yourself.”
Continued growth in petfood spending is also attributed to the humanization of pets. According to Paula Flores, head of global pet-care research at Euromonitor, as cats and dogs have become more important members in American families, this has driven premium petfood sales. 

Pet product retailer Fressnapf reports 7 percent sales growth in 2012

European pet product retailer Fressnapf recorded overall sales of €1.46 billion (US$2.6 billion) in fiscal 2012, an increase of 7 percent compared to fiscal 2011.
Sales in Germany rose 6 percent in 2012 to €970 million (US$1.3 billion), while comparable store sales grew 4 percent in the domestic market. Fressnapf sales in 11 other countries grew 10 percent to more than €490 million (US$654.8 million). According to the company's head, Torsten Toeller, the pet product chain's fastest-growing markets include Austria, Belgium and Denmark.

Pet Food Express says petfood antitrust lawsuit dismissed by US District Court

Pet Food Express announced that Royal Canin’s antitrust lawsuit against Pet Food Express was dismissed by Judge Marilyn Patel of the US District Court, Northern District of California.
The case focuses on a 1997 distribution agreement between the two companies that was signed by Royal Canin’s predecessor Pet Products Plus, but that Pet Food Express claims was violated when Mars Inc. purchased Royal Canin and sold the petfood to PetSmart stores. 
Pet Food Express is now seeking US$22.8 million in damages from Royal Canin, for what Pet Food Express calls a "breach of contract" by Royal Canin. The trial date is set for May 31, 2011.

US petfood sales up to US$18.4 billion in 2010, according to report

According to the report "Pet Food in the US, 9th Edition," released by Packaged Facts, US retail sales of petfood reached US$18.4 billion in 2010, up 2.8% over 2009 sales, but the growth was the slowest the market has seen since 1999.
Mass-market outlets led in petfood sales: dog food, the largest petfood category, grew 1.5% in 2010 to reach $3.7 billion, according to the report. However, pound volume was down 1% at 3.7 billion pounds. Biscuits and treats grew nearly 8% over 2009, and the smallest segment, frozen/refrigerated dog food, jumped 10%. Mass-market sales of cat food declined 0.2% in 2010 to US$2.4 billion, but cat treats performed well, and the frozen/refrigerated segment rose from virtually nothing in 2009 to US$600,000 in 2010, according to the report.
Looking ahead to the next five years, the Packaged Facts report indicated that petfood sales returning to their pre-recession annual growth rate of 5% to 6% is unlikely, but a gradual improvement is possible. For 2011 to 2015, the report gave an annual growth rate of 3.5%, with US retail pet food sales reaching US$21.8 billion in 2015.

Former Pets.com CEO explains reasons behind company's shutdown

Former Pets.com Chief Executive Julie Wainwright discussed why Pets.com shut down, after a recent sfgate.com article made the comparison between Wainwright's pets.com and startup company, PetFlow.com.
In her comments , Wainwright said that her company did not go out of business because it was selling petfood for below cost, as the article claimed, and pointed out that the company's average order was around US$37, only half of which included petfood. She also noted that in 2000, the company had to employ more than 40 engineers because there were no "plug and play" solutions for ecommerce management and customer service, in addition to needing several IT staffers to ensure the site did not crash since cloud computing did not exist. 
Wainwright also attributed the closure of Pets.com to the fact that of the US$260 million in funding needed to break even, the company had only raised US$180 million and felt it would be impossible to raise the rest. Pets.com believed that the company should be shut down to return money to shareholders instead of being forced to declare bankruptcy, according to Wainwright.

Burns Pet Nutrition saves UK pet shop from closing

When Jim Burns, owner of Burns Pet Nutrition, took over the lease of Pets Corner in early December, he saved the only pet shop in the town of Carmarthen, UK.
The shop's previous owner, Grace Jones, ran the pet shop for 22 years before announcing her retirement and the closing of Pets Corner.
"When I heard that Carmarthen was about to lose its only independent pet shop I knew that I had to do something. Taking over the shop seemed the logical answer,” Burns said. “Burns has always encouraged its customers to support local traders. Small local shops are a vital part of the community especially for older customers and those without their own transport."

Nestle predicts petfood sales over US$ 1 billion in Latin America

Nestle SA expects petfood sales to surpass US$1 billion in Latin America next year as consumers there start buying supplies designed for dogs and cats, according to a Bloomberg article.
In the article, Nestle Purina's Chief Executive W. Patrick McGinnis said sales in Latin American countries like Brazil are growing at nearly 20% a year, as incomes of pet owners rise. McGinnis also said Nestle is hiring more salespeople and pursuing acquisitions to strengthen its Latin American business. According to the article, Nestle reported nine-month sales growth and a total revenue of US$85.4 billion, helped by gains in emerging markets like Latin America.

Tractor Supply sees growth in petfood sales

Tractor Supply Co. has seen an increase in its petfood sales as non-traditional customers come in looking for a deal in the current economy.
According to the company, its second quarter same-store sales surged by 6.1% due to core consumable categories, which include animal and pet-related products. In addition, the livestock and pet product segment is outperforming all other product categories and in 2009 represented 39% of sales, up from 33% in 2007. "In good times or bad times, it's convenient to go in and get a large bag of feed," said Morgan Keenan Analyst John Lawrence.
As more and more households add pets, Tractor Supply has adjusted accordingly. "We've continued to grow our offerings as pets went from outside the home to inside, and the pet population has grown," said Tractor Supply Vice President Ken Wilmes. The company has even launched its own brand of dry dog food called 4health, with plans to expand the line to include wet dog food and cat food.

Del Monte CEO predicts growth in its petfood business

Richard Wolford, chief executive of Del Monte Foods, predicted growth in the company's petfood business, according to a report by The Washington Post.
Del Monte recently lowered its sales outlook to 2% - 4%, from 3% - 4%. But despite the economy, the company expects to see the most growth in its pet business, according to Wolford.
"People always feel very special about their pets," said Wolford. "They treat them better than their children; our survey will actually show they are more willing to cut back on their children then they are their pets in a tough time."

Spending increasing in Latin America petfood, pet care market

Latin Americans are spending more money on products and services for their pets despite the poor economy, according to an online article from The Independent.
A July 15 report from Euromonitor International indicated that Latin American and Caribbean pet owners are spending more money than previously on pet care goods and services, such as petfood, toys, fashion accessories, health care and grooming. This trend spreading in Latin America is driven by Americans, who treat their pets like children, and the "pet parents" who believe that animals have equal or almost equal rights to people, according to the report.
Euromonitor statistics reported spending on petfood and pet care products increased dramatically across Argentina and Chile from 2004 through 2009. In Argentina, spending increased from US$0.2 billion in 2004 to US$0.6 billion in 2009, and in Chile spending increased from US$0.3 billion to US$0.5 billion in the same period.

Japanese pet population increases, petfood ads decrease

In 2009, the Japan pet population grew to 13.6 million dogs and 11.3 million cats, a 9 and 29% increase respectively from 2004, according to the Japan Pet Food Association. But while the number of Japanese pets continues to rise, ATL advertising has decreased in the country.
Last year, Master Foods Japan spent one-tenth of what it spent a decade earlier on advertising, according to in-house data from McCann Erickson Japan.
Ichiro Hata, group account director at McCann Erickson Osaka, told Haymarket Media Limited the reason for the drop.
“After the [March 2004 recall of Pedigree dog food], the consumer psychology changed,” said Hata. “Makers of mid-quality petfood … cut back on advertising. Sales of petfood shifted toward the premium and low ends.”

UK sees increased gourmet, seasonal sales

UK petfood manufacturers reported an increase in demand for their gourmet food ranges as well as seeing a seasonal surge in purchases of special snack treats for animals, according to Financial Times.
“The number of people buying products such as our gourmet cat food … increases by 13-16% during December and January,” said Andrew Harding, director of market development at Nestlé Purina.
The demand for seasonal novelty items extends to pet owners with some pet stores reporting a 30-50% increase in sales during the holidays.

Purina introduces new treat for cats

Purina has recently launched its Fancy Feast Appetizers for cats, according to a news report. Purina claims it took a team of 40 about three-and-a-half years to develop a cat food and introduce it to the US$17 billion US petfood industry. The company is launching a national ad campaign beginning next month to market the product as a premium brand.
In early 2007, Purina hosted a focus group in St. Louis, to identify what consumers wanted for their cats. That was when the idea of an appetizer came up. The company then worked on packaging prototypes and eight varieties of appetizers, including "tender Tongol tuna," "white meat chicken" and "steamed Tilapia."
Despite the recession, petfood sales registered 5.5% growth last year compared with 2007, according to Packaged Facts. The US pet cat population grew to an estimated 83 million last year.

People less likely to switch pet brands

A recent poll by ICOM found 59% of people surveyed switched from national brands to private labels for food and household products in the last six months.
However, only 23% of people surveyed switched from national brands to private labels for pet care products, suggesting there is still a lack of trust in private label goods for specific product categories, according to an article from The Retail Bulletin.
Pet owners cannot test the pet products themselves and therefore are uncertain of its quality and less likely to switch from a brand they trust, according to Aldi UK boss Paul Foley.

Research: Summer best for pet industry

The Yellow Pages Association's research shows summer as the best time for the pet industry as its "Pet Supplies & Foods" heading sees peak usage in August, according to a press release from the association.
The heading sees about 23 million references annually. The consumers searching for petfood (22%) were usually looking for specialty dog food, such as biscuits or bones with no meat by-products.
"A good rule of thumb is any trend in human foods will be reflected fairly quickly in petfoods, such as natural options and vitamin supplements," said Bob Vetere, president of American Pet Products Association.