Acquisition of Big Heart Pet Brands pays off for Smucker’s

The J.M. Smucker Co. reported a 47% increase in sales, or US$628.2 million, in the first quarter, after its acquisition of Big Heart Pet Brands.
The company announced a record $1.95 billion in sales for the first quarter of its 2016 fiscal year. Operating income rose 39 percent, to $267.1 million, and diluted net income per common share stayed at $1.14. Its stock price jumped $8 a share, to $117.21.
In February 2015, Smucker's announced that it would acquire Big Heart Pet Brands for US$5.8 billion, including US$2.6 billion of net debt. The purchase marked Smucker's entrance into the petfood and snacks category and expands its overall presence in consumer packaged goods. Smucker's acquired brands including Meow Mix, Milk-Bone, Kibbles 'n Bits, 9Lives, Natural Balance, Pup-Peroni, Gravy Train, Nature's Recipe, Canine Carry Outs and Milo's Kitchen.
'We are off to a solid start this fiscal year,' Chief Executive Richard Smucker said in a written statement. 'Contributions from the Big Heart acquisition and new products were key drivers of this performance.'
'Overall, we are on track to achieve our full year expectations for net sales and earnings, and are confident about the initiatives we have in place to support future growth,' he said. 

Pet industry spending more than US$58 billion in 2014

Overall spending in the pet industry for 2014 exceeded US$58 billion, according to the annual comprehensive report from the American Pet Products Association (APPA).

“The pet industry continues to outpace most other retail segments and for 2015 we are projecting to surpass the $60 billion mark which demonstrates the strength and vitality of this industry,” said Bob Vetere, APPA president and CEO.
Pet services, which includes grooming, boarding, walking, training, daycare and spa services for pets, saw the largest growth again this year and exceeded expectations at close to 10%.  It is expected to grow another 8% this year.  Second only to pet services growth is veterinary care spending, at just under 5% growth from 2013.  Even though visits to the vet have been flat to down recently, expenditures per visit continue to go up as more expensive procedures grow in popularity. As in years past, veterinary care spending is the second highest spending segment in the pet industry, and is expected to grow another 4.6% to over $15.7 billion in 2015.
The food category is by far the leading source of dollars spent within the industry.  As the pet industry continues to mirror human food and diet trends, pet owners are becoming more aware of the quality and source of food given to their animal companions.  Petfood manufacturers are offering new varieties of food for dietary preferences, medical issues, overall health, and other partialities, and pet owners are paying for these options.
Supplies and OTC medications comes in third both for amount spent on this segment and percentage growth in 2013 from 2014.The supplies categories can include anything from dog and cat beds, bowls, and collars to fish tanks, terrariums, and bird toys.
“Increases in spending are being led by both ends of the pet owning spectrum -- aging baby boomers paying more to provide care for their pets and younger Gen Y owners who prefer the conveniences of high-tech and pampering products and services,” said Vetere.
As for the decline seen in live animal purchases, Vetere says that although they anticipated this, there are only theories explaining why, ranging from a decline in pet types available from shelters or breeders, a growing number of pet sale bans, and longer pet lifespans due to improved health care.

GfK: 10 million US households high-value pet retail targets

GfK analysis has identified over 10 million US households that represent the greatest potential value for pet retailers and manufacturers. Using GfK’s Pet Owner Navigator, manufacturers and sellers in the pet retail marketplace can target their most important potential customers more efficiently in specific geographies—through promotion dollars, shelf-stocking decisions, in-store promotions and other marketing efforts, according to the company.

Pet Owner Navigator divides consumers nationwide into six groups based on their pet attitudes, buying habits and location of residence. The highest-value segment, Privileged Pet, represents 9% of US households, is well educated and has a high likelihood of earning more than US$100,000 annually. Members of this group tend to live in urban and inner suburban areas and prefer to purchase petfood at pet specialty stores; they appreciate the expertise of the store owners and are generally not concerned that the prices may be a bit higher, says the report.
Other groups tracked by Pet Owner Navigator are:

• Waffling Woofers (27% of US households) – not loyal to a particular pet channel
• Bargain Buddies (17%) – driven primarily by price concerns when it comes to pet purchases
• Cyber Sidekicks (11%) – would rather shop for pet products online
• Vets R Us (4%) – visit their veterinarians often and strongly prefer to buy their pet supplies there
• Antipetism (32%) – not likely to own a pet or be buying pet products
GfK’s Retail and Technology team developed Pet Owner Navigator by segmenting extensive data on US consumers. Using this analysis, manufacturers or retailers can allocate marketing funds against the right geographies and stores; distributors can support retailers with the right marketing programs; and marketing and sales professionals can distribute marketing dollars more wisely, says GfK.

Midwestern grocery store seeks pet products made in US

Made in USA Certified has partnered with Daymon Worldwide to create an opportunity for the petfood industry to get products on the shelves of a major Midwestern grocery store in an end cap kiosk dedicated to pet products made in the US.

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This is a branding and distribution opportunity to increase market share and brand awareness. Made in USA Certified is looking for petfood products and treats that are eligible to be displayed in this special rollout in 40 stores across the Midwest.  
To qualify, companies must have the ability to stock the shelves in inventory and be made in the US.
The promo pricing for this initiative expires February 20, 2014, as the retailer deadline to participate is fast approaching with an anticipated rollout March 1.

Blackwood Pet Food, design firm Ideas that Kick to again repackage petfoods

Idea's that Kick previously redesigned the packaging for the Adirondack brand.

Family owned, Ohio, USA-based Blackwood Pet Food has again enlisted the Minnesota, USA-based design consultancy Ideas that Kick for the repackaging of two of its petfood brands, in hopes of expanding the retail network and gaining new market traction.
Kick's packaging system concepts designed for the Adirondack and Makin' Trax brands inspired Blackwood to rethink how it introduced all of its brands to retail partners. The concepts for both brands were designed to appeal to owners who value "outside" time with their pets and appreciate the quality of a food made in the USA.
"The client's previous packaging for Adirondack and Makin' Trax lacked brand equity," explains Kick brand strategist, Mary Kemp. "We delivered lifestyle concepts that will stand out on shelves because they tell real, relevant stories that haven't been over-told in pet retail."
"Pet owners know authentic when they see it," adds Kick creative director, Stefan Hartung. "Our creative concepts for Adirondack and Makin' Trax speak authentically about how many consumers spend time with their pets.. Most mass petfood packaging uses appetite appeal - targeting pet owners - to sell substandard product. Anybody who knows about dog food knows that human appetite appeal isn't what matters. But we all enjoy adventures with our pets. And American-made quality is key in the petfood category."
"We knew that Kick would deliver great designs," says Matt Golladay, Blackwood Pet Food vice president. "We had no way of anticipating they would have us re-visioning how we looked at these brands that have been in our portfolio for years. Now we're able to approach retailers with a tiered offering of premium pet food brands - and we can already tell that retailers are just as excited as we are."

Natural pet food, pet products market to grow 23 percent in 2013

The US market for natural pet products is projected to grow 32 percent in 2013 as retailers devote more shelf space to the expanded natural pet food and pet care product offerings by manufacturers, according to Packaged Facts.
The report, "Natural, Organic and Eco-friendly Pet Products in the US," estimates combined sales of natural pet foods and natural pet care products will grow by 10 percent to 15 percent over the period from 2014-17. Sales are projected to reach US$9.4 billion by 2017, up from an estimated US$4.1 billion in 2012.
Currently, independent pet retailers comprise 72 percent of the natural market and about 75 percent of natural pet food will be sold through the specialty channel. But, according to the report's author, David Lummis, this is expected to change as mass retailers offer more lower-priced natural foods, such as the 2011 launch of Nestlé Purina's Purina One Beyond and the 2012 launch of Pure Balance from Walmart. He said the market for natural pet products is expected to grow by several hundred million dollars alone because Hill's Pet Nutrition announced it will reformulate all its Science Diet pet foods into natural recipes.
“As Science Diet converts to natural and the natural pet food competition heats up even more, it’s also increasingly likely that one of the leading natural brands in the pet specialty channel will make the leap into mass, further blurring the already somewhat tenuous distinction between the natural products sold in the two channels,” said Lummis.
According to Lummis, The Nutro Co. and Blue Buffalo capture a combined 40 percent of sales in the natural petfood market. Market shares of 5 percent to 10 percent are held by four companies: WellPet, Natural Balance Pet Foods Inc., Merrick Pet Care Inc. and Natura Pet Products. The report found that smaller companies, such as Halo, Purely for Pets and Champion Pet foods account for the remaining shares of natural pet food sales. 

Research and Markets offers 'Pet Food Manufacturing' report

Research and Markets added a new "Pet Food Manufacturing" report to its offerings, which found that the US petfood manufacturing industry's nearly 200 companies bring in a combined annual revenue of about US$47 billion.
Major companies noted in the report include divisions of Nestle (Nestle Purina PetCare Company); Procter & Gamble (Iams); Colgate-Palmolive (Science Diet and Prescription Diet); Mars (Pedigree and Whiskas); and Del Monte (9Lives, Gravy Train, Milk-Bone, and Meow Mix). The petfood industry is very competitive and highly concentrated, according to the report, with the eight largest companies accounting for about 85 percent of sales. Major petfood products are dry and canned dog and cat food: Dry dog food accounts for about 45 percent of industry revenue and canned cat food for about 25 percent. 
Other key topics covered in the report include an industry overview, business trends and challenges, industry forecasts and opportunities, and financial information. The full report can be purchased online. 

Online pet food retailers growing popular among US pet owners

With 232.1 million Americans having Internet access at home or at the office, according to Forrester Research, a growing number of online pet food and pet product retailers are popping up in hopes of finding more success among pet owners, according to an article on WSJ.com.
Online pet supply retailers like PetFlow.com, MrChewy.com and Wag.com are among those that have emerged in recent years thanks to changes in Internet commerce, online pet retailers say, as well as reduced marketing costs and consumers' desires for convenience. In fact, it cost an online retailer three to five times as much to launch a decade ago, said Brian Walker, online-commerce analyst for Forrester Research.
So, following the failure of Pets.com, a pet food start-up founded in 1998 that raised US$110 million and went public in 2000 before going out of business shortly after, PetFlow was founded in 2010 after raising US$10 million in venture capital. The company's co-founder, Alex Zhardanovsky, said the company now ships one million pounds of petfood per month, and he expects the company will break even by the second quarter of 2012 with sales of US$30 million, up from US$13 million in 2011. PetFlow also stopped using its third-party storage and distribution warehouse in 2011 because Zhardanovsky said it would be too costly as PetFlow ships greater volumes of pet food. The company instead now leases a 65,000-square-foot facility in Cranbury, New Jersey, USA, and said it also plans to seek another round of venture funding in the next year to continue operations.

PetFlow, Wag, launched in July 2011, and Mr. Chewy, launched in September 2011, all say they differ from Pets.com because they focus on convenience, rather than price, by carrying mostly higher-end, premium dog foodsS that have a higher margin. Traditional retailers like PetSmart Inc. and Walmart have also expanded higher-end offerings online, with estimates that US online sales of pet supplies will reach US$4.8 billion by 2015, up from US$2.5 billion in 2011, according to Forrester.  
"There are going to be some 99-cent cat food, dog food, lower-price-point items that may not make sense for us to carry online," said Ravi Jariwala, Walmart spokesman. "We'll bundle them together, so you might buy a six pack."

Pet product retailer Fressnapf's 2011 sales rise to US$1.7 billion

European pet product retailer Fressnapf's 2011 sales rose by 5.2 percent over 2010 sales, to €1.36 billion (US$1.7 billion), in 11 European countries.
In Germany, Fressnapf's 2011 sales increased 3.4 percent to €913.5 million (US$1.2 billion), which comes after the petfood and accessory retailer opened 23 of its 56 new stores there in 2011. In 10 other countries where Fressnapf trades under the name Maxi Zoo, sales rose 9 percent to €448.9 million (US$587.1 million) in 2011. The company reported its total like-for-like sales were up by slightly more than 1 percent.  

Survey finds American dog care spending unaffected by economy

In honor of National Dog Week from September 19-25, CouponCabin.com conducted an online survey that found nearly seven in 10 (68%) of US adult dog owners said that economic challenges do not affect their dog care spending.

CouponCabin.com’s survey found that more than one in five (21%) dog owners spend an average of US$100 or more per month on their dogs, for a total of more than US$1,200 per year. When asked what they thought was the most expensive aspect of owning a dog, 57% of pet owners said veterinary appointments, 16% said dog food and treats, 25% said prescriptions and medications, and 6% said boarding. The survey also found that 50% of married couples own dogs compared with 34% of single, never married, adults.
“The pet care industry has remained resilient during the past few years, but it’s still important for consumers to budget for their dog’s needs,” said Jackie Warrick, president and chief savings officer at CouponCabin.com. “Pets are often considered a family member, and just as you save money and budget for your family, you should do the same for your dog. Plan ahead to make sure you have money put away for emergencies. In addition, be proactive and save on your dog care expenses by using coupons, buying generic brands, and asking friends and family to walk or watch them.”

Nature's Variety announces consumer pet food referral program

Nature’s Variety announced a referral program,“Transform a Life,” offering rewards to consumers who purchase the company's pet food.
The company said the program will reward consumers who recommend Nature’s Variety to their friends with up to US$5.00 in coupons if their friends sign up and request a free sample of the Prairie dog food line. The program begins on April 26.
“Nature's Variety has a lot of passionate pet parents that support us and spread the word about the transformational results of our food every day,” said Reed Howlett, chief executive of Nature’s Variety. “Our consumers have seen the results of a wholesome, nutritious diet for their own pets and they don’t hesitate to tell their friends. So now it’s our turn to reward our most passionate advocates for doing what they’ve already been doing.”