KEY TRENDS AND DEVELOPMENTS IN GLOBAL PET CARE
ZOOMARK CONFERENCE 11 MAY 2017 LEONARDO BULGARELLI FREITAS, SENIOR RESEARCH ANALYST
EUROMONITOR INTERNATIONAL THE PET MARKET AROUND THE WORLD PET CARE IN EUROPE: AN OVERVIEW HUMANISATION AND VALUE ADDING NEW HORIZONS
EUROMONITOR INTERNATIONAL
Euromonitor International - strategic global market intelligence
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EUROMONITOR INTERNATIONAL
The structure of Euromonitor’s pet care research
Pet Care Pet Products
Pet Food
Dog Food
Cat Food
Other Pet Food
Bird Food
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Cat Litter
Small Mammal /Reptile
Fish Food
Pet Dietary Supplements
Pet Healthcare
Other Pet Products
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EUROMONITOR INTERNATIONAL
Pet care exclusions
Services
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Prescription Products
Live Animals
Insurance
EUROMONITOR INTERNATIONAL THE PET MARKET AROUND THE WORLD PET CARE IN EUROPE: AN OVERVIEW HUMANISATION AND VALUE ADDING NEW HORIZONS
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THE PET MARKET AROUND THE WORLD
Small industry, healthy performance
USD104 bn 2016 Global pet care value sales
<1% 2016 Pet care share of consumer expenditure on non-durable goods
3% 2011-2016 Value CAGR at constant 2016 prices © Euromonitor International
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THE PET MARKET AROUND THE WORLD
North America remains leader in value sales…
Eastern Europe
Western Europe North America
Asia Pacific
Latin America
USD104 bn 2016 Global pet care value sales
MEA Australasia
value retail sales (2015)
Global Pet Care retail value sales in 2016
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THE PET MARKET AROUND THE WORLD
Sales per capita differ markedly 2016 Pet care sales per capita USD
57
131
14 Western Europe
Eastern Europe
2 Asia Pacific
North America
103 1 16
value retail sales (2015)
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Latin America
MEA Australasia
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THE PET MARKET AROUND THE WORLD
USD million
(at constant 2016 prices, fxed 2016 exchange rates)
...but substantial growth stems from developing markets 6,000
Pet Care Value Sales by Region 2011-2016
6%
5,000
5%
4,000
4%
3,000
3%
2,000
2%
1,000
1%
0
0%
Actuals growth © Euromonitor International
CAGR
THE PET MARKET AROUND THE WORLD
Emerging markets in 2021
• 4.5% of real GDP growth vs 3.3% in the world
• 86% of global population
• Increasing access to products that were previously inaccessible due to high unit prices
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EUROMONITOR INTERNATIONAL THE PET MARKET AROUND THE WORLD PET CARE IN EUROPE: AN OVERVIEW HUMANISATION AND VALUE ADDING NEW HORIZONS
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PET CARE IN EUROPE: AN OVERVIEW
Europe has a high representation in global pet care sales Eastern Europe
Western Europe
EUR30 bn 2016 pet care value sales
Eastern Europe 7,000 tonnes of pet food sold in 2016
value retail sales (2015)
Western Europe 0
50
Dogs per 1000 capita
100
150
Cats per 1000 capita Global Pet Care retail value sales in 2016
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PET CARE IN EUROPE: AN OVERVIEW
Flat volume increase for Western Europe, Eastern Europe driving growth 8000
Total Volume Sales of Pet food in Europe 20112016
7000 6000
Eastern Europe • 18% of total • 2.3% vol
5000
CAGR 2011-2016
4000 3000
Western Europe
2000 1000 0 2011
2012
2013
2014
2015
2016
• 82% of total • 0.0% vol
CAGR 2011-2016
Western Europe
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Eastern Europe
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PET CARE IN EUROPE: AN OVERVIEW
Category relevance in pet care Western vs Eastern Europe Pet Care Value Sales by Category by Region 2016 100%
9 27
25
Pet products
75%
26 50%
54
Other pet food
35 Cat food
25%
0%
44
World
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Western EuropeEastern Europe
Dog food
PET CARE IN EUROPE: AN OVERVIEW
Opportunities exist, despite Russian crisis Growth in Disposable Income per Household 2011-2016 Value growth (at constant 2016 prices)
30% 25%
20% 15% 10%
5% 0% -5%
-10% Š Euromonitor International
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PET CARE IN EUROPE: AN OVERVIEW
Slow shifts leading to... 20%
Age at First Marriage 2011/2016
Share of Population Aged 65+ 2011-2016 31
18%
30
16%
29
14% 12%
28
10% 8%
27
6%
26
4%
25
2% 0%
24 Women
Eastern Europe © Euromonitor International
Western Europe
2011
Men
2016
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PET CARE IN EUROPE: AN OVERVIEW
…pet ownership and processed food penetration WE vs EE Western Europe
Eastern Europe
30%
35%
Households own a dog
Households own a dog
23%
43%
Households own a cat
Households own a cat
40% Of dog food comes from table scraps
42% Of cat food comes from table scraps
© Euromonitor International
75% Of dog food comes from table scraps
73% Of cat food comes from table scraps
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PET CARE IN EUROPE: AN OVERVIEW
Increases in prepared food in EE are indicator of more mature market Share of Prepared Cat Food 2011/2016
Share of Prepared Dog Food 2011/2016
Ukraine
Ukraine
Slovakia
Slovakia
Russia
Russia
Romania
Romania
Poland
Poland
Hungary
Hungary
Czech Republic
Czech Republic
Bulgaria
Bulgaria
-15%
5%
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25%
45%
2016 2011
PET CARE IN EUROPE: AN OVERVIEW
Consumer education is strong driver
Cats cannot resist our Whiskas food. Each meal is carefully balanced and contains all necessary nutrients, vitamins and minerals. Besides, they are tasty!
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PET CARE IN EUROPE: AN OVERVIEW
EUR million (at constant 2016 prices, fxed 2016 exchange rates)
Opportunities exist across all price bands in Eastern Europe
1,800
Dog and Cat Food Value Sales by Price Band in Eastern Europe 2016 and CAGR 2011-2016
1,600
7% 6%
1,400 5%
1,200 1,000
4%
800
3%
600
2%
400 1%
200 0
0% Economy
Mid-Priced 2016 sales
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2011-2016 CAGR
Premium
PET CARE IN EUROPE: AN OVERVIEW
Social media brand-consumer interaction in the UK as a brand strategy
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PET CARE IN EUROPE: AN OVERVIEW
(at constant 2016 prices, fxed 2016 exchange rates)
EUR million
Market maturity in Western Europe continues to push trading-up Dog and Cat Food Value Sales by Price Band in Western Europe 2016 and CAGR 2011-2016 8,000
4%
7,000
4%
6,000
3%
5,000
3%
4,000
2%
3,000
2%
2,000
1%
1,000
1%
0
0% Economy
Mid-Priced 2016 sales
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2011-2016 CAGR
Premium
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PET CARE IN EUROPE: AN OVERVIEW
Dog and cat treats: Most dynamic over historic and forecast periods
point of interaction between human and pet Focus on innovation and variety products are perceived as indulgence Better margins
Opportunities for seasonal products
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PET CARE IN EUROPE: AN OVERVIEW
Bigger outlets maintain larger contribution in WE, with EE market more fragmented Importance of Distribution Channels by Region 2016
Grocery Retailers
Western Europe
Pet superstores Pet shops Internet Retailing
Eastern Europe
Veterinary clinics Others
0% Š Euromonitor International
20%
40%
60%
80%
100%
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PET CARE IN EUROPE: AN OVERVIEW
Internet retailing and pet superstores to gain relevance in both WE and EE Internet retailing Veterinary clinics Pet shops Pet superstores Grocery retailers 0%
10%
20%
2011
30%
40%
50%
60%
2016
Internet retailing
Veterinary clinics Pet shops Pet superstores Grocery retailers
0% Š Euromonitor International
10%
20% 2011
30% 2016
40%
50%
60%
PET CARE IN EUROPE: AN OVERVIEW
Basic strategies in European pet care
Consumer education on prepared food Understand demographics Advertise to the right group Understand retailing dynamics
Multi price tier on EE vs premium on WE Š Euromonitor International
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EUROMONITOR INTERNATIONAL THE PET MARKET AROUND THE WORLD PET CARE IN EUROPE: AN OVERVIEW HUMANISATION AND VALUE ADDING NEW HORIZONS
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HUMANISATION AND VALUE ADDING
Humanisation is the main driver for premiumisation
Humanisation
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Premiumisation
HUMANISATION AND VALUE ADDING
Be aware of human food trends
Pet humanisation leads to a convergence of trends
The “natural” trend is spilling over from health and wellness human food
human food trends trends being mirrored in pet food
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HUMANISATION AND VALUE ADDING
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Immitating human dishes
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Sources: https://www.purina.co.uk/; https://www.whiskas.co.uk/
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HUMANISATION AND VALUE ADDING
Key trend: Natural food for pets - are owners going back to basics? Health and wellness food for pets
Processed dog food with fruits: Nestlé Purina Revena Grain-free processed food: Taste of the Wild Natural frozen/canned dog and cat food: James
Wellbeloved
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HUMANISATION AND VALUE ADDING
Immitating human sweet and savoury snacks
Tom&Co Snac’o Olijf by Aniserco SA/NV
Hugo & Celine by Hugo & Celine AB
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Sources: https://catalogue.tomandco.be; http://www.hugoandceline.com
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HUMANISATION AND VALUE ADDING
Exploring texture in cat food
Texture claim
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HUMANISATION AND VALUE ADDING
Cognitive/Stimulating toys are also on the rise Trixie dog activity flip board
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Source: www.amazon.co.uk
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HUMANISATION AND VALUE ADDING
Main humanisation factors
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Human health and wellness trends
Increased time for interaction between humans and pets
Income increase and demographic factors
More access to information regarding products and advertising
EUROMONITOR INTERNATIONAL THE PET MARKET AROUND THE WORLD PET CARE IN EUROPE: AN OVERVIEW HUMANISATION AND VALUE ADDING NEW HORIZONS
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NEW HORIZONS
Pet care in Europe sees good opportunities if threats are kept at bay
Strengths Strong WE standing of premium food Innovative retail strategies
Weaknesses Ethical or animal welfare
Opportunities Pet parents’ increased expenditure Human food concerns
Threats Internet retailing - being left behind! Not exploring the right niche
© Euromonitor International
Limited distribution network in EE
NEW HORIZONS
How can small players tackle the challenge of competing with big competitors? Leverage the fact (and marketing message) that smaller players can cater to
consumers in certain niches more effectively than big competitors Creative approaches to products or distribution Manufacturers and pet shops can benefit from a virtuous circle if they support each
other
© Euromonitor International
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THANK YOU FOR LISTENING Leonardo Bulgarelli Freitas Senior Research Analyst (Food and Nutrition - Western Europe) leonardo.freitas@euromonitor.com
Š Euromonitor International