A Brave New World 2017PFMA ANNUAL REPORT & BREXIT MANIFESTO

6th Floor, 10 Bloomsbury WayLondon, WC1A 2SL

T 020 7379 9009E info@pfma.org.uk

www.pfma.org.uk

Chairman’s Welcome 03

Brexit Manifesto 05

Chief Executive’s 2016 Highlights 08

Membership Benefits 10

Secretariat 12

Educational Tools and Resources 13

Pet Population and Industry Data 14

PFMA Members 16

Mission Statement 16

Contents

Welcome to the PFMA Brexit Manifesto and Annual report 2017. I complete my firstyear as Chairman at a very interesting time, in particular with the fallout from thereferendum to leave the EU. This will have enormous consequences for the UKeconomy which are, of course, almost impossible to predict, given that eventsaffecting the final outcome ebb and flow on an almost daily basis.

Chairman’s Welcome

02 03

With respect to our own pet food industry, we engaged our members at an early stageto understand not only their concerns but also the opportunities they wanted us todeliver on. Not surprisingly those key areas are:

• Protect and grow a strong agricultural sector to supply high quality raw materials• Retain high animal welfare legislation (for both farm and companion animals)• Ensure robust safety regulations for raw material and finished products• Protect the ability to trade openly with the rest of Europe through retaining

regulatory convergence with the EU • Recognise that flexibility to shape domestic legislation could also be positive• Create opportunities to improve trade conditions with the rest of the world, which

we need to be in a position to seize

We share our outlook on these priorities and opportunities with you in our newlylaunched PFMA Brexit Manifesto: A Brave New World (page 05). We recognise that toachieve our goals we cannot act alone. Collaboration on issues where we havecommonality of interests is critical and I am delighted to see organisations workingtogether as never before, and we at PFMA are highly pro-active in this key area. I reallysee the potential for this engagement going beyond Brexit and shaping discourse wellinto the future, to our mutual benefit.

Finally, I must add that ‘business as usual’ is also important for our members. Thefundamentals of a strong and vibrant pet food sector have not disappeared, and givingour members the support to help them achieve their goals is what PFMA will continueto focus on alongside the Brexit work. In our Annual Report we are pleased to sharewhat we have delivered for our members and the broader pet care sector in 2016.

In this respect, I would like to thank all member companies that have providedresource and support to the PFMA committees, the Executive Committee for providinga robust and challenging steer and the PFMA Secretariat for their continued andunstinted efforts. Without all this work, I have no doubt the industry would not be sostrong.

May I wish you a successful 2017 and I look forward to working with you as we embarkon this new journey.

Peter KershWorld Feeds

Introduction

The Pet Food Manufacturers’ Association (PFMA) is the leading trade body for the UKpet food industry. Our 76 members account for over 90% of the UK market with anindustry value of £3bn, serving over 12m households with pets. We are members ofFEDIAF, the EU representative of the pet food industry, which has a market value of€15bn across Europe. As well as feeding our nation’s pets, the sector adds valueacross the supply chain, in particular using by-products from the human food industrythat would otherwise go to waste and, by doing so, provides value for UK farmers. Werely heavily on the agricultural supply chain, hence any changes in the UK agriculturalsystem or access to agricultural raw materials from outside the UK are of key interest.

The decision taken by the UK electorate in June 2016 to leave the EU has profoundimplications for our Association’s members. Since the UK’s accession to what wasthen the European Economic Community some forty years ago, businesses haveoperated under the rules, regulations and trading patterns agreed in that forum. Fewhave experience outside that system.

Involvement

Uncertainty is the enemy of our business; it lowers confidence levels and risks curbinggrowth and innovation in the UK. As negotiations commence following the triggeringof Article 50, PFMA will engage in discussions at all levels to inform Government ofissues that will affect our members’ interests and business operations.

The pet food industry holds a unique place within the food and feed sector. Whilst weare governed by the same high safety rules covering the feed industry, at the sametime our consumers are those who shop in the general retail environment. Thispresents unique challenges which means we need to be consulted closely as thenegotiations proceed to ensure we are considered.

Data sourced from PFMA and FEDIAF

04 05

SustainabilityWe are proud of our contribution to sustainability in theagri-food sector. Pet food companies utilise those partsof the animal surplus to the requirements of the humanfood chain (around 600,000 tonnes in 2016). This givesvalue to farmers who would otherwise have to disposeof that high quality material. Similarly, right at the otherend of the life cycle only 0.7% of pet food is thrown awayby consumers. Compare this to an average 30% of allother food purchased being thrown away.(source WRAP reports)

Safety StandardsIn the UK we have some of the highest animal healthand product safety standards in the world. This isunderpinned by stringent legislation on what rawmaterials we can use and how pet food ismanufactured. It also relies on supervision by officialvets and meat hygiene inspectors, as well assafeguards to handle any disease outbreaks. On top ofthis we have developed a complex set of guidelinesthrough our European association, Fediaf, whichensures our members follow best practice to meet, andeven go beyond, the strict regulation. We must ensurethese standards and high animal health levels remainas strong as ever, not only to satisfy our UK customersbut to ensure UK pet food remains highly regardedwhen we trade globally.

Animal welfareThe pet food sector is in a unique positon when it comesto animal welfare. We are not only keen to ensure thehighest welfare of our pets, through providing the bestpossible nutrition, we also support livestock having thebest possible life as well as end of life. Maintaining highlevels of farm animal welfare post-Brexit is critical. Thisis a cost to farmers that must not be undermined byimporting products from markets which operate underlower welfare standards.

Non-tariff barriersMuch of the discussion on future trading arrangementswith the EU focuses on the impact of tariffs. For the petfood sector, it is the impact of non-tariff barriers whichis likely to be more critical.These include the requirementfor Export Health Certificates (signed by official vets), therequirement to prove the origin of the raw material usedin pet food, the need for veterinary inspection at theborder. All of these will take time, add cost, and requiresufficient numbers of qualified vets.

90%of the UK market isaccounted for by our

members

12 millionUK households have pets

54milliontotal pet population

44%of UK households have

at least one pet

76 members90% are SMEsSupport over 5,000 jobs

PFMA members currentlyaccess 500m consumers in theEU single market (75m pet

owners)

€15bnEuropean market worth

£3bnUK market worth

PFMA Brexit ManifestoA Brave New World

Key Issues

Resolution to the question of overseasvets remaining in the UK is urgent.Approximately 85% of official state vetscarrying out official controls in approvedmeat establishments are from other EUcountries and up to 30% of all vets comefrom the EU. Without their continuedpresence, the safety and welfarestandards, which underpin our industry,are under serious threat.

Dialogue between Government, businessand farming sectors to ensure stabilityalong the supply chain during negotiations.

A clear indication of the Government’sintentions with regard to market access,both EU and non-EU. Clarity on thefuture functioning of cross-borderarrangements which is of particularimportance to our industry.

A clear message that the UK continues towelcome workers from EU Member Statesunder current “Freedom of Movement”provisions and will continue to do so atleast until the Article 50 negotiations areconcluded.

We will need to consider whether toimplement new legislation currentlyunder negotiation but not yet in force.

To protect our already strong feed safetyand animal welfare standards

To resist opening our domestic marketto imports which do not have equivalentstandards.

FUTURE

WE NEED…

NOW

Strengthen UK agricultural policy toensure a reliable and sustainable sourceof raw materials. This includesacknowledging farmers’ key role inensuring high welfare and safetystandards

Avoidance of barriers to trade, both tariffand non-tariff. In a highly competitiveindustry, any on-costs as a result ofincreased bureaucracy and delays toshipments are potentially damaging.

Strong assistance from relevantGovernment Departments to supportindustry accessing new markets, forinstance through organizing trademissions or providing training on newrules and systems.

We must maintain flexibility to employthe best qualified people, whatever theirorigin, as part of the competitive edgethat will maintain our success indomestic and international markets.

Maintain the present regulatory regimein line with EU rules. The package ofdetailed legislation to be reviewed oncethe UK’s new position in the worldbecomes clearer.

06 07

PFMA members are proud of the highanimal health and welfare and feedstandards we have in the UK. Much of thisis based on EU legislation.

PFMA members source more than 80%of their raw materials from the UK. Wewant this to continue.

PFMA members import raw materials,as well as importing and exportingfinished product. All this will besignificantly impacted by changes totrade relations. Of particular concern isthe impact on some of our members withmanufacturing plants in NorthernIreland who currently enjoy (and wish toretain) free access to the Republic ofIreland.

Access to people and skills is asimportant as access to materials andmarkets.

95%of members support currentraw material & product

safety rules

ANIMAL HEALTH & WELFARE RAW MATERIAL SUPPLIES MARKET ACCESS WORKFORCEREGULATORY REGIME

90%of members want a strong UKagriculture sector to supply

their raw materials

73%of members want us to focusour resources on market

access in future

40%of members see access tolabour and skills as a riskover the next 12 months

74%of members want to maintainlegislation aligned to the EU

for ease of trade

PFMA BrexitManifestoOur Priorities

PFMA members have worked intenselywith EU partners to establish rules andregulations which underpin the SingleMarket and have facilitated trade.

The UK vote to leave the EU last June has not changed our role and it is vital ourusual activities of supporting the membership, promoting the sector and educatingon pet food nutrition continues. In this latest edition of our Annual Report wehighlight what we have delivered to our Members in 2016 and how we have supportedthose in the broader field of animal health and nutrition.

PFMA Annual ReportChief Executive’s Highlights

(from 70 to 76 members in March 2017)

Winner!

Winner of ‘Best Digital Campaign’ at the Trade Association Forum Awards for our ‘Truthabout Pet Food’ campaign. A campaign to educate on pet food production and pet nutrition.

Companion AnimalNutrition Conference

Teaming up with one of UK’s leadingcolleges – Moulton College – to co-hostour first ‘Companion Animal NutritionConference’ which brought togetherresearchers, industry professionals andstudents to discuss the latest science oncompanion animal nutrition. Pets & Aquatics Trade

Show

PFMA ran a of survey of pet retailers atPATS to find out how we can supportretailers on nutrition education.

A brand-new office forPFMA

Along with FDF, the team moved fromCatherine Street in Covent Garden toBloomsbury Way; a modern open planmeeting space with better networkingopportunities

London Vet Show Seminar

For the second year running, hosting aseminar at London Vet Show entitled:‘Humanisation of pets: part of the familybut not at the table’. PFMA was joined byleading small animal veterinarynutritionists Dr. Marge Chandler and Dr.Cecilia Villaverde.

8%membershipincrease

Companion Animal Nutr i t ionConference

2016 2017Branded media coveragereaching over 21 millionand worth over £1.15million.

This 44% value increase on the previousyear firmly establishes PFMA as thevoice on pet food nutrition.

Whilst Brexit is an important new part of our workprogramme, we have other exciting initiatives in storefor 2017 and we share a taster of this below.

European Society ofVeterinary ComparativeNutrition AnnualConference

The 21st ESVCN Congress will be held inCirencester, UK, from 20-23 September.The event will showcase the latestresearch in animal nutrition withdelegates participating from across thenutrition discipline. PFMA will be runninga seminar and networking session withthe title of Pet Food Exposed; Behind theScenes of Pet Food Industry on the 23rdlooking at the hottest topics in pet food.More info: www.rau.ac.uk/esvcn2017

Raw Guidelines to belaunched

Sector specific guidelines for PFMAmembers who manufacture raw pet food.

London Vet Show

Visit our stand at London Vet Show from16-17 November and hear the latestfrom the voice of the industry.

Canine Feline Sector Group

Working with the Canine Feline SectorGroup (CFSG) to develop a robust systemfor data collection to help with strategicplanning on animal welfare issues.

Developing education

Extending our nutrition educationoffering to vets through digital learning(to include webinars and more).

Developing more tailored educationresources for pet retailers.

Visiting UK vet schools to participate in petfood nutrition seminars and education.

We look forward to working with you in 2017.

Michael BellinghamPFMA

European Pet FoodFederation (FEDIAF) AGMPFMA is hosting the AGM of the EuropeanPet Food Federation (FEDIAF) in Manchesterfrom 01–02 June with a highly relevanttheme – ‘A global pet food industry united’.All members are encouraged to attend.

Educational Material

Increasing our offering of educational material to 13 pet food fact sheets, threenutrition posters and five Pet Size-O-Meters, which are all available free to downloadfrom our website.

08 09

Membership Benefits PFMA strives to represent its members by promoting the good nutrition of pet foodproducts. Knowledge is shared online, via committee meetings, in topic papers andtailored articles for trade and hobby press. PFMA also lobbies government on issuesand monitors the wider media environment. Our recent member survey askedmembers to prioritise why they were members of PFMA.

85%are members because PFMA isa valuable information resource

79%are members because PFMAgives credibility to the industry

76%value PFMA for networkingopportunities

74%look to PFMA for lobbyinginfluence

dedicated onlineportal for members

annual pet foodmarket report

newly launchedBrexit Newsletter

35working groupmeetings

400+member queriesanswered

49editions of petthemed ‘Your News’for members

annual petpopulation report

10new pet foodfactsheets

2media trainingworkshops

10dedicated workinggroups & committees

online shop for allPFMA educationalleaflets andfactsheets

Information Resource

Information Resource Credibility Networking Lobbying

dedicated Brexittask force MP lunch 39

meetings withgovernment bodies

member of AllParliamentaryGroup for AnimalWelfare

member of theCanine FelineSector Group

member of FEDIAF(the European petfood federation)

Lobbying

annual convention& AGM

190PFMA brandedmedia mentions

19pet food articlesproduced for tradeand hobby press

attendance atinternationalscience symposium

5training sessions and workshops(LVS, BVNA Congress, Glasgow University PetFood Seminar, Moulton College, PATS)

Networking and Credibility

10 11

PFMA Secretariat Education

PFMA works hard to ensure pet owners and those at the front line of pet care haveall the information they need to make diet related decisions. Obesity remains aconcern and we are active in developing and promoting tools to help professionals’access information on good pet nutrition and healthy feeding.

In order to promote good pet nutrition, PFMA has organized events or presence atnumerous conferences and seminars including:• Moulton College, June 2016 • PATS, September 2016• BVNA Congress, October 2016 • LVS, November 2016• Glasgow University Pet Food Seminar

At these events and through our media work, we promote our evolving range of petnutrition resources. All these tools are downloadable from pfma.org.uk/resources-and-downloads. This advice from the voice of the industry has proven very popularwith over 5800 page views since its launch six months ago .

Education is an important element of what we do as today’s pet owner is keen to bewell informed about the diet they provide for their pet.

NICOLE PALEYCommunications ManagerNicole joined the PFMA in 2003 andmanages the PFMA communicationsactivity overseeing both internal andexternal communications. Nicole alsoruns the PFMA Press Office and is anindustry spokesperson. Beyond the UK,Nicole sits on the CommunicationsWorking Group of the European Pet FoodFederation and participates in thecommunications discussions of theGlobal Pet Food Alliance, GAPFA.

SARAH HORMOZIScience and Education ManagerSarah joined PFMA in 2011 and runs anumber of PFMA Committees andWorking Groups including Veterinary &Nutrition Committee, Bird and SmallAnimal Working Groups. Part of her role isto keep abreast of developments in areassuch as veterinary medicine/science andanimal nutrition. Collaboration withgovernment and other trade associationson technical issues and providing advice tomembers also form an important part ofher role.

LANA MORGANRegulatory Affairs ManagerHaving joined PFMA in 2009, Lana isresponsible for dealing with allregulatory issues, acting as anintermediary between government andthe industry, and providing advice tomembers.

LYNN INSALLLynn joined PFMA as a consultant at theend of January and is covering aspects ofLana's regulatory work during hermaternity leave. Lynn spent twenty yearsin regulatory affairs with FDF and hassubstantial experience in Europeanlegislation. She is also supportingMichael on Brexit issues.

We are active in developingand promoting tools to helpprofessionals’ accessinformation on good petnutrition and healthy feeding

12 13

MICHAEL BELLINGHAMChief ExecutiveMichael joined PFMA in 2004. Before thathe worked in both retail and food tradeassociations in the UK. In 2000 he movedto Brussels to run a European cerealsassociation which focused oninternational trade issues. As well aslooking after the Executive Committee,which has financial and strategicoversight of PFMA, Michael also runs theFish and Raw Pet Food Groups. He isChairman of National Pet Month, acharity which PFMA supports whichpromotes positive messages on the bondbetween pets and humans.

Fact Sheets13 subjects and still expanding… from responsible raw andhomemade diets to additives and protein. Top three fact sheetsare currently Raw Feeding (1350 views), Puppy Nutrition (1114views) and Labelling (832 views)

Weight Management Tools• Pet Size-O-Meters for dogs, cats, rabbits, guinea pigs and

birds are still incredibly popular with over 8000 views this year.• Food Diary, Weight Log and Posters about pets and human leftovers• Adult Dog and Cat Calorie calculators

1350 1114 832

Online caloriecalculator

15-20 million fish kept in tanks

15-20 million fish kept in ponds

8.5 million dogs

8 million cats

12 millionhouseholds have pets

54 milliontotal pet population

900,000 rabbits

700,000 caged birds

700,000 reptiles

600,000 domestic fowl

500,000 Guinea Pigs

300,000 hamsters

300,000 horses as pets

£1.35bn £1.1bn £200m

£68m £69m £20m

TOTAL£2.8bn

15-20 million fish k anks ept in t15-20 million fish k

15-20 million fish k

8.5 million dogs

ept in ponds15-20 million fish k

ats8 million c

abbits900,000 r

al pet populationott54 millionhouseholds hav

2 million1

al pet population54 million

e petshouseholds hav2 million

ds aged bir700,000 c

es eptil700,000 r

ds

bn£2.8LATOTTA

tic f600,000 domes

500,000 Guinea Pigs

sert300,000 hams

wlotic f

500,000 Guinea Pigs

35bn£1.

£68m

bn£1.1

£69m

£200m

£20msert300,000 hams

ses as pets300,000 horses as pets

Pet and Industry DataEvery year PFMA gathers Pet Food Market Data and commissions Pet PopulationResearch. Here is a snapshot of our findings and more detail can be viewed in our

‘Pet Data Report’.

Veterinary Professional Research

PET FOOD MARKET DATAPFMA is the principal trade body representing the UK pet foodindustry. Our 76 member companies account for over 90% of theUK market.

PET FOOD POPULATION DATA

89%agree that commerciallyprepared pet food providesoptimum nutrition when fedcorrectly

97%agree that pets are livinghealthier lives and advancednutrition played a key role

79%think vet students wouldbenefit from more pet nutritionteaching

PFMA has a presence at the London Vet Show every year and surveys veterinaryprofessionals on pets’ health and nutrition. Our aim is to get an up-to-date pictureof the state of pets’ health, introducing our latest educational material and raisingawareness of the industry representatives (PFMA and FEDIAF) to veterinaryprofessionals.

PERCENTAGE OF OVERWEIGHT PETS ACCORDING TO VETS

Vets believe that 49% of dogs, 44% cats, 32% small mammals and 11% birds are obese

Awareness of PFMA has grown among vets from 16% in 2012 to 35% in 2016

14 15

Mission Statement

PFMA Members

PFMA aims to create a credible and responsible industry by placing pets at the centreof everything we do. While striving to achieve a balanced regulatory environment forthe production of nutritious and safe food, PFMA also encourages responsible petownership, working in partnership with relevant pet bodies. It aims to be the mainresource for its members, the public and others, as well as playing a lead role informing opinions in Europe through the European Pet Food Federation (FEDIAF).

Alba Protein AlltechArden Grange Pet FoodsBeapharBenyfit natural pet food Billy and Margot Bob MartinBurgess Pet Care Burns Pet Nutrition Butcher's Pet CareC&D FoodsCaledonian Cambrian Pet Foods Cotswold RawCountryside ProductsCrown Pet FoodsDevenish NutritionDietex InternationalDodson and HorrellDSM DuPont N&HDurham Animal Feeds Eden Holistic Pet FoodsFeedwell Animal FoodsFish4DogsFold Hill Foods (inc Pointer)

GA Pet Food PartnersGel SystemsGladwell & Sons Grove Pet FoodsHappy Pet Products Henry Bell and CoHill's Pet NutritionHoney's Real Dog FoodInspired Pet Nutrition InterpetJohn Pointon & SonsJohnsons Vet ProdsJohnston & Jeff Lily's KitchenMarches NaturalMarriage’s Specialist FoodsMars Petcare Millies WolfheartMPM ProductsNatural InstinctNatural VetcareNatures Menu Nestle Purina PetCareNutriment Oscar Pet FoodsPacific Proteins

Pedigree Wholesale Pet Food UK Pets ChoicePremier Pet NutritionPro-petProvimi Rolf C HagenRegency FeedsRettenmaier (JRS)Roger SkinnerRSPB TradingSarvalSpectrum BrandsSuffolk GroupSupreme Pet FoodsThompson and CapperTown & Country PetfoodsTPMS Animal FeedsTrouw Nutrition GBUnited Fish Industries Wafcol Westland HorticultureWolf TuckerWorld Feeds

REPRESENTING

90%of UK Pet Food Market