Pet Care - Trends and Insights across Europe (november 2012)

International PET ConferenceNovember 13 2012, Prague

Pet Care - Trends and Insights across Europe

Tim Eales Director of Strategic InsightSymphonyIRI Group, UK

Copyright © SymphonyIRI Group, 2012. Confidential and Proprietary. 2

AgendaEuropean Economic Overview (SymphonyIRI Topline Report)1.

Do specific trends link Food and Pet Care categories?2.

Pet Care – Insights for the European marketPet Care – Insights for the European market3.

Summary and growth opportunities for the future4.


• A unique crisis where prices are rising faster than earnings

• ‘Consumer Recession’ has started more than a year ago now

• Purchasing power is under pressure due to increasing prices which are impacting volume sales

• Price volatility and inflation are likely to be here to stay and will be the new norm, impacting shoppers behaviour

• The frugal shopper is smarter, buying less and more wisely

• Promotional activity has started to increase in most countries

• Own labels are challenging national brands across Europe

HIGH PRICES

DRIVEN BY PRIVATE LABELS AND PROMOTION

FRUGAL SHOPPER

Key findings


-0,4

0,5

-0,9

-2,8

-0,3

-6,3

-1,6

Netherlands Germany UK Italy France Greece Spain

Source : Eurostat Q2 ’12 – Checked 2nd Oct 2012

Growth rates of GDP in volume (based on non- seasonally adjusted data)

Euro area (17 countries) GDP down by -0.8%

After the first half of 2012 Germany is the only country showing GDP growth


5,3 5,58,1

10,3 10,7

24,4 25,1

Netherlands Germany UK France Italy Greece Spain

Source : Eurostat July ‘12

(5.0) (5.6) (8.2) (9.9) (9.7) (21.7) (23.5)

June ‘12

(Jan ’12)

Unemployment rate is rising further although more stable in Germany and the UK


1,5 1,2

3,4

1,83

-3,8

3,4

Netherlands Germany UK Italy France Greece Spain

VALUE TREND

VOLUME TREND

UNITS trend for Greece

-0,7

-2,8

-0,4 -0,6

0,3

-2,8

2,6

Price increases lead to more value, however they affect volume sales

FMCG Growth – H1 2012 - % change vs. previous year


Share of Private Labels is rising across Europe with its value share up 0.5% at 35.6%

Source: SymphonyIRI Infoscan; 52 weeks ending 16th June 2012 versus same period prior year.*Source of FMCG: Kantar Worldpanel; 52 weeks ending 10th June 2012 versus same period prior year. Channel coverage: supermarkets, hypermarkets and discounters.** Source: SymphonyIRI Market InsightTM; 52 weeks ended 9th September 2012 versus same period prior year. Channel coverage: grocery, drug and mass formats point of sales.

Private Label Value Share and Evolution vs. Year Ago - FMCG vs. Pet Care

+0.2%

+1.3%+0.5%

+0.7%

+0.7%

+0.5%

0%

10%

20%

30%

40%

50%

60%

Netherlands Italy UK* Spain France Germany

Pri

vate

Lab

el S

har

e o

f T

ota

l Mar

ket

PL FMCG value share 2012 and share evolution vs. year ago PL Pet Care Value share 2012 and share evolution vs. year ago


Share of Private Labels is rising across Europe with its value share up 0.5% at 35.6%

Source: SymphonyIRI Infoscan; 52 weeks ending 16th June 2012 versus same period prior year.*Source of FMCG: Kantar Worldpanel; 52 weeks ending 10th June 2012 versus same period prior year. Channel coverage: supermarkets, hypermarkets and discounters.** Source: SymphonyIRI Market InsightTM; 52 weeks ended 9th September 2012 versus same period prior year. Channel coverage: grocery, drug and mass formats point of sales.

Private Label Value Share and Evolution vs. Year Ago - FMCG vs. Pet Care

+0.2%

+1.3%+0.5%

+0.7%

+0.7%

+0.5%-0.1%

-0.4%

+1.9%

+2.1%

+0.4%+0.6%

0%

10%

20%

30%

40%

50%

60%

Netherlands Italy UK* Spain France Germany

Pri

vate

Lab

el S

har

e o

f T

ota

l Mar

ket

PL FMCG value share 2012 and share evolution vs. year ago PL Pet Care Value share 2012 and share evolution vs. year ago


• FMCG price increases have reached the point that it’s impacting volumes in most countries in Food and Non Food and Own label share is rising

• Rising prices have predominantly resulted in increased value sales

• Price is the heart of the battle and different strategies are being developed to retain shoppers

• Promotion is changing – less stocking for more expense control

• In France and in Spain consumption has increased

• In Greece, it’s the promotion war

• Although Germany has the healthiest economy and price rises have slowed down, it’s the biggest drop in volume sales for food

• Shoppers are cautious about the cost of their shopping basket and are willing to buy value for money

• ‘Consumer Recession’: return to a few basic principles that have been forgotten during a time of rapid expansion and waste

• People are buying what they need when they need it, buying less each time they shop and buying more often

Summary - FMCG consumer reaction to economic uncertainty


Private Labels

Quality For Money

Weight Control

High Quality

Health & Wellness

Premiumisation

Similar trends dominate markets for Human Food and Pet Food...


...although the desires and expectations of

those actually consuming pet food differ considerably

from those buying pet food


While pets focus on the essentials, their owners ask for extra benefits

Food?!?

Handling?

Price?

Design?

Brand?


2050Um 1900 Um 1950 1970 1980 1990 2000 2010

„kla

ssis

che

Kan

dida

ten“

Fut

ter-

“Tre

nds“

„Kon

kurr

ente

n“?

?

„Feline Hairball Control“

„adult/ kitten“„diet, nutrition, fur shine“

„dental care“

Our pets have become far more than a furry friend – products adapt to needs


Beauty and care products Wellness trips and holidays

Whatever makes pet owners happy, is just good enough for the pet itself


• High Quality: Shoppers expect ingredients to be highest standard – many manufacturers turn to natural ingredients and flavours, knowing that cats and dogs were originally ‘carnivores’

• Premiumisation: innovations in the market focus on premium flavour combinations and smaller packaging – shoppers seem to be willing to pay more money for convenience

• Quality for Money: even though budgets for Pet Food have not yet been reduced, consumers are comparing brands and assortments, hunting down bargains and are always on the lookout for better offers

• Health & Wellness: pet owners search for products with extra benefits that can do more for their pets than just feed them – e.g. ‘anti-hairball’ snacks, specific breed ranges, ‘light’ food, Oral Care snacks

• Private Labels: during tough economic situations, private labels are increasing in Pet Food – in Germany e.g., private labels are pushed and treated like national brands

HIGH PRICES

DRIVEN BY PRIVATE LABELS AND PROMOTION

FRUGAL SHOPPER

Linking FMCG key trends to Pet Care throughout Europe


1,1

3,25,0

1,9

5,8

7,6VALUE TREND

VOLUME TREND

1,8 0,6 2,0

-2,4

1,9

9,1

The first half of 2012 shows rising value sales for Pet Food in all countries

Source : CR in % for Value and Volume Sales; Total Pet Care; All Grocery outlets; 1.HY 2012 vs. 1. HY 2011

Netherlands United Kingdom Italy France SpainGermany


Cat Food stands for more than half of the entire Pet Care Sales in Europe

52,0%

39,0%

6,5%2,5%

Cat Food Dog Food Cat Litter Other Pet Food

1.912

1.437

23991

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

2.000

Source : Value Sales in Million € ; CR in %; Market shares Value; Total Pet Care; All Grocery outlets; 1.HY 2012 vs. 1. HY 2011

Pet Care in Europe: 3.679 Million €

+5,1

+3,4

+6,3

-2,7


Although Snacks show the strongest growth, wet food is the main driver for Cat Food

67,0%

26,0%

7,0%

Cat Wet Cat Dry Cat Snacks

1.281

497

134

-100

100

300

500

700

900

1.100

1.300

1.500


Cat Food in Europe: 1.912 Million €

+4,2

+4,2

+18,1


Cat Care is star performer in the UK –support through media, new products, promotions and core growth

48,7%

43,4%

4,9%3,0%


533

474

5333

0

100

200

300

400

500

600


Pet Care in the UK: 1.093 Million €

+4,8

+4,6

+12,0

+3,5


Value Sales. IRI Grocery Outlets .Pet Food. 52 w/e 6 Oct 2012.

£127,7 £138,3 £147,9 £154,2 £153,3£24,3 £27,8 £35,6 £46,7 £59,5£146,6 £150,6 £138,9 £130,6 £123,9

£431,9£474,3 £488,3 £505,5 £535,4

£176,3£190,0 £193,1 £197,9 £205,5

£18,6£17,4 £16,4 £15,9

£15,3£171,7

£182,7 £190,7£199,0

£214,3£225,5

£243,8 £246,7£243,2

£244,5£77,8

£78,6 £79,6£84,3

£88,5

£0,0

£200,0

£400,0

£600,0

£800,0

£1.000,0

£1.200,0

£1.400,0

£1.600,0

£1.800,0

52 w/e 11 Oct, 08 52 w/e 10 Oct, 09 52 w/e 9 Oct, 10 52 w/e 8 Oct, 11 52 w/e 6 Oct, 12

Mil

lio

nen

Cat Dry Complete Cat Treats Cat Wet Multi Serve Cat Wet Single Serve Dog Dry Complete

Dog Dry Mixer Dog Snacks & Treats Dog Wet Multi Serve Dog Wet Single Serve

Being one of the largest players within the category, the UK sets trends


Value Sales Change. IRI Grocery Outlets .Cat Food Pack Type. 52 w/e 6 Oct 2012.

-£0,8-£5,7

£1,8 -£0,1£1,0£7,4 £5,5

£3,8£9,5

£2,2 £0,7

-£5,3

£5,5

-£8,8

-£6,6-£4,3

£0,8

-£0,1

£0,1£0,0

£40,7

£16,9£13,0

£28,4

£0,0

£0,0

£0,0

£0,2

£0,6

-£0,2

£3,4

£7,8£11,1

£12,8

-£20,0

-£10,0

£0,0

£10,0

£20,0

£30,0

£40,0

£50,0

£60,0

£70,0

52 w/e 10 Oct, 09 52 w/e 9 Oct, 10 52 w/e 8 Oct, 11 52 w/e 6 Oct, 12

Mil

lio

nen

Alu Tray Bag Box Can Dome Pouch Tetra Tub Treats

Treats and Pouch format with constant increase in value sales


Value Sales Change. IRI Grocery Outlets .Dog Food Pack Type. 52 w/e 6 Oct 2012.

£6,0 £4,9 £6,9 £7,1

£10,0

£3,8£5,1

£7,5

£2,5

-£1,7 -£0,8 -£0,5

£16,8

£3,4

-£5,6

£0,4

-£4,8-£4,1

-£0,5

-£2,4

£1,1

-£0,2

£0,3

£0,5

£10,9

£8,0 £8,3

£15,3

-£10,0

£0,0

£10,0

£20,0

£30,0

£40,0

£50,0


Mil

lio

nen

Alu Tray Bag Box Can Pouch Sausage/Chub Treats

On the contrary to Cat Food, pouches for Dog Food are not working in the UK


In Germany, a switch to smaller and more premium packaging like pouches generates value growth

56,4%

33,6%

6,2%3,9%


565

337

6239

0

100

200

300

400

500

600


Pet Care in Germany: 1.003 Million €

+5,2

+1,8

+1,6

-9,1

+ another 500 Mio. €sales from Pet

Specialty Channel!


Value Sales in 1.000 €. IRI Grocery Outlets .Pet Food. 52 w/e 5 Oct 2012.

168.190 177.435 183.470 176.188

117.234 131.032 139.807 154.898

281.924 278.740 261.621 256.896

497.414 522.513 526.072 566.725

158.442159.736 164.541

166.755

232.888242.703 245.528

259.805

257.488253.012 251.669

247.509


Cat Dry Complete Cat Treats Cat Wet Multi Serve Cat Wet Single Serve Dog Dry Complete Dog Snacks & Treats Dog Wet

Similar to the UK market, Treats and single serve stand for value growth


Change of Value Sales in 1.000 €. IRI Grocery Outlets .Cat Food Pack Type. 52 w/e 5 Oct 2012.

9.245 6.035

-7.282

13.798

8.77415.091

-17.134

2.028

-13.960

3.530

22.091

17.533

34.676

52 w/e 8 Oct, 10 52 w/e 7 Oct, 11 52 w/e 5 Oct, 12

Dry Treats Can Flexi Pouch Mixed

Germany reflects UK figures – the limit for pouch growth has not been reached

Value % Chg YoY

Pack Formats MAT 10 MAT 11 MAT 12

Dry 5,5% 3,4% -4,0%

Treats 11,8% 6,7% 10,8%

Can -0,7% -5,5% -0,8%

Flexi 0,8% -5,7% 1,5%

Pouch 9,8% 7,1% 13,1%

Mixed -41,8% 145,1% -100,0%


Change of Value Sales in 1.000 €. IRI Grocery Outlets .Dog Food Pack Type. 52 w/e 5 Oct 2012.

Treats and Dry Food remain constant winners for the German market

1.294

4.8052.214

9.815 2.825

14.2773.925

-2.414 -3.777

2.742

-4.363

52 w/e 8 Oct, 10 52 w/e 7 Oct, 11 52 w/e 5 Oct, 12

Dry Treats Can Flexi Pouch Sausage Tub/Bowl

Value % Chg YoY

Pack Formats MAT 10 MAT 11 MAT 12

Dry 0,8% 3,0% 1,3%

Treats 4,2% 1,2% 5,8%

Can -0,8% 3,0% -3,2%

Flexi -2,1% -3,3% 2,5%

Pouch 0,5% -17,7% -37,2%

Sausage 7,8% -0,5% -43,4%

Tub/Bowl -34,9% -49,7% -99,1%


Strategic category development with broad assortments in all segments pushes Pet Food sales

52,7%

36,8%

10,5%

Cat Food Dog Food Cat Litter

405

283

81

0

100

200

300

400

500


Pet Care in France: 769 Million €

+7,1

+2,5

+11,0


Even though Dry Cat food performs better than Wet food, single serve wet shows remarkable growth

58,0%

34,8%

7,2%

Cat Food Dog Food Cat Litter

229

137

28

0

100

200

300


Pet Care in Italy: 394 Million €

+2,3

+2,4

-3,3

+ another 348 Mio. €sales from Pet

Specialty Channel!


Private labels have reached almost 50% market share which leads to lower prices for branded dog food

34,6%

60,5%

5,0%

Cat Food Dog Food Other Pet Food

85

149

12

0

20

40

60

80

100

120

140

160

180

200


Pet Care in Spain: 246 Million €

+8,3

+7,9

+0,1


A negative trend for Dog Food sales in the Netherlands could be the result of less promotions

55,1%

32,2%

8,6%4,1%


96

56

15

7

0

100


Pet Care in The Netherlands: 174 Million €

+1,7

+3,6

+2,8

-0,6


Pet Care remains to be a promising category with further potentials for future success

• The main contributor to the growth of Pet Care across Europe is Cat Food (+168 million €), whilst a smaller proportion is coming from dog food (+94.6 million €, where the driver is snacks and treats)

• Wet cat single serve is the most important segment for Cat food, where brands are investing most, and to a lesser extent dry cat food

• Pet Care is not as promotionally reliant as most major FMCG markets, but promotions are growing across most of the countries and pushing sales

• The main focus of innovations by major brands is on new premium tastes in small sizes or on new user friendly packages; no real new concept innovations in the market unless we consider the growing importance of “oral care” concept in snacks and treats

• Private Label is growing across most of the markets and represents a cheaper but acceptable alternative offer compared to major brands, in the tough economic climate

• Pet Care appears to be an increasingly polarising category; economy products are growing (Private Labels) as well as Premium products in small sizes


• Major brands are expected to create innovations in order to enliven the Pet Care market

• Down-Sizing could be a real alternative to think about – smaller packaging is successful and private label products are a bigger threat the larger the pack sizes get

• Extra benefits and added value has to be communicated very precisely – consumers ask for products with additional and relevant functions and these need to be demonstrated clearly or be self explanatory

• Formats play an important role for both cat and dog wet food – think of the convenience trend that consumers search for in other categories as well

• New variants and flavour combinations approach the consumers’ desire for innovations

• Participate in future markets with high potentials e.g. the snack segment – this is a field where manufacturers and retailers can ask for high prices

Make sure to participate in a growing market without losing your focus on successful strategies and brands

THANK YOU FOR YOUR ATTENTION

For further information please contact:

Tim Eales Director of Strategic InsightSymphonyIRI Group, [email protected]

Nina KenfenheuerConsultant Client SolutionsSymphonyIRI Group, [email protected]

Pet Care - Trends and Insights across Europe (november 2012)

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