By Paula Flores, Head of Pet Care Research at Euromonitor International
Regardless of continued economic uncertainty in much of the world, the intertwining trends of pet humanisation and premiumisation have helped global pet care sales to rebound relatively strongly in 2013.
Recent times have proven challenging for many consumers. Difficult economic circumstances have been seen particularly in Western Europe, where the International Monetary Fund (IMF) has been called in to intervene in various economies. The stronger budgetary discipline dictated by the institution has resulted in severe cuts for many consumers, especially in Greece. Despite continued economic uncertainty, pet care is expected to post global constant value growth of 2 per cent in 2013, with sales totalling 96 billion US dollars. This will represent a slight increase on the previous year, primarily driven by Latin America with anticipated growth of 8 per cent in 2013.
In spite of sluggish economic growth and significant reductions in government spending, both the French and UK pet care markets have seen significant premiumisation over recent years. In France, the economy dog and cat food segments exhibited real value declines of 11 per cent, the mid-priced segment declines of 1 per cent and the premium dog and cat food segments exhibited a real value rise of 26 per cent respectively over the period 2008-2013. In the UK, these figures were a 7 per cent decline and rises 3 per cent and 15 per cent respectively. Indeed, in France, the premium segment (with value sales of 1.3 billion US dollars in 2012) is on the point of overtaking its mid-priced counterpart (1.4 billion US dollars). In the UK, strong growth in online sales of pet food (internet retailing accounted for 8 per cent of overall value sales of dog and cat food in 2012) does not appear to have had a significant negative impact on pricing. There are thus plenty of good opportunities as humanisation and premiumisation continue to develop.
Pet treats are another example and they are booming in the UK. Over the period 2008-2013, real value sales of dog treats expanded in the UK by 56 per cent to 654 million US dollars, according to Euromonitor International data. Real value sales of cat treats grew even more vigorously (albeit from a much lower base), increasing by 59 per cent to 78 million US dollars. Over the same period, real value sales in the wider dog and cat food market expanded by just 9 per cent to 4.7 billion US dollars.
The US market is showing signs of recovery and is set to post 2 per cent value growth in pet food, with sales reaching 21.4 billion US dollars.
Latin America has proved the most vibrant region, with Brazil now overtaking Japan as the second largest pet care market globally with reported value sales of 7.2 billion US dollars in 2013. Brazil also leads in terms of incremental value growth, rising by 1.6 billion US dollars over 2008-2013. This is related to its expanding dog population, with some 46 per cent of households owning a dog. Outside Brazil, Mexico has proved a further growth leader, although more prominent in terms of dog and cat food sales.
In terms of the most dynamic categories driven by the indulgence trend, cat and dog treats are expected to be the fastest growing segment globally in 2013. Anticipated robust constant value growth of 5 per cent in 2013 illustrates how pet owners love to indulge and reward their pets. More specifically, while cat treats are only just taking off (with global sales of 1.4 billion US dollars), dog treats are a more developed category and are expected to reach sales worth 6.2 billion US dollars in 2013. This means that over 15 per cent of total pet food sales will be accounted for by dog treats. It also goes to show that despite the more challenging economic environment, “pet parents” are still willing to indulge and reward their pets, thereby strengthening the bond between them.
In conclusion, while there are many reasons for optimism, there are also causes for concern as some mature markets see a slowdown in demand. Mature categories are also posting slower performances, with one notable exception being premium dog food. Indulgence remains a key factor in pet care, with owners showing no signs of cutting their spending on rewarding their furry friends. Thus, much potential remains for industry players savvy enough to capitalise on it.
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