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.
Copyright © SymphonyIRI Group, 2012. Confidential and Proprietary. 3
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.
Copyright © SymphonyIRI Group, 2012. Confidential and Proprietary. 4
• 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
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-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
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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
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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
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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
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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
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• 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
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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.
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Private Labels
Quality For Money
Weight Control
High Quality
Health & Wellness
Premiumisation
Similar trends dominate markets for Human Food and Pet Food...
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...although the desires and expectations of
those actually consuming pet food differ considerably
from those buying pet food
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While pets focus on the essentials, their owners ask for extra benefits
Food?!?
Handling?
Price?
Design?
Brand?
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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
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Beauty and care products Wellness trips and holidays
Whatever makes pet owners happy, is just good enough for the pet itself
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• 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
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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.
Copyright © SymphonyIRI Group, 2012. Confidential and Proprietary. 19
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
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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
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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
Source : Value Sales in Million € ; CR in %; Market shares Value; Total Pet Care; All Grocery outlets; 1.HY 2012 vs. 1. HY 2011
Cat Food in Europe: 1.912 Million €
+4,2
+4,2
+18,1
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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%
Cat Food Dog Food Cat Litter Other Pet Food
533
474
5333
0
100
200
300
400
500
600
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 the UK: 1.093 Million €
+4,8
+4,6
+12,0
+3,5
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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
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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
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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
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 Pouch Sausage/Chub Treats
On the contrary to Cat Food, pouches for Dog Food are not working in the UK
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In Germany, a switch to smaller and more premium packaging like pouches generates value growth
56,4%
33,6%
6,2%3,9%
Cat Food Dog Food Cat Litter Other Pet Food
565
337
6239
0
100
200
300
400
500
600
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 Germany: 1.003 Million €
+5,2
+1,8
+1,6
-9,1
+ another 500 Mio. €sales from Pet
Specialty Channel!
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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
52 w/e 9 Oct, 09 52 w/e 8 Oct, 10 52 w/e 7 Oct, 11 52 w/e 5 Oct, 12
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
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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%
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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%
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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
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 France: 769 Million €
+7,1
+2,5
+11,0
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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
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 Italy: 394 Million €
+2,3
+2,4
-3,3
+ another 348 Mio. €sales from Pet
Specialty Channel!
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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
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 Spain: 246 Million €
+8,3
+7,9
+0,1
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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%
Cat Food Dog Food Cat Litter Other Pet Food
96
56
15
7
0
100
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 The Netherlands: 174 Million €
+1,7
+3,6
+2,8
-0,6
Copyright © SymphonyIRI Group, 2012. Confidential and Proprietary. 34
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.
Copyright © SymphonyIRI Group, 2012. Confidential and Proprietary. 35
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
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• 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]