Pet Industry Weekly

Sanofi Wins Dogfight for Merial

2009-07-29T08:42:00.000-07:00

Sanofi-Aventis SA will acquire the remaining 50% of the animal-health business Merial from Merck & Co, according to Bloomberg. Global animal drug sales - mostly livestock but also pets - were estimated to grow 7.2% to $19.2 billion in 2008 by Vetnosis Ltd.

Animal Health Care News and Forecast

2009-05-19T08:55:00.000-07:00

Consolidation in big pharma is changing the landscape of the companion animal health market. Merck (NYSE:MRK) and Schering Plough (NYSE:SGP) will combine their respective animal health companies Merial and Intervet. Pfizer's (NYSE:PFE) acquisition of Wyeth (NYSE:WYE) includes Fort Dodge, which combined with Pfizer Animal Health would form the largest animal drug provider in the world. According to Pfizer's first quarter 2009 results, the company has "had productive discussions with the [FTC] regarding the possible divestiture of some animal health products." So it seems part or all of Fort Dodge may be for sale.

What do these mergers mean for growth in veterinary services and pet care spending? Competing products may disappear, jobs may be lost, and supply chains may be disrupted. For instance, in fiscal year 2008, MWI Veterinary supply (NASDAQ:MWIV), Pfizer products accounted for 23% of sales, Fort Dodge 12%, Merial 60% and Intervet 9%.

On the flip side, however, it's clear that pet (and livestock) drugs have become an important part of the new diversified business models of big pharma. Pfizer plans to give the group "more autonomy" and global moves imply additional investment as well. Pfizer Animal Health does business in 60 countries and in the first quarter of 2009 opened a new Shanghai office, expressed interest in acquiring an Indian veterinary health company, and announced new product launches in certain countries.

Long term consumer spending forecasts on veterinary services, prescription and over-the-counter drugs are quite positive. We estimate veterinary services spending to grow 4% in 2009 and 8% in 2010, reaching $16.4 billion by 2011, compared to $13.6 billion in 2007. Compelling demographics will drive future growth. In 2003, the $8 billion spent on vet services was split 50/50 by pet owners making less than $70,000 per year and those making more than $70,000 per year. But by 2007 almost $14 billion was spent, and that ratio changed to 28/72, favoring higher income consumers. Married couples without children are the biggest spenders at the vet, according to the Bureau of Labor Statistics, spending over $4.5 billion in 2007 alone.

Dog Friendly Car Unleashed by Honda

2009-04-09T10:21:00.000-07:00

Honda showed off the Dog Friendly Honda Element concept car at the New York Auto Show today, with integrated dog amenities and safety equipment including restraints, hardy fabrics, an access ramp, a cushioned bed, a spill-resistant water bowl and dedicated doggie cooling system.

Appealing to the broad spectrum of dog owners who increasingly treat their pets like family definitely separates this model of the Element from the pack.

Honda has been developing its pet-themed marketing since 2005, when it launched a dog friendly concept car at the Tokyo Motor Show. Soon after, the company launched Honda Dog in Japan, pitching cars and its Travel Dog line of pet accessories to its 1.5 million monthly visitors.

Not to be outdone, Toyota also has a Japanese website for dog owners featuring the Corolla called C Loves Dog.

Closer to home, DogCars.com helps American pet parents choose the best pet-friendly cars, by reviewing new models specifically from a dog owner's perspective.

Pet Industry Market Research 2009

2009-04-04T20:41:00.000-07:00

The Pet Industry 2009 Strategic Outlook report from Dillon Media LLC has been published.

This market research report charts and analyzes aggregate pet owner spending demographics in the U.S., covering the four main industry segments: Pet Food, Veterinary Services, Pet Supplies and Pet Services.

It includes forecasts and analysis of the recession's impact on pet industry trends and consumer behavior.

Pet owner spending demographics are charted by income, age, general region and family composition from 2000 - 2007 (the latest available) with totals forecasts for 2008 - 2011. Data are from the Department of Labor, Bureau of Labor Statistics, forecasts are by Dillon Media.

The critical higher income brackets are also included for available years.

Published: Feb 18, 2009
Format: Adobe PDF file
Delivery: Emailed to you within 2 hours of purchase.

Why Buy It?
Align your product, customer or business with the strongest demographic groups in the U.S. pet industry. Read more and buy online: Pet Industry 2009 Strategic Outlook

PetSmart Q4 and Fiscal Year 2008 Results

2009-03-05T09:03:00.000-08:00

PetSmart, Inc. (NASDAQ:PETM) announced $5.07 billion in net sales in 2008, up from $4.67 billion in 2007. Comparable store sales grew 3.8 percent in 2008, and pet services continued to stand out, growing 15.8 percent in 2008 to $526.7 million. The year 2007 had one extra week added to the fiscal year in the fourth quarter.

During the fourth quarter of 2008, pet services sales grew 6.9 percent. Net income for the fourth quarter was $78.4 million, compared to $75.4 million for the fourth quarter of 2007.

PetSmart is the nation's largest pet specialty retailer with over 1,000 stores in the U.S., and announced a more cautious approach to new store openings in 2009, in line with the prevailing mood these days about the rest of this year. In 2008 the company opened just over 100 stores and 45 new PetsHotels, on par with the previous couple of years. For 2009, however, the company plans to open 40 to 42 new stores and 20 new PetsHotels, or about a 60% reduction in new store openings and a 50% reduction on new pet hotels.

These results and the 2009 outlook confirm, in our opinion, that pet spending will be impacted, but to a lesser degree than consumer spending in many other industries.

Read more and listen to the PetSmart, Inc. conference call.

Pet Owner Buying Habits Changing

2009-01-21T21:16:00.000-08:00

Even though pets may be toward the bottom of the list of things to cut back on, consumers are still forced to rethink many pet industry purchases these days. Pet food sales seemed to survive mid-2008 price increases and reduced portion sizes, but other segments may not be so lucky as consumers cut back on optional products and services.

The New York Times reports on the do-it-yourself (DIY) trend among consumers, how it's affecting services businesses, including pet care services, and how retailers like Target are adjusting marketing strategies to meet this rapid change in consumer behavior. (Outsourced Chores Come Back Home, by Catherine Rampell, The New York Times, Jan 19, 2009).
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Helmsley's Trust Leaves Billions of Dollars To Dogs

2008-08-25T22:27:00.000-07:00

In June, a New York judge reduced the amount of money available to Leona Helmsley's dog, Trouble, from $12 million to $2 million, ordering the remaining $10 million to go to her charitable foundation.

But the New York Times reports that the charitable trust has been assigned to the care and welfare of dogs, according to a mission statement that may or may not be legally binding. Being the only clear direction for the donor's intent, however, means that the entire trust, valued at $5 to $8 billion, may indeed go to the dogs ("Helmsley Left Dogs Billions in Her Will," by Stephanie Strom, The New York Times, July 2, 2008).

May I suggest outlets that uniquely benefit both dogs and humans, such as service dog programs, public assistance through HSUS and ASPCA funding, a national disaster fund (FEMA for pets), veterinary student grants, a centralized database linking CDC, vets, FDA and the public, and research that also benefits humans?

Pet Business Trade Shows

2008-07-01T08:14:00.000-07:00

Attending a Pet Industry Tradeshow?
Dillon Media can help with booth design, web and print marketing material. Learn more...

Global Pet Expo 2009
Feb 12-14, Orlando, Florida
Presented by the top industry manufacturers and distributors' trade organizations, over 800 companies will launch dog, cat, bird, aquatic and small animal products at this show.

H.H. Backer Winter 2008 Trade Show
Oct 3-5, Rosemont (Chicago), Illinois
New this year is an expanded aquatics section and an All-Natural area of the tradeshow, featuring eco-friendly and green pet products.

Pet Fashion Week 2008
Aug 23-24, New York City.
A smaller trade show focusing on fashion, Pet Fashion Week has quickly grown in the last two years and now includes an annual show in Tokyo. The market in Japan remains strong for luxury dog collars, apparel and supplies.

Pet South America is an international trade show for the Latin American market
Sep 17-19, Sao Paulo, Brazil

Pet Fair Asia has grown steadily over the last couple of years, from 280 to 350 exhibitors. It seems international visitors are interested in the export market; that is, sourcing, manufacturing and shipping from China.
Sep 3-5, Shanghai, China

Toyota and Honda Dog-Friendly Cars

2008-05-29T16:39:00.000-07:00

Honda's dog-friendly concept car introduced in 2005 has evolved into a comprehensive marketing campaign that is creating sales in Japan, according to Reuters ("Dog-lovers of the world unite...around Honda," by Chang Ran-Kim, Reuters, May 29, 2008).

Honda Dog uses its 1.5 million monthly website visitors to sell cars and its Travel Dog line of pet accessories.

Not to be outdone, Toyota also has a Japanese website for dog owners featuring the Corolla called C Loves Dog.

In case you don't read Japanese, it's still fun to click around these sites. I assume it's just a matter of time until the U.S. versions come out as the auto industry aggressively seeks to differentiate products while appealing to broad demographics.

Closer to home, DogCars.com helps American pet parents choose the best pet-friendly cars, by reviewing new models specifically from a dog owner's perspective.

Read all posts about dog cars.

Business Resources

2008-05-14T20:43:00.000-07:00

The largest trade organization in the industry, the APPMA has updated their website with some valuable information for pet businesses and about the pet industry.

Check out the new blog written by Bob Vetere, president of the American Pet Products Manufacturer's Association. This should be a good way to stay informed about the latest trends and issues.

Pet Business News

2008-05-05T09:39:00.000-07:00

VCA Antech, Inc. (NASDAQ:WOOF) reported a profitable first quarter of 2008 as it continues to acquire animal hospitals and grow its laboratory business. Although elective procedures tend to diminish when consumers cut back, this strength highlights the fact that the bar is moving; some services once considered elective are now being considered necessities. VCA seems to be on its way to becoming the managed care company for pets, primarily dogs and cats.

Utilizing the pet industry to differentiate a business in a crowded market has been a popular strategy the last few years. Check out Peninsula House Hound dog-friendly real estate website, with features like 'Search Homes Near Dog Parks'.

Anyone watch Nascar this weekend? Dog food marketing is big business in the U.S., and Mars, Inc.'s Pedigree brand is prominently featured on Kyle Busch's number 18 car. This sports sponsorship by Mars draws an average of about 6 million viewers per race, according to ACNielsen ratings for April and May of 2008. But the company didn't stop there; Mars' Nascar marketing campaign is directly tied to its adoption drive, illustrating the importance of the adoption channel for generating long-term brand loyalty in the pet sector.

Ralph Lauren Dog Accessories

2008-04-17T06:36:00.000-07:00

More than four years after introducing a popular dog polo shirt and cashmere sweater, Ralph Lauren now boasts 16 different dog accessories, including a wider range of trendy shirts, a hoodie, a trench coat, and leather collars and leashes.

Catering to the broad swath of American consumers that own dogs, every retail store allows dogs. And the company's website has vastly improved since I last blogged about it three years ago.

It seems to be a solid strategy to appeal to certain pet parents, with dog products and marketing co-ordinated at the retail level and online. This picture, for instance, is for a human tote bag sold on a Mother's Day page.

Pet Vacuum Cleaners

2008-04-06T19:19:00.000-07:00

Browsing Williams-Sonoma's website, I noticed a $799 Miele Dog & Cat vacuum cleaner, made specifically to handle pet hair.

It seems the response to pet owner demographics, or at least Consumer Reports testing in 2006, has been swift, with pet-specific lines now available from Bissell, Eureka and Dyson, all retailing for under $200.

Two-thirds of American households own a pet of some sort. Forty percent of U.S. households own a dog. That's a large market, with lots of pet hair, suitable for an expensive dog & cat vac. Eight hundred bucks is a lot for a vacuum cleaner, but they are really nice. Even the lowest-end Miele model (the one I own) is fantastic.

Home Depot To Stop Selling Pet Products

2008-02-29T08:52:00.000-08:00

Home improvement retailer The Home Depot, Inc. (NYSE: HD) plans to stop selling pet products in 2008. Overall, the company reported it's first ever yearly sales decline in 2007 yesterday, so perhaps it's wise to re-focus on core competencies. Especially with the state of the housing market.

Home Depot's pet product selection was highly limited in scope and brand selection anyway, with no dog houses, beds, indoor barriers, ramps or other common products a pet owner often adds to a home. Even so, this move signals a broader theme that may play out again soon: large retailers cutting back on pet products discretionary to their business models, but not necessarily to the consumer.

Pet Owner Spending Trends in the U.S.

2008-02-18T21:52:00.000-08:00

A new report has just been published on nationwide pet owner spending trends.

The aging population, childless consumers and the ascendancy of high-income baby boomers are analyzed by their pet spending habits. Charts and tables are included using data from the Department of Labor, Bureau of Labor Statistics that highlight core trends in U.S. consumer spending by income, age, general region, and family composition.

The Pet Industry 2008 Strategic Outlook is our annual report, written for businesses marketing to pet owners.

Standard & Poor's Take on the Pet Industry

2008-02-01T11:47:00.000-08:00

In a research note upgrading PetSmart (PETM) today, Standard & Poor's Equity Research notes "while we expect a slowdown in consumer spending to impact sales of discretionary pet supplies, we continue to believe underlying demographic trends for the industry remain very strong." Well put.

Looking Toward 2008

2008-01-24T21:01:00.000-08:00

The pet industry has been called recession-resistant by many people, myself included, as it stood up to economic shocks in 2002 and again in 2005 after hurricane Katrina.

This year may test that theory, however. A decade of strong growth has created some fluff in an industry that has been growing like a balloon, in every direction at once. Balloon, bubble...we think slowing growth or contraction in certain segments is inevitable in 2008.

Sure, pet owners will continue to spend money on their companions in tough times, but on what? The latest available data from the Department of Labor show spending on pet purchases and supplies declined 20% in 2006 from the year before, while the other segments of food, services and veterinary services grew but at a much slower pace.

Just like humans, spending constraints will probably result in cutting out non-essential products and services, but with some interesting twists. Higher income demographics are supporting more and more of the industry each year.

Two new reports on U.S. pet owner spending are out.

Pet Food Consumer Spending Data Tables

How much money Americans spend on pet food by age, income, region and family composition.

Veterinary Services Consumer Spending Data Tables

How much we spend at the vet each year.

Pet Owner Spending by Income

2008-01-03T00:39:00.000-08:00

The latest available data from the Labor Department show the first decline in pet industry spending in over 10 years.

Check out the new report Pet Industry Spending by Income which includes new 2007 and 2008 forecasts by Dillon Media and charts of expenditures on all segments by income bracket through 2006.

Pet Trade Shows

2007-08-28T13:00:00.000-07:00

It's trade show season for the pet industry. This list will be updated throughout the year as schedules are finalized and websites go online, so bookmark it and check back.

Global Pet Expo 2008
Feb 14-16, San Diego, California
Presented by the top industry manufacturers and distributors' trade organizations, over 800 companies will launch pet products at this show.

H.H. Backer Spring 2008 Trade Show
May 16-18, Baltimore, Maryland
Traditionally in Atlantic City, show organizers moved this event to Baltimore, citing improved logistics and metropolitan city services for the participants.

Interzoo 2008
May 22-25, Nurnberg, Germany
Floor space is already 85% sold as of this post date. This biennial international pet trade show drew almost 1,300 companies from 56 nations in 2006, and 2008 should be even better.

Attending a Tradeshow?
Dillon Media can help with booth design and marketing material. Learn more...

Dog Friendly Cars

2007-08-17T17:40:00.000-07:00

These days, consumers are taking pets into consideration when making large purchasing decisions, and the market has responded.

Last year, home and garden stores and catalogues, as well as custom home builders, ramped up marketing to pet owners, and now, a new company helps dog owners buy a new car.

DogCars.com reviews new automobiles from a dog owners perspective. Dog friendly cars tend to be roomy: SUVs, trucks, wagons, hatchbacks and crossovers, and there are some pleasant surprises on the site like the Suzuki Forenza and Honda Fit reviews.

Surveys indicate up to 50% of dog owners consider a pet's needs when buying a new car.

[Update Jan 2008] DogCars.com is seeking advertisers for its new website. Check them out to reach a niche market of high income pet owners in the market for a new car.

Read all posts about dog cars.

Handmade Leather Dog Collars

2007-08-02T13:17:00.000-07:00

A small company poised for growth is Paco Collars. Run by leather artisans and dog owners, they create and sell custom and handmade leather dog collars. These collars are beautiful but also highly functional, with tapered neck widths for smaller dogs and multiple sturdy leash attachments. Each order is handmade to each dog's specifications and takes 6-8 weeks for delivery. The company also sells leashes that match the collar in color, leather and brass or silver hardware.

The depth of commitment to the human-animal bond (and to the customer) is on display, from the initial order process to a lifetime guarantee on parts. When the dog passes the company can make the collar into a bracelet for the owner.

When asked who's buying these expensive collars, founder Ana Poe responded, "The one really interesting trend that we've found in our sales is that there is no one demographic that's buying. When we think we've got the consumer pegged, there's a whole new crop of people that surprise us. Rich, poor, young, old, you name it and they're buying."

Maybe this widespread appeal is why a Paco Collar was recently spotted in a television ad for Proctor & Gamble's Febreze air fresheners.

It seems Paco Collars is well-positioned in the pet industry as it moves forward. By offering premium, well-designed, custom products to pet parents across demographic groups, the company is aligned with core trends in spending and consumer behavior.

The Pet Economy

2007-07-28T22:50:00.000-07:00

BusinessWeek dedicates its August cover story to Americans' spending spree on pets. The article has lots of great pet industry statistics. For instance half of all dog owners consider the pet's comfort when buying a car.

The Pet Economy, by Diane Brady and Christopher Palmeri, BusinessWeek, August 6 2007.

Petco Expands Services Offerings

2007-07-20T10:35:00.000-07:00

Petco announced a partnership with Sittercity.com today, adding in-home pet sitting services to its lineup. While PetSmart (NASDAQ:PETM) focuses on bringing the customer to the store for daycare and PetsHotels, where they subsequently load up on high-margin tennis balls and the like, Petco is going in the other direction, extending its reach directly into the consumer's home. Here's the press release.

Photo: PR Newswire Photo Service/Sittercity.com

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Marketing Pet Services?
The Pet Industry 2008 Strategic Outlook is an affordable market research report on current and emerging trends and demographics for pet businesses.

Kansas City Animal Health Corridor

2007-06-29T07:55:00.000-07:00

Last year's unique initiative by Kansas City to attract animal health companies keeps paying off. MWI Veterinary Supply, Inc. (NASDAQ:MWIV) based in Idaho is the most recent company to sign up, announcing plans to open a 105,000 square foot distribution facility in the area.

In fact, the KC Animal Health Corridor contributes 32 percent of total sales in the $15.2 billion global animal health market by hosting company divisions including Bayer HealthCare, Hill's Pet Nutrition, Del Monte and Cargill.

Pet health has become one of the driving trends in the industry. Even though pharmaceutical companies have been in the animal health segment for years, there's been a recent acceleration in interest, as previously reported in this blog and on our company website.

A good article on the subject: "Big Pharma Chases Dogs and Cats," by Rachel Petkewich, Chemical & Engineering News, June 25 2007.

Central Garden & Pet

2007-06-27T19:02:00.000-07:00

Central Garden & Pet Co. (NASDAQ:CENT) may be rapidly losing interest in acquiring some assets of Spectrum Brands, Inc. (NYSE:SPC), according to the Financial Times. Bad news continues to dog both companies. Central Garden & Pet experienced "softness" in lawn and garden as well as pet retail sales in April and May, and told investors to expect results below expectations ("Spectrum Brands could face new complications to asset sale process, sources say," by Aja Whitaker-Moore, Financial Times, June 13 2007).