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U.S. Pet Market Outlook 2009-2010: Surviving and Thriving in Challenging Economic Times


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U.S. Pet Market Outlook 2009-2010: Surviving and Thriving in Challenging Economic Times

  1. 1. Get more info on this report!U.S. Pet Market Outlook 2009-2010: Surviving and Thriving inChallenging Economic TimesMarch 1, 2009During the current macroeconomic environment the much touted recession resistanceof the pet industry is being put to the test like never before—and appearing to hold upas of March 2009. Whereas total U.S. retail sales rose just 1.4% overall in 2008according to the National Retail Federation, No. 1 pet specialty retailer PetSmart postedan 8.4% sales increase in fiscal year 2008; top five pet food marketers Del Monte andHill’s recently reported double-digit growth, with Del Monte’s pet product net sales up15.1% during the third quarter of fiscal year 2009 (ending May 3), and Hill’s revenues up13.5% in fourth-quarter calendar 2008; leading veterinary hospital operator VCA Antechposted 6.7% revenues growth during fourth-quarter 2008; and online merchant PetMedExpress reported a 16% increase in net sales during the fourth-quarter 2008. Looking atthe pet industry as a whole, Packaged Facts predicts overall steady performance in2009 and 2010, although the market growth rate will drop back slightly due to cutbacksin some of the more discretionary categories.Featuring February 2009 pet owner survey data polling 2,600 U.S. adults, this all-newPackaged Facts trend report will bring you up to the minute with regard to the four coremarket categories—veterinary services, pet food, non-food pet supplies, and other petservices (grooming, boarding, training, etc.)—projecting sales and analyzing key growthdrivers and competitive opportunities for each. The report is divided into five chapters,beginning with an Overview examining why the pet industry has been performing betterthan other industries of comparable size and maturity, and what marketers, retailers andproduct developers can do to help keep their own market momentum going. Fouradditional chapters examine ongoing and emerging trends in four focus areas—Humanization, Health and Wellness, Competition, and Demographics—covering suchtopics as the multifaceted notion of value during the recession; impact of thehuman/animal bond on consumer expenditures; adaptation of human brands, drugs andservice types; natural, organic and green products; functional products including petmedications and supplements; impact of the fast-growth pet insurance industry; effect ofbig-box expansion and franchising in the pet services field; the rise of celebritymarketing, non-traditional media, and cause marketing; and pet ownership trends in keyconsumer segments including premium demographics, aging Baby Boomers andPONKS (Pet Owners/No Kids).
  2. 2. Read an excerpt from this report below.About the AuthorDavid Lummis is the senior pet market analyst for Packaged Facts. He is also author ofthe monthly "Market Outlook" column in Pet Product News International, and a regularcontributor of articles and market insight to other pet industry magazines as well asmajor business media including The New York Times and CNNMoney. Mr. Lummis alsois President of New Orleans-based Marigny Research Group, Inc., a producer ofcustom market research reports for Packaged Facts. Since 1986, MRG has preparedmore than 175 studies on consumer packaged goods markets and developed full reportlines covering pet, demographic, retail and financial markets. Mr. Lummis, whograduated from Yale University, has also written approximately 75 other published B2Breports and is the author of the book, "Value Retailing in the 1990s."Additional InformationMarket Insights: A Selection From The ReportNatural/Organic/Holistic ProductsIn the minds of most of the pet owners who purchase them, natural and organicproducts have always been associated with enhanced pet health and wellness, but thedevastating recalls of spring 2007 appear to have cemented this association. Illustratingthe impact of the recall on sales of natural pet products, natural supermarket petdepartment sales surged 18% in the first week of April vs. the last week of March 2007and by a total of 22% during 2007, according to Packaged Facts’ August 2008 report,Natural Supermarket Pet Department Close-Up.Although food represents the bulk of natural supermarket sales, the safety-relatedappeal of natural products also resonates in ingestible non-food categories such assupplements and chews, topical product categories like flea/tick spot-ons andshampoos, and even commodity categories like litter, where alternatives to traditionalclay-based litter have been leading market growth for several years.The strong showing for pet food overall in 2007 and 2008 also reflects the switch tohigher-priced products including natural and organic varieties, according to PackagedFacts’ January 2009 report, Pet Food in the U.S. (see Chapter 1, “Economy, Value andRecession Resistance”) [Figure 3-1]Specialty and Functional Food Formulas on the Ups
  3. 3. Specialty formula foods for dogs and cats are well established in the market, with 72%of dog owners and 76% of cat owners having purchased these products in the last threemonths, according to Packaged Facts’ February 2009 pet owner poll. Adult formulas arethe most commonly chosen, with 33% of dog owners and 32% of cat owners havingpurchased these types of foods in the past three months, followed by other typesincluding organic, puppy or kitten, weight-related, and senior. [Figure 3-3]TABLE OF CONTENTSChapter 1: Introduction Scope of Report Report Methodology Overview Economy, Value and Recession Resistance Pet Humanization Table 1-1: Percent of Pet Owners Who Anticipate Spending Less on Pet Food/Supplies or Pet Services in Next 12 Months, February 2009 Premium Demographics Pet Market Momentum High Rates of Value-Added Product Entries Table 1-2: Number of New Pet Product Introductions: Reports and SKUs, 2005- 2009 Table 1-3: Top 20 Marketing Claims by Number of New Pet Product Reports, 2008 Pet Care Services Also Going Strong International Cross-Pollination Illustration 1-1: Nestlé Purina’s Friskies Flea Repellent Drops (France) A $57 Billion Market by 2010 Table 1-4: U.S. Pet Market Retail Sales by Category: 2009 and 2010 (in billions of dollars) Table 1-5: U.S. Pet Market Compound Annual Growth Rates: 2004-2008 vs. 2008-2013 (percent)Chapter 2: Humanization More Than a Trend A Three-Pronged Movement Human/Animal Bond Figure 2-1: “Consider My Pet(s) Part of the Family”: By Percent of Pet, Dog/Cat, Dog and Cat Owners, February 2009 Table 2-1: Mean Number of Veterinary Visits: By Human/Animal Bond Among Dog and Cat Households, 2006 Table 2-2: Mean Veterinary Expenditures: By Human/Animal Bond Among Dog and Cat Households, 2006 (in dollars) Human Company Cross-Over
  4. 4. Illustration 2-1: Jakks Pacific’s White Bites Oral Care Dog Treats with Arm & Hammer Baking Soda Illustration 2-2: Bissell Website Banner for New Pet Lovers Products Collection Illustration 2-3: Consumer Advertising for Procter & Gamble’s New Febreze Pet Odor Eliminator Extensions Human-Style Product/Service Cross-Over Illustration 2-4: Consumer Advertising for Dr. Harvey’s Handmade Biscotti for Dogs Illustration 2-5: Trade Advertising for Bamboo’s New CatToids and DogToids Breath Mints Illustration 2-6: Trade Advertising for Spa Lavish Your Pet’s Botanical Grooming Collections A Societal ShiftChapter 3: Health and Wellness The Ultimate Value Appeal Natural/Organic/Holistic Products Figure 3-1: Seasonal Pattern of Pet Product Sales in the Natural Supermarket Channel: January 2005-December 2007 (in dollars) Table 3-1: Percent of Pet Owners Who Purchased Natural/Organic Pet Products in Last 3 Months: Dog Owners vs. Cat Owners, February 2009 (percent of U.S. dog or cat owners) Table 3-2: Percent of Pet Owners Who Would Buy More Natural/Organic Pet Products If They Were More Available or More Affordable, February 2009 (percent of U.S. dog or cat owners) Figure 3-2: U.S. Retail Sales of Natural and Organic Pet Products: 2003, 2007 and 2012 (in millions of dollars) Functional Products Specialty and Functional Food Formulas on the Ups Figure 3-3: Percent of Pet Owners Who Purchased Specialty Formula Dog or Cat Food in Last 3 Months: Dog Owners vs. Cat Owners, February 2009 (percent of U.S. dog or cat owners) Table 3-3: Household Purchasing of Light/Weight Management and Senior Dry and Canned Dog and Cat Food: 2004 vs. 2008 (percent of U.S. households with dogs or cats) Pet Supplements and Nutraceutical Treats Going Strong Figure 3-4: U.S. Retail Sales of Pet Supplements and Nutraceutical Treats: 2003, 2007 and 2012 (in millions of dollars) U.S. Pet Medications Posting Healthy Retail Sales Figure 3-5: U.S. Retail Sales of Pet Medications: 2003, 2007 and 2012 (in billions of dollars) Holistic Labeling Pet Services Riding Pet Health Wave Figure 3-6: Percentage of Dogs and Cats Age 6 and Over: 1996 vs. 2006 Complimentary/Holistic Pet Care Figure 3-7: Attitudes About Alternative/Self-Care: Dog and Cat Owners, 2008 (index)
  5. 5. The Pet Insurance Boom Ethical/Green Interest, Appeals Figure 3-8: Dog or Cat Owners as Consumers: Selected “Green” Psychographics, 2008 (percent and index for U.S. dog or cat owners)Chapter 4: Competition Overview/Market Structure Veterinary Services to the Fore Figure 4-1: Percent of Dog Owners Who Used Pet Services in Last 12 Months: February 2009 Figure 4-2: Percentage Share of U.S. Pet Market Retail Sales by Category: 2004, 2008 and 2013 Food and Non-Food Supplies Coming Together One-Stop Pet Care Figure 4-3: PetSmart and Petco: Share of Pet Grooming, Boarding and Training Sales: 2000, 2005 and 2010 (percent) A New Mid-Sized National Chain? Additional Market Consolidation Table 4-1: PetSmart and Petco Combined Sales: 2000-2008 (in millions of dollars) Table 4-2: Timeline of U.S. Pet Product Marketer and Brand Acquisitions and Sales: 2001-2009 Franchising Altering Pet Services Terrain Celebrity Marketing Media Trends Non-Traditional Media Figure 4-4: Dog or Cat Owners as Consumers: Selected Media & Marketing Psychographics, 2008 (percent and index for U.S. dog or cat owners) Value Focused Advertising Illustration 4-1: Email Coupon for S.C. Johnson & Son’s New Pledge Fabric Sweeper for Pet Hair Illustration 4-2: Petco Coupon Mailer Featuring Halo Purely for Pets Emotional Messaging Cause-Related Marketing Retail Trends Table 4-3: Household Purchasing of Pet Products by Retail Channel: Total Purchasers and Sole Purchasers, 2006 vs. 2008 (percent of U.S. households with pets) Table 4-4: Percent of Pet Owners Who Do or Do Not Anticipate Spending Less on Pet Foods/Supplies in the Next 12 Months: By Retail Channel Always or Often Shopped, February 2009 Table 4-5: Indices for Spending Level Expectations for Pet Food/Supplies in the Next 12 Months: By Retail Channel Always or Often Shopped for Pet Products, February 2009 Table 4-6: Percent of Pet Owners Who Purchase Pet Food/Supplies by Retail Channel: Always, Often, Occasionally, February 2009 (percent of U.S. pet owners)
  6. 6. Refrigerated Pet Food Frozen/Raw Pet Food More Robust Pet Health Departments Natural Supermarkets and Pet Stores Mainstream Supermarkets Going Natural/Organic/Eco-Friendly Compact Supermarkets Walmart Capitalizing on Recession Agricultural Channel Action Increasing Private-Label Penetration Figure 4-5: Attitudes About Healthcare Brands: Dog and Cat Owners vs. U.S. Adults Overall, 2008 (percent) Independent Pet Shop/Boutique Trends Internet Potential Figure 4-6: Use/Influence of the Internet: Adults Overall vs. Dog or Cat Owners, 2008 (index for U.S. dog or cat owners)Chapter 5: Consumer Demographics Number of Dog and Cat Households Trending Upward Figure 5-1: Household Penetration Rates for Selected Dog- or Cat-Owning Classifications: 2003 vs. 2008 (percent of U.S. dog- or cat-owning households) Premium Demographics Figure 5-2: Share of Total U.S. Pet Market Expenditures: $70K+ vs. Under $70K Income Brackets, 1997-2007 (percent) Figure 5-3: Share of U.S. Pet Market Expenditures by Category: $70K+ Income Bracket Households, 1997 vs. 2007 (percent) The Boomer Factor Figure 5-4: Dog or Cat Ownership Rates by Age Bracket: 2003 vs. 2008 (percent of U.S. households) Figure 5-5: Share of Total U.S. Population Growth for Selected Age Brackets: 2007-2015 (percent) PONK (Pet Owner/No-Kid) Clout Figure 5-6: Two-Adult Households/No Kids as Pet Owners: 2003 vs. 2008 (percent) Ethnic Energy Illustration 5-1: President Obama Promoting Shelter Adoption on the Cover of Tails Magazine, February 2009Available immediately for Online Download at 800.298.5699
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