The Specialty Pet Marketplace
The pet food, animal health, and pet care industries serve large and growing markets.
Pets, including birds, fish, small animals, and reptiles, have become increasingly prevalent in United States and Canadian households. Demand for pets is primarily influenced by family formation with a majority of pets owned by single family households and families with children between the ages of five and nineteen.
62% of United States households own a pet and 46% of those households own more than one. 55% of all American households had at least one dog or one cat.
Dog food, cat food, and pet treats and snacks represent the largest volume categories of pet-related products.
Within the United States, people love their pets and take exceptional care of them.
Of these categories, pet treats and snacks is the fastest growing in terms of dollar volume, exceeding $7 billion annually in the US alone.
Dry dog and cat food (not to include pet treats and snacks) production is now controlled by five major manufacturers garnering about 70% of the total domestic volume:
- Mars, Inc.
- Nestle (Purina).
- Proctor & Gamble.
- Colgate-Palmolive.
- Del Monte, Inc.
Nestle (Purina) is the largest US producer of pet treats and snacks. Mars, Inc. is the largest US producer of dog and cat foods.
Approximately 65% of pet products (foods and pet treats and snacks) go through standard channels of distribution including grocery, mass merchandise, club, and (high volume) specialty pet outlets. The balance is sold through alternative distribution channels including independent distributors, veterinarians, smaller pet stores, direct home delivery services, and over the Internet.
Sales through alternative channels are decreasing as larger chain and mass merchandise accounts command a larger share of the consumer budget.
While sales of food products increased approximately 6% in 2010, pet treats and snacks saw a 39% increase in volume due in part to higher prices paid at retail for an improved selection and higher quality products.
Pet Treats and Snacks
Comparing Categories
The size of the pet treat and snack category, when compared to other product categories, is extremely large:
- Within the United States, consumers buy over 4 times more pet treats and snacks than baby food.
- American consumers spend approximately the same amount on pet treats and snacks as potato chips and tortilla chips combined.
- American consumers purchase over 6 times more pet treats and snacks than the combined sales of M and M candy, Hershey™ Milk Chocolate bars, Reese™ Peanut Butter Cups, Snickers™, Kit Kat™, Twix™, York Peppermint Patty™, Peter Paul Almond Joy™, Butterfinger™, and Three Musketeers™.
NOTE: The figures above are estimates only derived from multiple sources.
SAFE HARBOR PROVISIONS REGARDING FORWARD LOOKING STATEMENTS: This document contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect management's view of future events and financial performance. These statements are subject to risks, uncertainties, assumptions and other important factors, many of which may be beyond the control of the company or its management and could cause actual results to differ materially from those expressed or implied in these forward-looking statements. Uncertainties contained in such statements include, but are not limited to, the risk of a divestiture or spin-off transaction and its impact on the operations and financial performance of the company, the ability of the company to achieve its growth and other business goals, and the success of the company’s business plan in a timely and cost-effective manner. Other uncertainties include sales, earnings and volume growth, achieving cost savings programs, competitive conditions, production, energy, and raw material costs, the ability to maintain favorable supplier relationships, global economic and industry conditions, new product and packaging innovations, achievement of gross margins, success of marketing spending, currency valuations and fluctuations in these rates, the impact of e-commerce and e-procurement, supply chain efficiency and cash flow initiatives, unforeseen economic and political changes in domestic and international markets where we compete and over which we have no control, the ability to integrate acquisitions and joint ventures into existing operations and success of divestitures and business combinations, and other factors described in this Offering Memorandum and updated from time-to-time. Future dividends and disbursements, including liquidity issues on Spectrum stock at any level are subject, among other things, to certain legal requirements being met at the time of declaration or issue. The forward-looking statements are and will be based on management's then current views and assumptions regarding future events and operating performance and speak only as of their dates. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
