Petcare

Worth an estimated £1.87bn, the petcare market is one every grocery retailer wants a bigger slice of at the moment. The lead is being taken by Tesco, which already has the largest and fastest growing share of petfood sales. The multiple is taking its cue from the dedicated pet supermarkets, which have proved that a comprehensive range is the way to gain sales, and is trialling a much wider selection of products than usual at its new Newcastle store. Tesco's Jim Loxdale, recently in charge of petfood buying and now in commercial logistics, says the enlarged fixture has been divided up "to create a sense of theatre" and to encourage customers to shop in more detail. Bulk petfoods, small animal food, accessories and treats are among the extra lines being trialled. "We've been doing it since November and it's been very successful," says Loxdale. "It's helped us explore areas we've not tried before, such as bulk petfood which has shown us that customers like the convenience of buying in this format. We are now looking to see which lines could be introduced to other stores." Gerardo Mazzeo, marketing manager (dogs) of Friskies, Tesco's category partner in the Newcastle development, says the multiple's aim is to maximise traffic throughput by turning petcare into a destination shop and stem the sales leakage to pet superstores. "All the multiples are trying to generate additional traffic from pet shops and superstores, but Tesco is at the most advanced stage," says Mazzeo. One of the Newcastle store's most significant developments is the expansion of small animal lines to include complete foods, treats, bedding, hay products and accessories. Tom Page, sales director at supplier Wagg Foods, says this is a relatively new area for the multiples, but one with huge growth potential because of the popularity of rabbits, guinea pigs, hamsters and other small mammals. "Since we introduced small animal feed to Asda three years ago, we've expanded into Tesco, Safeway, Morrisons, symbol groups and the Co-ops, and have seen our small animal sector sales increasing between 50­100% year on year," says Page. Looking at the petcare market as a whole, cat and dog products generate the vast majority of sales. Catfood is ahead of dogfood, and looks set to increase its share because of the continuing rise in the cat population. The food market, worth £1.14bn, is particularly buoyant at the moment, largely due to the development of more convenient food formats, and the upsurge in pet treats. Complete dry food, which provides a balanced diet in one meal, is the biggest growth area and is part of a global trend. Dry food accounts for 80% of the US market, and approximately two thirds of the continental European market. The UK lags behind, with a ratio of two thirds wet (canned) to one third dry. But all the signs point to it following the European example. Taylor Nelson Sofres' latest figures show a 23.9% rise in complete dry dog food and a 6.5% gain in dry cat food last year. The main reason for its growth is the convenience it provides pet owners. "It's just easier all round," says Nigel McCrea md of Ralston Purina whose Bakers Complete is claimed to be the leading complete dry brand in grocery. "It's less messy and smelly, is more digestible and, in the case of dogs, what comes out the other end is a lot less unpleasant." Another reason is the development of complete dry brands for grocery. "Until fairly recently, the sector was the preserve of specialist pet suppliers and vets, with grocery concentrating mainly on flavour variants," says McCrea. "Now all that's changed with grocery going for a bigger slice of the petfood market." Increasingly the trend is towards nutritionally en-hanced premium products with a healthier claim. Friskies' Mazzeo explains: "Petfood is following human healthy eating patterns. Pet owners are now demanding products with a healthier claim." In the last year the company has launched Winalot Complete Digestion+ for dogs with chicory, a natural probiotic ingredient that boosts the number of friendly bacteria in the gut, and Vital Balance, a super premium product for cats. Butcher's Pet Care recently introduced two complete dry ranges for dogs claimed to be free of soya and genetically modified ingredients. Pedigree is about to launch a super premium dry product for dogs exclusively for the grocery market and is heavily supporting its Complete dry range this year. Last year it enhanced its entire dry and canned dogs range with Fortivil, a formulation of vitamins, minerals and oils designed to promote health in a number of ways. Costcutter's trading manager Ian Cameron says dog owners are keener than cat owners to try dry products. "Dry dogfood is performing better than the cat equivalent. Cat owners appear to be more reluctant to try these products." Unsurprisingly, with all this activity, canned food is in volume decline. It is still the largest segment of the market, but the question remains ­ for how long? The major brands express confidence in it, but the level of new product development is noticeably low. Butchers bucked the trend when it launched Classic for cats last June, embellishing the 400g cans with pleasing imagery of cats and emotive wording. Butcher's head of marketing Paul O'Reilly claims it is the first premium cat food to target owners' lifestyles, in this case, aspirational, independent women of all ages. Launched in the centre and south of the UK, it has 54% of total distribution and is in four multiples. Where the canned or wet food market is doing particularly well is in prepacked single portions for cats. Friskies' marketing manager (cats) Mark Nelson says canned catfood's value growth of 13.3% year on year is being largely driven by the single serve format. Sales of Felix single serve foil tray meals doubled last year, says Nelson. Pedigree's Whiskas Singles have done even better, achieving 150% growth last year [Information Resources] through a major marketing drive which pushed the variant to the number one slot in the sector. The company's head of external affairs Michael Edwards says the concept is perfect for cats and their owners. "Cats are fussy eaters, like fresh food every time, so 100g pack provides enough for a single meal. And consumers like the convenience, hygiene and no waste." Following this success, Pedigree has introduced a mixed pack to provide the variety the market wants and, at the end of last year, put Kitekat into pouches as Kitekat Express. Multipacks of this variant are on trial at the moment. Edwards says the single serve format will be extended to other cat brands this year. Virtually everyone sees huge potential in pet treats, a sector largely untapped until recently and now worth £110m and growing rapidly. It's the focus of a great deal of product development at the moment, with the main thrust being on creating treats that are healthier or fulfil a functional purpose. Edwards says it will be a key area for Pedigree this year. It has extended its dog range, which includes its Schmakos top selling treat, with Breath Buster and DentaRusk, both designed to help with oral healthcare. It's also targeting cats, a less developed sector, with Dentabits, which helps keep teeth clean, and Kitamins, a vitamin enhanced treat. Ralston Purina is creating healthier treats. Its Bakers Power Crunch for dogs has no added sugar. Friskies, which claims to have kickstarted the cat treat market three years ago with its Felix variants, has more planned this year. n {{FOCUS SPECIALS }}