Dog Food in India- MARKET REPORT
Headlines
·
Dog food current value sales
grow by 21% in 2008 to reach Rs1.46 billion; volume sales grow by 12% to reach
12,964 tonnes
·
Dog food manufacturers begin
using ingredients that are more familiar to owners to capitalise on the
humanisation trend
·
Economy dry dog food shows the
fastest growth in current value terms with an increase of 25%; dog treats is
the most dynamic performer in volume terms with growth of 14%
·
Average unit prices increase by
8% in line with rising production and raw material costs, causing sector
current value sales to grow faster than volume sales
·
Effem remains the clear leader
in 2007 with a sector value share of 40%, followed by Ruskin Pet Products with
a share of 12%
·
Dog food constant value sales
are expected to grow at a CAGR of 11% over the forecast period to reach Rs2.52
billion in 2013; volume sales are expected to grow at a CAGR of 9% to reach
19,895 tonnes in the same year
Trends
·
In 2008, dog food manufacturers
placed less emphasis on the functional benefits of their products and focused
more on adding and promoting their use of ingredients that owners were familiar
with. For example, a number of manufacturers began placing pictures of
ingredients like meat, vegetables and milk on packaging for their products.
These efforts to make dog food more 'palatable' to owners reflected the
increasing humanisation of pets in India. Towards the end of the review period,
many owners began to transfer their own expectations of food on to their dogs,
and were reluctant to feed them anything that they themselves could not
identify with. This trend was particularly strong in larger urban centres.
·
Restrictions on imports from
the US and many European countries continued to hinder the development of the
mid-priced and premium dog food segments towards the end of the review period.
These restrictions were imposed to stop the spread of bird flu in India.
Leading mid-priced dry dog food brands like Purina Dog Chow and Pro Pac, both
of which are imported from the US, were worst affected. The situation was so
bad that Purina Pet Care, manufacturer of Dog Chow, decided to fold up its
Indian operations and withdraw from the pet food and pet care products market
altogether. Midwestern's Pro Pac brand was not available in India throughout
2007 or at the beginning of 2008, but it is expected to reappear on retail
shelves early in the forecast period provided import restrictions are eased.
·
Growth in dog food current
value sales in 2008 was markedly faster than the CAGR recorded for the review
period as a whole, while volume growth was only slightly faster than the 5-year
CAGR. The acceleration in current value growth reflected price increases
imposed by manufacturers seeking to offset rising production costs. Most
consumers who buy prepared dog food products are middle or upper income earners
and were therefore willing to accept price hikes, which contributed to the
slight improvement in volume growth. Volume growth was also driven by growth in
the pet dog population.
·
Average unit prices rose
substantially in 2008, mainly due to rising production and raw material costs.
Prices for leading brands like Pedigree increased sharply in line with the
rising cost of standard dog food ingredients such as corn, oil, milk and meat.
Dry dog food showed the biggest average unit price increase of 10%, while wet
dog food showed an increase of 2%. Inflationary pressures also served to drive
prices upwards. Average unit prices are likely to continue increasing over the
forecast period.
·
Dry dog food continued to
dominate the category in 2008, accounting for 85% of total dog food volume
sales. Most owners find that dry dog food products are easier to handle and
store; in particular, they are less likely to give off the same kind of strong
odour as wet products after they have been opened. Many owners also perceive
dry dog food products as offering better value for money.
·
Economy dry dog food showed the
most dynamic development in current value growth terms in 2008. While this was
partly due to the fact that it experienced a bigger increase in average unit
prices than any other category, economy dry dog food also benefited as import
restrictions limited the availability of mid-priced and premium brands, most of
which are imported. Strong current value growth for economy dry dog food was
also attributable to the successful introduction of more specialised or
value-added products at higher price points. For example, Effem launched new
products for dogs at different life stages, from puppies to adults, under its
Pedigree brand. This trend towards greater segmentation was evident throughout
dog food, with the premium segment witnessing the launch of new dog breed-,
age- and size-specific variants under leading brands like Royal Canin.
·
Dog treats showed the fastest
growth in volume sales of any dog food category in 2008. While this was partly
due to the fact that it was still emerging from a very low base, strong volume
growth also reflected the trend towards the humanisation of pets in India. In
line with this trend, many owners became more willing to spoil or treat their
dogs with dog biscuits, dog chews and other products. Strong volume growth also
reflected competitive prices, with many domestic players present in the
lucrative dog treats niche. Private label dog treats products were also offered
by larger pet shops chains like Akbarally's.
·
While pet shops and veterinary
clinics continued to dominate retail dog food distribution in 2008, during the
review period the value share of the supermarkets/hypermarkets channel rose
steadily in line with the expansion of leading chains like Reliance and Hyper
City across India. To reach more consumers, leading dog food players entered
into agreements with such chains to have their products listed in their
outlets. Pet shops was the leading dog food distribution channel in 2008 with a
value share of 49%, followed by veterinary clinics with 39% and
supermarkets/hypermarkets with 10%.
·
The proportion of dog-owning
households in larger India cities such as Delhi, Mumbai, Bangalore and
Chandigarh increased rapidly towards the end of the review period. In smaller
towns and rural areas, however, the number of dog-owning households remained
very low. In 2008, it was estimated that just 3% of Indian households kept dogs
as pets. The pet dog population was estimated at around 6.8 million. While
large breeds such as German Shepherds and Labradors were the most popular,
towards the end of the review period many urban dog owners showed an increasing
preference for small breeds like Pugs and Pomerians, which are easier to look
after and better suited to living in smaller city apartments and houses.
·
Prepared dog food products
accounted for just over 1% of total dog food consumption in India in 2008. Most
owners in the country feed their dogs on scraps or leftovers, occasionally
supplementing this diet with prepared dog food products.
Competitive Landscape
·
Effem retained a commanding lead
in dog food in 2007 with a value share of 40%, thanks mainly to the strength of
its competitively priced Pedigree brand. Pedigree held the leading position in
both wet and dry dog food. Because it is manufactured locally, Pedigree was one
of the few multinational dog food brands to avoid the negative impact of import
bans towards the end of the review period. Ruskin, which offers the Royal Canin
brand, was the second leading dog food player in 2008 with a value share of
12%. Because Ruskin is active in the premium price segment, it does not compete
directly with Effem. Leading the charge among domestic players in 2007 was
Tetragon Chemie, claiming third place in dog food with a value share of 10%.
The company's Nutripet brand is positioned alongside Pedigree, and appeals to
price-conscious consumers.
·
Effem showed the most
impressive performance of any dog food player in 2007, increasing its leading
value share by four percentage points on 2006. This was largely attributable to
the competitive prices of its Pedigree brand. Additionally, unlike other
multinational brands, Pedigree was not affected by import restrictions and was
therefore available all year round, ensuring a strong degree of consumer
loyalty. Value share gains for Effem were also driven by the company's
willingness to invest in expanding its distribution network and advertising its
products on TV and in the print media. Midwestern showed the worst performance
of any dog food company in 2007, with its value share declining by five
percentage points. This share drop was attributable to the fact that its Pro
Pac brand was not available in India throughout the year due to the ban on pet
food imports from countries affected by bird flu.
·
While some brands were
withdrawn from dog food towards the end of the review period due to the ban on
imports from bird flu affected countries, there were a number of new launches
in the category over 2007 and in the first half of 2008. With its Pro Pac brand
absent from retail shelves for most of the year, in 2007 Midwestern decided to
launch Propett in an effort to maintain its competitive position. Because it
was imported in bulk from Brazil and repackaged in India, Propett was not
affected by the import restrictions that proved so damaging to Pro Pac. In
January 2008, Effem launched the Pedigree Professional range, which retails at
a higher price than its standard Pedigree products. The company adopted a
slightly different strategy for marketing and distribution of the Pedigree
Professional range, making it available in non-grocery retailers channels such
as pet shops, breeders' clubs and veterinary clinics. Pedigree Puppy Weaning
Diet was the most promising new product in the range, as it specifically
targets owners of young puppies, who are more inclined to spend money on
improving and maintaining the health of their pets. The product also appeals to
new owners who are unsure as to what they should feed their puppies for the
first few months after they are weaned.
·
Effem was one of the few
companies to invest heavily in building consumer awareness of its prepared dog
food products throughout the review period. The company actively advertised its
Pedigree brand in pet magazines and on TV. Most other manufacturers were only
able to advertise in the print media due to financial constraints, and thus
frequently sought to promote their brands by organising or sponsoring dog
shows. In addition, some manufacturers also targeted their promotional efforts
at dog breeders. In 2008, however, the most popular and effective promotional
strategies remained ensuring that products were widely available and visible on
retail shelves, and using vets and breeders to recommend brands.
·
Most premium dog food brands
available in India are imported and sold through veterinary clinics, breeders'
clubs and pet shops. Among the most popular premium brands in 2007 were Royal
Canin, Eukanuba and Hill's Science Diet. These brands are usually only
purchased by higher income dog owners. Mid-priced and economy brands are mainly
sold through pet shops, supermarkets/hypermarkets and veterinary clinics.
Economy products were by far the most popular in dry dog food in 2008, while
wet dog food was dominated by mid-priced brands.
·
As dog food in India is still
at an embryonic stage and consumer awareness about prepared products is low,
retailers refrained from launching private label products in the category
during the review period. The relatively low number of
supermarkets/hypermarkets chains with the necessary financial resources also
prevented the development of private label dog food products. However, large
pet shops chains such as Akbarally's did introduce private label dog treats
products to capitalise on the trend towards pampering and humanising pets in
India. Many owners like to give their pets dog biscuits or dog chews as rewards
during training.
·
Venky's and Tetragon were the
biggest local manufacturers in dog food in 2007. Most other local companies
were only active as importers and distributors. Among the most prominent of
these was Midwestern, which imports dog food in bulk from overseas and
repackages it in India. Most domestic players are present in the economy dog
food segment or in dog treats. Multinationals meanwhile are mainly active in
the premium and mid-priced segments. Effem was the only multinational with a
significant presence in the economy segment in 2007; it was also one of the few
foreign players to maintain production facilities in India.
Prospects
·
Given the massive gap between
prepared and non-prepared food in 2008, dog food retains plenty of room for
further development over the forecast period. As a result, all categories are
expected to show robust growth in volume and constant value terms. Volume and
constant value growth rates will slow slightly towards 2013 in line with increasing
maturity, but on the whole dog food will maintain its positive development as
the pet humanisation trend gains momentum and the pet dog population continues
to rise. Dog food will also benefit as manufacturers continue to launch new
specialised or value-added products targeted at different breeds, sizes and
life stages. Following the example of Effem with its Pedigree Professional
range, a number of manufacturers are likely to launch products with specific
functional benefits, such as the ability to help maintain a healthy coat or
wean puppies off milk. At the same time, manufacturers throughout dog food will
continue to add ingredients that are familiar and appealing to owners.
·
Dry dog food will continue to
dominate the sector, and is expected to show faster growth in volume and
constant value sales than wet dog food. Most dog food brands are available in
dry format, and consumers prefer dry products as they are easier to serve and
store. Dog treats is expected to show the fastest growth in volume sales of any
category as it continues to emerge from a low base and capitalise on the trend
towards humanising and pampering pets. However, demand for dog chews and
similar products will continue to be concentrated among higher income urban dog
owners. Economy dry dog food is expected to show the fastest growth in constant
value terms. While this will be partly due to the fact that average unit prices
in the category are expected to rise steadily, the fact that most economy dry
dog food products are manufactured locally means it should continue to benefit
as import restrictions limit the availability of more expensive imported
brands. Effem's strong promotional support for its Pedigree brand will also
contribute to the positive development of the category, as will competitive
prices.
·
Bans and restrictions on
imports of pet food from countries affected by bird flu will remain the biggest
threat to dog food over the forecast period. If consumers cannot find their
preferred brand on retail shelves, they may switch back to feeding their dogs
on scraps. This would have a negative impact on dog food as a whole. To
overcome the problems associated with import restrictions, it is possible that
some multinational players will follow the example of Effem and set up production
facilities in India. Relatively high unit prices could also hamper the
development of dog food. Moreover, since many Indians are wary of consuming
packaged and processed food themselves, they may also be reluctant to purchase
prepared food products for their pets.
·
Average unit prices in dog food
are expected to grow at a CAGR of 2% in constant value terms over the forecast
period. The upward movement will continue to be driven by rising production,
transport and raw material costs, as well as a gradual trend towards more
expensive functional and added-value products. New launches of more specialised
products by leading players like Effem and increasing segmentation in dog food
as a whole will also push prices up.
·
The Pedigree Professional
range, which was launched at the start of 2008, is expected to perform well
over the forecast period as more owners become aware that their dogs may have
specific nutritional requirements depending on their breed, size and age.
Rising demand for Pedigree Professional products should help Effem to
strengthen its position in mid-priced dog food. Midwestern's Propett, launched
in 2007, is also expected to fare well, as the company already has a well
established distribution network for its Pro Pac brand. It also has valuable
experience in marketing dog food, maintaining close relationships with
breeders, vets and pet shop owners so that they will recommend its products to
consumers.
·
Over the forecast period, small
dogs are expected to become more popular with people residing in big cities,
where houses and apartments are usually too small to accommodate large breeds.
Moreover, children and women are increasingly expected to opt for smaller dogs
because of their friendlier appearance and the perception that they are easier
to care for. Most people living in larger houses, small towns and rural areas
will continue to prefer large dogs for security reasons.
·
The demand for standard premium
and super-premium dog food brands is expected to pick up over the forecast
period. However, this will depend on whether or not and for how long
restrictions on pet food imports from countries affected by bird flu remain in
place. The economy segment, which is largely unaffected by import restrictions,
should continue to develop at a faster pace.
Sector Indicators
% households
2003 2004 2005 2006 2007 2008
Households owning
a dog 2.7 2.7 2.7 2.8 2.8 2.9
Source: Official statistics, Trade
associations, Trade interviews, Euromonitor International estimates
'000s of animals
2003 2004 2005 2006 2007 2008
Dog population 5,496.0 5,770.8 5,972.8 6,241.5 6,480.4 6,824.4
Source: Official statistics, Trade
associations, Trade interviews, Euromonitor International estimates
% total
consumption
2003 2004 2005 2006 2007 2008
Prepared dog food 0.9 1.0 1.0 1.1 1.1 1.2
Non-prepared dog
food 99.1 99.0 99.0 98.9 98.8 98.8
Total dog food 100.0 100.0 100.0 100.0 100.0 100.0
Source: Official statistics, Trade
associations, Trade interviews, Euromonitor International estimates
Sector Data
Rs million
2003 2004 2005 2006 2007 2008
Dog food 794.7 811.6 942.9 1,093.4 1,209.6 1,463.6
Wet dog food 7.1 8.1 9.5 10.7 11.9 13.4
Dry dog food 628.2 623.4 728.1 846.6 923.8 1,133.9
Dog treats and
mixers 159.4 180.1 205.3 236.1 273.9 316.3
Source: Official statistics, Trade
associations, Trade press, Company research, Store checks, Trade interviews,
Euromonitor International estimates
% current value
growth
2007/08 2003-08 CAGR 2003/08 TOTAL
Dog food 21.0 13.0 84.2
Wet dog food 12.6 13.6 88.8
Dry dog food 22.7 12.5 80.5
Dog treats and
mixers 15.5 14.7 98.5
Source: Official statistics, Trade
associations, Trade press, Company research, Store checks, Trade interviews,
Euromonitor International estimates
Rs million
2003 2004 2005 2006 2007 2008
Premium dog food 180.0 122.6 148.3 175.2 201.5 241.8
- Premium wet dog
food - - - - - -
- Premium dry dog
food 180.0 122.6 148.3 175.2 201.5 241.8
Source: Official statistics, Trade
associations, Trade press, Company research, Store checks, Trade interviews,
Euromonitor International estimates
% retail value
rsp
Company 2003 2004 2005 2006 2007
Effem India Pvt
Ltd 29.2 35.0 34.8 35.6 39.5
Ruskin Pet
Products Pvt 16.2 11.0 11.0 11.3 12.0
Ltd
Tetragon Chemie
Pvt Ltd 10.0 9.4 9.1 9.2 9.7
Venky's India Ltd 3.1 3.9 3.1 3.9 4.4
Asian Diet
Products Ltd 3.4 3.8 3.5 3.6 4.0
Naughty Pet 2.4 2.9 2.6 2.6 2.7
Life Laboratories 1.8 1.6 1.5 1.5 1.4
Creative Pet
Products Co 1.2 1.1 1.3 1.3 1.4
Procter &
Gamble Co, The 1.1 0.4 1.2 1.2 1.3
Bento Kronen
Products- - - 0.5 0.6 0.7
Versele Laga
Midwestern Pet
Foods Inc 7.3 4.6 6.2 5.7 0.4
Purina Pet Care
India 0.8 1.5 1.6 1.1 -
Pvt Ltd
Private Label 1.6 1.6 1.5 1.5 1.6
Others 21.8 23.4 22.0 20.9 21.1
Total 100.0 100.0 100.0 100.0 100.0
Source: Trade associations, Trade press,
Company research, Trade interviews, Euromonitor International estimates
% retail value
rsp
Brand Company 2004 2005 2006 2007
Pedigree Effem
India Pvt Ltd 20.4 20.2 20.7 22.7
Pedigree Puppy Effem India Pvt Ltd 14.6 14.6 14.9 16.8
Royal Canin Ruskin Pet
Products Pvt 8.7 8.7 9.0 9.5
Ltd
Nutripet Tetragon
Chemie Pvt Ltd 6.9 7.0 7.1 7.7
Royal Venky's
India Ltd 3.8 3.1 3.8 4.3
Stylam Choostix Asian Diet Products
Ltd 3.8 3.5 3.6 4.0
Naughty Pups Naughty Pet 2.9 2.6 2.6 2.7
Nutribix Tetragon
Chemie Pvt Ltd 2.4 2.2 2.2 1.9
Probisk Life
Laboratories 1.6 1.5 1.5 1.4
Happy Dog Creative Pet
Products Co 1.1 1.3 1.3 1.4
Eukanuba Procter
& Gamble Co, The 0.4 1.2 1.2 1.3
Bento Bento
Kronen Products- - 0.5 0.6 0.7
Versele
Laga
Pro Pac Midwestern
Pet Foods Inc 4.6 6.2 5.7 0.4
Dog Chow Purina Pet
Care India 1.5 1.6 1.1 -
Pvt
Ltd
Private label 1.6 1.5 1.5 1.6
Others 25.8 24.4 23.4 23.6
Total 100.0 100.0 100.0 100.0
Source: Trade associations, Trade press,
Company research, Trade interviews, Euromonitor International estimates
% retail value
rsp
Brand Company 2004 2005 2006 2007
Stylam Choostix Asian Diet Products
Ltd 17.0 16.0 16.5 17.5
Pedigree Effem
India Pvt Ltd 16.0 15.0 15.0 15.0
Naughty Pups Naughty Pet 13.0 12.0 12.0 12.0
Nutribix Economy Tetragon Chemie Pvt Ltd 7.0 7.0 7.0 6.5
Treats
Probisk Life
Laboratories 7.0 7.0 7.0 6.0
Happy Dog Creative Pet
Products Co 5.0 6.0 6.0 6.0
Nutribix Dog
Rolls Tetragon
Chemie Pvt Ltd 4.0 3.0 3.0 2.0
Private label 7.0 7.0 7.0 7.0
Others 24.0 27.0 26.5 28.0
Total 100.0 100.0 100.0 100.0
Source: Trade associations, Company research,
Trade interviews, Euromonitor International estimates
Rs million
2008 2009 2010 2011 2012 2013
Dog food 1,463.6 1,684.6 1,902.5 2,118.7 2,325.6 2,515.8
Wet dog food 13.4 14.7 16.1 17.6 19.2 20.8
Dry dog food 1,133.9 1,314.0 1,487.8 1,656.6 1,813.1 1,949.9
Dog treats and
mixers 316.3 355.9 398.6 444.4 493.3 545.1
Source: Official statistics, Trade
associations, Trade press, Company research, Trade interviews, Euromonitor
International estimates
% constant value
growth
2008-13
CAGR 2008/13
TOTAL
Dog food 11.4 71.9
Wet dog food 9.3 56.0
Dry dog food 11.5 72.0
Dog treats and
mixers 11.5 72.3
Source: Official statistics, Trade
associations, Trade press, Company research, Trade interviews, Euromonitor
International estimates
