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overview Tue, 16 Jan 2018 07:18:00 +0000 Joomla! 1.7 - Open Source Content Management en-gb Petfood Forum Asia 2014 (Bangkok, 04-09-2014) A lively and interesting Petfood Forum Asia in Bangkok on April 9 2014.

About 160 people from the industry attended. People for all over the place:
SE Asia, India, Oceania and even the Dominican Republic.

A variety of subjects was presented ranging from influencing choice of pet
food brands to air purification and views on grain or no grain in dog and
cat diets.

As usual the forum was very well organised by Petfood Industry because they
set their standards high; which is an opinion that was shared by the
attendees I spoke with.

I welcome you to download the powerpoint file of what I spoke about during the forum. If you have any questions or would like some additional information, you are more than welcome to contact me at

Petfood Forum Asia 2014 (Bangkok)

]]> (Super User) Wed, 16 Apr 2014 07:47:35 +0000
International Pet Industry Summit 2012, Shanghai IMG 1423My key note speech at the International Pet Industry Summit (October 2012, Shanghai) had as objective to share with the audience of the summit my personal views – which are based upon 30 years in the industry – on the future developments in the global pet food industry.

After explaining a bit of history and describing the current situation, I arrived at hopefully provocative statements about the challenges the industry is facing.

Until recently pet foods was essentially a “win-4-all” industry. Entry barriers were relatively low, the market provided for healthy growth perspectives, the trade was easy-going.

But gradually things started to change, particularly in the more developed markets; there was no more “guarantee” for growth, competition got fiercer, the trade got much more powerful and private labels started to take a sometimes significant slice of the market-pie.

One would expect that suppliers to the market would have readily adapted to these new business-circumstances. But quite a few of them didn’t. Which eventually led to a bigger divide than ever between the truly global players and the 2nd tier companies. Furthermore a wave of mergers & acquisitions went through the industry. Partly to create the mass and the size to counter the ever-increasing power of the retail-trade. The balance of power changed dramatically from a supplier-market (you sell what we have) to a retail-buyer market (we sell what sells).

With this in mind we can look at the challenges the industry is facing. Even more than is already the case today, the industry will have to step up its New Product Development programs and investments. Certainly in the mature markets where NPD is one of the main drivers for growth. This implies shorter life-cycles for products and implicitly shorter earn-back periods as far as the NPD-investment is concerned.

But New Product Development without New Process Development will ultimately prove to be a game without winners. We have an industry that is extremely energy-intensive in processing raw materials that in itself have a low value.

Technology-breakthroughs will be required to bring the industry to the next level. Maybe by starting to “borrow” technologies that are already common and proven in the human food industry.

Another very tangible challenge is the procurement of ingredients and raw materials in an increasingly demanding global environment. Are we sure that we need to have the highest quality ingredients to feed our pets? Have we tried to find adequate alternatives for the at this moment common and well-known raw materials? Because competing on the global commodity market with the human food and energy industries will prove to be a lost cause in the long run.

Is it all that bleak? Of course it isn’t. Key regions in the world still offer excellent growth-opportunities because of the low PPP (= Prepared Petfood Penetration) these regions experience today.

We deal with a much better informed (and therefore more critical) consumer who has 24/7 access to mountains of information; and these consumers are likely to drive some of the important changes the industry will go through. Certainly natural, functional and humanisation will remain the other key drivers for growth.

However, a new set of rules in and for the industry is imminent.

Adjusting to this new set of rules paves the way for continued success!

]]> (Super User) Sun, 25 Nov 2012 14:07:09 +0000
Kids In A Candy Store! What is new at the Interzoo?

The industry is preparing for its main bi-annual event: the Interzoo in Nuremberg!

Some of us will go there as exhibitors, others as visitors.

And all of us will see an offer which will be again unprecedented in the history of the industry.

The real challenge – for exhibitors and visitors alike - will be: how to absorb this enormous amount of information while separating chaff from wheat? Those visitors who have prepared themselves for the exhibition by focussing on a certain product-category or by having a list of must see's and must do's will find being at the show more relaxing than those that go unprepared; the latter will be so surprised that they may go home slightly disappointed, concluding "I didn't see anything really new!"

Is that why people visit the exhibition: to find and see new and exiting? New can be new for the industry, or just for the visitor. New can be a minor alteration to an already well-known theme. Is that enough to get exited or does one expect a genuine breakthrough which will significantly change the life of the animal, its owner or both?

And to which extent do visitors take new trends in demographics, in the human/animal relationship, in human lifestyle into consideration. Or should I ask, does the industry do so?

Will we see easy to carry – by elderly people - bags of dogfood; will we see fresh prepared cat meals for the affluent dinky's; will we see ...............?

The list of examples can be a long one. But I fear that the list of affirmations will be sensitively shorter.

And of course we must make a clear division between a hype and a trend. If something is extremely fashionable for a very short period of time and shared by a great number of animal-owners you can of course smell the business opportunity. That's what hypes are for! However, the second container you ship in from a low-cost country may already arrive too late: the hype is gone!

We all tend to look at trends as something that happens to us, as something we can or must react to. But somebody or something else provides the stimulus: the trend. How do these trends emerge? In the case of demographics they tend to grow over a longer period of time; the greying society is a.o. the result of healthier living and more developed life-sciences. Other trends – such as life-style – only take a short period to become influential. Flower power struck us in the 60's of the last century more or less overnight. It needed only a few icons and a lot of media-attention to become the "in" thing. Which lasted long enough to make some people believe that it's still there.

Now the question is: can we create a trend ourselves, to the advantage of our business specifically or the industry in general? I think we can, with focus, dedication and commitment.

Paul Iams did so (although the genesis may have been a bit of Eureka) when he started Eukanuba, because he believed in feeding dogs (and later cats) in the best way possible, without the market having set standards for him! He set his own! There were no socio-demographic or other tangible trends that he could use as a coat-hanger. He just believed and put his barriers high! So instead of following a well-defined trend, Paul Iams created one that has lasted until today.

So, what to do with the cornucopia of products and ideas one will be overwhelmed by at the Interzoo. Select on the basis of yet small but growing trends and take a leading position in new niches or follow the main stream to avoid risk?

Choices you as the entrepreneur will have to make taking into account the kind of business you wish to run. Or will no choices be made in the end because the exhibition-euphoria is caught up by the daily worries and routine. Whatever the case may be, let the visit to Nuremberg be illuminating.

]]> (Super User) Thu, 16 Feb 2012 15:29:53 +0000
A CORNUCOPIA OF IDEAS? The most recent Global Pet Forum – convening in Prague earlier this year – had a most challenging theme: "expanding the pet market - and your piece of the pie!"

The challenge was twofold: expansion and cooperation.

Why? The industry has seen slow growth over the last years; therefore expansion most likely has not been more than "retain the share we have in the market we know". Individual company plans may have been aggressive, but much more to oust competition than to grow the market. And, expanding the market is not something that can be done by individual companies anymore. A collective approach to expansion needs to be considered.

Ideas for collective approaches were presented during the Forum. As were trends in the market. Initiatives were discussed, but the common denominator was the question: "how do we get all noses pointing in one and the same direction?"

Perceived controversies are the relationship between manufacturers and retailers; as well as the relationships between manufacturers and distributors. On the surface their objectives may coincide – all geared towards expanding the market - but as soon as shareholders' value emerges as one of the individual objectives, most of the hope for collectivity – if not all – is lost.

In some geographical markets petfoods are in their growing-stage; say the earlier phase of maturity. When observing what the activity of both manufacturers and retailers really is about, one cannot but wonder if the short-term is the only thing that counts. In a growing market there is room (and also the necessity) for collectivity to popularise the use of products, in this case foods. If only to have a massive base once that market starts plateauing. By explaining the positive effects on health and wellbeing of the animal that industrially prepared foods have. A collective approach provoke market-expansion. It is of course up to the manufacturer and retailer to work on getting (more than) their fair-share of the growth. However, instead of investing in expansion the industry now seems to invest in destruction. Too early in the development of the market (again, this relates to petfoods) price has become the focal point. This implies that funds available for a collective approach are gradually melting away; the focus again becomes a selfish one!

One can argue that private label has a negative influence on the expansion of the market. They tend to replace branded alternatives at a lower value-base, but are not to be seen as drivers for market-growth. Nobody will buy a dog because the food gets cheaper!

Furthermore private labels put margins under pressure, certainly for the manufacturers. This implies that resources available to expand the market (new product development being one of them because genuinely new products provide an impetus for market-growth) are likely to decrease.

All-in-all the industry doesn't lack ideas to expand the market; it's the translation of these ideas into meaningful concepts that needs to get more focus! Wherever and whenever possible on a collective basis to have the optimum use of resources available.

Expansion of the pet market is a long-term game; entering this game with a short-term gain objective will prove to be counter-productive and nothing will have changed vis-à-vis the current status quo.

]]> (Super User) Sat, 18 Feb 2012 13:44:30 +0000
But that's just marketing, isn't it? This is what you sometimes hear when you have a chat with people from our industry;  the more so when those that represent the “scientific conscience” are around. However, if the questions is:

“Is pet food about marketing or nutrition?” the clear answer must be: both! More intriguing might it be to ask: Is marketing about nutrition as far as pet food is concerned? I think that the only possible answer to that question is: certainly not always!

In very mature markets marketers have to struggle to have their product and brand stand out; to give it a reason to buy or rather a reason for being. Old truths such as quality and price have an eroding value. People want more, other, without precisely knowing what this should be. In total desperation these marketers therefore become creative beyond belief. Once super premium got a foothold in the European market – and thus saw a plethora of suppliers of products with a super premium positioning* – people became inventive and brought out hyper premium and even ultra premium ranges of product. Was the food (or the nutrition) essentially different compared to the super premium products then on the market? No, it was not!

But the intention was to be PERCEIVED as being different; thus implying superiority.

*: after the launch of Eukanuba Premium for dogs in Spain with 30% protein and 20% fat, the Spanish definition for super premium became 30/20!

Another example is grain-free. There seems to be a hot debate in the scientific world about the use of cereals in dog and cat food, whereas if taken from a nutritional point of view grain-free products are as good as products containing cereals. But grain-free is positioned as being closer to the animals “original” diet; this perceived superiority or pseudo-authenticity can demand a higher price. And not only because animal proteins are mostly more expensive than vegetable ones.

Probably 10 years ago we saw so-called holistic pet food coming to market; a trend that has gradually become mainstream. The real boom seems to have passed already. But what is it, holistic? I recently asked manufacturers of holistic pet food at Interzoo. And I got an avalanche of different answers.

Philosophically speaking (w)holism is defined (Concise Oxford Dictionary) as follows: “the theory that certain wholes are to be regarded as greater than the sum of their parts”. Can this apply to pet food and if so, how exactly? Are the ingredients reinforcing one another, providing beneficial nutritional synergies? Is it more than complete? Medically speaking (w)holism is defined (same dictionary) as: “the treating of the whole person (read pet) including mental and social factors rather than just the symptoms of a disease”. Just with a food?

Does this mean that holistic products are  curative (=treatment) beyond being “just” food? If this is so, we’re looking at a highly potent claim that craves for further explanation; and hopefully scientific substantiation. Or, is that why holistic has not yet been defined as a regulated category by the regulatory bodies?

What to think of “human grade”. Another one of those claims that imply that food containing ingredients of another grade is inferior. But this is questionable. Is there proof that dogs and cats that are fed non-human grade foods have their health jeopardised? And is it ethical to use human grade ingredients for our pets in a world where still one-sixth of its population is mal-nourished?  And around at least 120 million people are constantly on the brink of starvation.

The humanisation of pets which is at least partly the reason for propagating human grade runs the risk of leading us all astray: dog and cats are no humans. Of course our industry has an extremely good reason to use the humanisation-phenomenon:  it’s emotion, so it sells! My conviction is that we do not need human grade ingredients for that.

I think it is fair to say that marketers play a huge role in communicating about pet food and its properties & features; they are on the brink of overstepping a line however when they imply inferiority of other product-offers without proving their own superiority. Particularly when this implication put the end-buyer on the wrong foot and is getting scared for no reason. That is when people say “but that’s just marketing, isn’t it?”

Marcel Blok

Change Stranamics BV/The Netherlands


(Appeared earlier in Petfood Industry’s E-Newsletter)


]]> (Super User) Sun, 30 Nov 2014 10:48:05 +0000
If only fair trade If only …………

Like most of us, I sometimes wonder what the future has in store for our industry. And to which extent we can and do influence what’s in store. This inevitably leads to – at least for me – thoughts or maybe even dreams about the ideal conditions for our industry to prepare itself for the next generation. The “If only…..” dreams. The wishes we hope will come true.

Of course we have lots of different wishes; collectively, individually. Practical ones and utopian ones. But wishes all the same.

To mention one that is in the top-5 of my list: trading fairly. Although only slow progress seems to be made on a global scale, the thoughts and ideas behind it are getting a foothold in among others the human food industry. Certainly the multinational operators start to pay (more) attention to this phenomenon. With Nestlé and Unilever taking a leading role.

Fair TradeNot only for altruistic reasons; there are strong economic ones as well. Because after all, shareholders need to be pleased. So if Fair Trade (or any other initiative that provides a better livelihood for those at the start of the food chain) finds its adherence in the human food industry, can it do the same in the pet food industry? Or is this too far-fetched? Because the effects are too minimalistic; because the sourcing for the our industry is totally different from the one for the human food industry; because Fair Trade cannot apply to the kind of ingredients that are commonly used for pet foods?

All questions to which I cannot even pretend to have the answer. Maybe somebody else does. But the fact remains that it is my dream to not only contribute to what is best for the animal, but simultaneously improve the fragile balance between people, planet and profit. And trading fairly looks to me to be one of the ways, but certainly not the only one, to achieve this.

]]> (Super User) Tue, 01 May 2012 05:51:02 +0000
SLOW GROWTH: A SELF-INFLICTED WOUND? The European petfood industry is suffering from slow volume-growth if any.

The analysis is simple: dog and cat populations don't show any sign of significant increase (the dog population is stable at best), the fast growth markets of the recent past have reached their maturity stage, dog-owners change their feeding-regime from wet to dry and – on top of that - the spectacular increase of superpremium in the last decade, implying less food-intake in grams because of its high nutritional density.

Overall the European market (if there is such a phenomenon) has definitely not yet reached its genuine saturation. In virtually all geographic markets we're still far away – in comparative terms – from the N.American situation. In other words, if we should reach the levels of calories provided by industrially prepared that the N.American market has been accustomed to over the last years, there is still attractive room for growth.

But the European petfood industry seems to be failing in this respect.

Key contributors to this trend are an increasingly strong internal focus in most companies (caused by a drive for further cost-effectiveness/reduction and absorbing the effects of mergers and/or takeovers), the evident lack of genuine new product development, a focus on competition leading to marginal improvements of own products for the sake of gaining a few sharepoints, but not for the sake of growing the market.

These are evidently business factors that are in the control of the manufacturers.

Another clear influence for slow growth is the changing make-up of retail-distribution. Chains and groups gain in influence very rapidly in an increasing number of countries in Europe. They gradually start to define the retailing-landscape, but more importantly, the retailing culture. More particularly on the specialty retail side, where a "grocery mentality" starts to emerge. Chains and groups don't have the objective to grow the market (that would be tooaltruistic); their goal is to take marketshare, make a handsome profit and be done with it. In fact, by being – sometimes outrageously – demanding (service, terms etc.) in relation to the performance they offer, the chains and groups deliberately lower the total value of the market; to the detriment of the manufacturers' financial performances, who can thus spend less on a.o. new product development, which is vital for further market-growth.

If all parties involved continue to behave as if the petfood market in Europe is totally saturated ( i.e. offers no more scope for growth as a market), we will soon see this self-fulfilling prophesy culminating in less manufacturers that can survive, thus a less attractive and diverse product-offer, thus less interest in the products , thus lower values, thus ....... etc.

A bleak prognosis, but certainly a realistic one if manufacturers and retailers alike keep inflicting wounds upon themselves.

]]> (Super User) Sat, 18 Feb 2012 15:41:41 +0000
THE IAMS – P&G DEAL The end of an era!

Rumours had been in the market for quite some time: The Iams Company is for sale.

But, if one pays attention to all the rumours one hears, M&A appear to be daily routine in the petfood industry.

However, few would have expected that The Iams Company would be sold to an outsider (i.e. a company not already in the industry); and even fewer would have predicted that P&G would value The Iams Company at nearly 3 times its turnover.

This clearly indicates that P&G wishes to establish itself as a serious player in the global petfood market. But the size of the acquisition of The Iams Company is not enough anymore to achieve this objective.

Most likely P&G will continue its acquisition-strategy, to buy itself a decent place in the market. After all, they're accustomed to being # 1 or 2 in the categories in which they operate.

What is likely to happen with the Iams and Eukanuba brands; rather sooner than later?

P&G is primarily a branded goods, grocery oriented company. It cannot be doubted that they will launch the Iams brand in the US grocery outlets on a massive scale. In overseas markets such as Europe it is more than conceivable that the Iams brand will be extended with a range of superpremium dogfoods and be brought to the grocery trade. But probably this will take place after P&G have gathered the experiences of entering the grocery trade in the USA.

If one knows that the Iams brand was originally developed to counter the rapid growth of "commercial petfoods" in the grocery trade – to the detriment of the traditional business of the specialty trade - the historic paradox is evident.

What will happen to the Eukanuba brand?

It will make perfect sense if the Eukanuba brand would remain "specialty trade only"; it's the flagship that grew a.o. through trade-loyalty and bringing that brand to the grocery trade would almost certainly evoke massive negative reactions (read boycot) from the specialty trade, most certainly the independents.

It will be interesting to see how the Iams and the P&G cultures will be merged.

P&G, the highly successful stereotype of traditional marketing and Iams, the acclaimed stereotype of radical marketing!

Will P&G manage The Iams Company at arm's length or do they wish to control the vital areas of their investment such as marketing?

And what will be the effect on the industry of the Iams/P&G deal?

Company-owners wishing to sell their company will seek higher premiums when they sell; whether justified or not. The Iams' acquisition has put new rules to the game!

The big players will rapidly look for acquisition-opportunities to further build critical mass. Smaller, non-niche, operators will (have to) seek alliances with one another in order to stay alive. Capital goods manufacturers will deal with less companies in the future; and these companies will require less capital goods , because their very size will lead to increased manufacturing-efficiencies.

In summary one can say: the petfood industry will never be the same again!

]]> (Super User) Sat, 18 Feb 2012 15:41:09 +0000
LIMITATION TO IMITATION Cynics will tell you that copying somebody else's ideas equals creativity.

As most other industries, the pet industry is prone to copying.

The question however is: "have the copiers been able to leave a lasting impression"?

More often then not the answer is: no!

Strategy ranks # 1 on the chart of abused words in management parlance; innovation is a close second!

Yet companies do maintain that they innovate; mainly because they take somebody else's concept, tweak it a little and bring out a "new and improved" product.

The apparent success of these tweaked propositions is caused by the good relationships that the copying manufacturers have with their trade-partners. So selling-in is not the toughest thing to do. And getting some product-rotation for first shipments isn't too difficult either; offer an introductionary-discount to the end-user and some will try the product.

The question is however: how sustainable is the product once it is left to live it's own life, i.e. without promotional support?

In the vast majority of cases copies undercut the prices of the original. Whereas total manufacturing-cost + the added general overheads are not necessarily lower for copies than for the original. The consequence is that copies sold cheaper than the original have less – if any – margin left to invest in the market, whereas the continuous investments in the market are required for sustainability of the brand and the product.

The paradox lies with the retail-trade

]]> (Super User) Sat, 18 Feb 2012 15:40:19 +0000
PRIVATE LABELS Their relevance to the pet market.

Private labels seems to have different definitions. I've met manufacturers who define them as "everything other than my own brands", whereas others restrict it to brands belonging to retailers with contolled distribution. Everything in between these two appears to be valid as well.

Over the last 10 years private labels – in this case being defined as brands owned and controlled by retail – have taken (sometimes significant) shares of market, primarily to the detriment of local manufacturers' brands; certainly in the dog and catfood arena. And these shares continue to grow. As an example I can mention the development in grocery in Spain, where private labels represented around 5% of market-value 10 years ago – for dog and catfoods - whereas the figures for 2003 show that around 36% of market-value was represented by retail-owned brands.

Another example is Ol'Roy, the WalMart brand, which now takes 3rd place in the massive US market.

What drives this development?

To a great extent the development of retail itself. International consolidation and expansion leads to increasingly powerful retail-chains that have a vested interest in developing their own brand and its image. And petfoods fit perfectly well in this strategy. Because there are very strong manufacturers' brands that serve as the benchmark. And furthermore, petfoods are high-interest products for pet-owning consumers.

This probably explains why slower moving non-food items are still predominantly sold under manufacturers' brands.

Private labels are in essence the domaine of grocery retailers. Because of their widespread presence and the sheer number of end-buyers they serve. Specialty does not yet have those powerblocks and is therefore much less in a position to effectively deal with private labels. Of course you can occasionally see the odd "chain" of 10 shops in which one sees private labels, but the decision to go this route is more based on a strongly developed ego of the owners of the "chain" than on business relevance.

If private labels have grown exponentially in the last decade, is there an end to its growth?

Although one can never be in a position to forecast consumer-behavior over a very long period, I do believe that for petfoods continued growth will be shown, albeit that the growth-curve will flatten significantly.

For non-food items strong growth can be forecasted to the extent that it is expected that proper specialty chains will emerge and further develop and that it will be in the interest of these chains to enhance its specialist image by selling private labels.

]]> (Super User) Sat, 18 Feb 2012 15:33:12 +0000
THE CONSUMER: A MOST UNPREDICTABLE SPECIES! For starters, isn't it relevant to remember that "our" consumer is a human being; and in being so is quite similar to you and me!

The human species tends to have a split personality; on the one hand the joyful and playful homo ludens takes decisions, whereas on the other hand the more severe and rational homo sapiens influences her or his own behavior.

What we do have to keep in mind however is that we are in an emotional industry; we talk about pets getting more and more integrated in the family. This justifies to look at our customers as homo sapiens, rather than homo ludens.

For the sake of clarity and (pseudo-)efficiency we put human beings in all sorts of boxes; we call these boxes target-groups. Of course the human beings = our customers fit in a huge number of boxes, but what we do not know is their set of priorities, i.e. which box comes first in their ranking, which second, etc. If the pet-keeping box ranks high on that list, fine for us in the industry; but if given a low priority, what do we do?

We try to influence the consumer as to her or his decision-making behavior!

And how do we do that?

By giving stimuli to try and stay loyal to the proposition we provide them with, whether that be product or service. We aim to create the satisfied customer.

In this respect the role of retail is increasingly important. Manufacturers can and do work out a wide array of stimuli, but if retail refuses to list and dedicate shelfspace to the proposition manufacturers'stimuli are an absolute waste of time and money.

So one might say that before we can even think about influencing the consumer it is paramount that the manufacturers influence the retailer. Who (re)acts much more as the homo ludens. But is otherwise sensitive to specials, i.e. a short-term offer like limited editions only available at a selected number or group of retailers. Reportedly, the Karl Lagerfeld collection especially designed for H&M boosted the latter's bottom-line with around 20%.

The clearest self-fulfilling prophesy in the industry is the following: for reasons of competition, retail started to use the price-weapon as a point of differentiation. Consumers bought products at a reduced price because they were given the opportunity; and therefore the conclusion seemed to be justified to say that consumers are price-conscious. I challenge that with the statement that if not having been given lower prices as a stimulus to buy, the consumer would still have continued to buy; at higher prices!

Of course discount is phenomenon that is here to stay. And in some countries (the perfect example would be grocery in Germany) so massive that one can ask oneself what they discount from.

Is discount of relevance to the pet industry? Once we look at product-categories that have reached their genuine point of saturation, price (which is not necessarily discount) becomes a more important weapon in the war with competition: but which product-categories have today genuinely reached that point? That is not to say that discount will not exist for the pet industry, but both manufacturer and (specialty) retailer are well advised to postpone the introduction of hard discount for pet related items for as long as possible!

After all, we are in an emotional industry supplying the homo ludens. Isn't it a bit too presumptuous that we put a price on our consumers emotions. And why should we give margin away to the benefit of the consumer, while the market still offers good opportunities for growth. Mustn't we (manufacturers and retailers alike) retain the potential margins to further grow the industry?

How! By offering stimuli to our consumers to change behavior, i.e. to buy more and better. Retail has a clear role to play in this process; it is closest to the final decision-maker, our consumer. And can react quickly to changing circumstances.

Turn the simple purchasing-process into an event. "Make me (the consumer) feel special and I will buy anything your recommend to me!" Puppy-corners that Fressnapf is currently testing in Germany and Austria are perfect examples of coming closer to the individual and emotional needs of their consumers.

One of the key objectives is to improve awareness. Not necessarily only brand, but explaining what your proposition genuinely means for the animal as a member of you consumer's family.

So inform your consumers, help them to become conscious, conscientious and responsable petowners; and continue with this process of informing, because after all, informing equals in our case influencing. Trigger their mind to trigger their purse! In the interest of both manufacturer and retailer.

A well-informed consumer is a loyal consumer and creating loyal consumers must be the objective of all of us in the industry. And above all, "our" loyal consumers become less unpredictable.

]]> (Super User) Sat, 18 Feb 2012 15:32:41 +0000
WHAT’S IN A NAME? Super-, hyper-, ultra-premium; superlatives roll over each other to express difference and superiority. Superlatives that aim to express a high quality-standard, but seem to have created confusion in the end-buyers' minds, resulting in price being a key component for


When focusing on dog and catfood it can be said that in the Spanish market - that is more dry oriented than most of the bigger and more developped petfood markets in Europe; and where prepared petfood penetration is below the European average - this has led to a very peculiar situation: the position of superpremium is now threatened by premium in the specialty trade-channels, whereas premium is under heavy fire from private labels in mas distribution with its inherent huge number of frequent shoppers.

There doesn't seem to be any reason to believe that the Spanish dog and cat-owners wish to spend less on foods for their animals; but given the opportunity to buy – what appears to be a good offer – at lower prices than they were accustomed to, they will evidently chose the cheaper option. Are the distinghuising components of the foods strong and relevant enough?

By now, both manufacturers and retailers seem to suffer from the same self-inflicted wound: the price-weapon started to be used at a development-stage of the category where further healthy and beneficial growth could have been obtained by all serious players in the category.

What happened however was that the branded manufacturers left the doors of retail wide open for the private label operators, resulting in a private label share in Spain that is way above the European average. This is in no way in the interest of neither the manufacturers that offer branded products – nor of the specialty trade.

So what's in a name? The top-end of the market is under severe pressure. Manufacturers are fighting each other for short-term gain, specialty retail has grown into the habit of demanding increased margins (through discounts and rappels) for a flat performance.

Instead of this marketing myopia (failure to see down the road") manufacturers and retailers should together recreate the opportunity to expand the superpremium category, because the reward for their effort will be super premium!

]]> (Super User) Sat, 18 Feb 2012 15:32:01 +0000
LOOKING BACK AT THE FUTURE As in any other industry, the ours on occasions looks into the crystal ball to try and see what the future will bring. Conferences look to be the most suitable platforms to radiate views and expectations in this respect.

It might be worth looking back at what the crystal ball told us in the past. But before doing so we must realise that if views about the future are expressed and subsequently not tried out and put in practise, any idea about future developments is doomed to fail; this is the self-fulling prophesy.

Also in our case, in essence all views expressed about the future had a few things in common: they were mostly optimistic, they were mostly growth-orientated and they were mostly evolutionary rather than revolutionary in character.

Have the ideas we collectively had about the influence of the internet in selling pet products really materialised. I tend to say: not by a long shot!

Have we forecasted the rapid growth of private labels/own brands in our industry. We knew that something would happen, but we underestimated the speed, the size and impact.

Did we foresee that one of the global leaders in petfoods, that has always been very adamant about it strategy of not selling private labels, would buy the biggest private label producer in petfoods?

I think it suffices to say that sometimes the crystal ball was right, but more frequently this ball was way of the mark or missed the subject completely.

Looking into the crystal ball is not a prerequisite for forecasting. If only it incites us to think about possibles that might influence our businesses, it serves its purpose.

So, what is likely to happen in my opinion?

Animal welfare issues get an increasingly higher position on an increasing number of political agendas because of consumer-interest and thus pressure. Regulations on selling life animals will become even more stringent than they are today. Retailers will therefore face requisites with which they find it almost impossible to cope and thus are forced to stop selling life animals. So where do people buy them? From breeders directly – chances are that malafide operators will therefore start a quantity-based breeder-business with the adverse effect as to animal welfare – or will we see the emerge of a new type of outlets that only sells life animals? The latter might prove to be a new – albeit strongly regulated - business opportunity.

In certain sectors of the industry – petfoods being the prime example – ingredient-shortages (and thus high price-levels) continue to influence the execution of strategies on the short and medium term; say for the next 3-5 years. R&D will have to face the challenge of finding, testing and approving new ingredients, which – because they are not mainstream – will be difficult to procure in a consistent way. I am convinced that on the African continent there are ingredients that are "novel" to, but potentially highly useful for, the pet industry. The pet company that effectively deals with the procurement and quality-issues surrounding these ingredients very likely builds itself a sustainable competitive advantage.

The "divide" between product-supply and retail will shrink. The days that manufacturers could dictate the market because they owned the brands is long behind us. Retail now rules the waves and dicates the market. (Is that revenge vs. the manufacturers?). The stage has arrived where both product-supply – whether manufacturers or traders - and retail are starting to perceive that cooperation on the basis of mutually shared values and believes is the most sustainable way to progress in order to retain the end-user's – thus the key decision-maker's – continued trust and interest.

And, retail is consolidating, i.e. less retail-companies get a bigger slice of the pie. This not only applies to mass distribution; a similar trend is can be observed in specialty retail. To counter-balance this process of consolidation and its inherent increased power, manufacturers and distributors are compelled to follow a consolidation-strategy as well; to ensure to have a level playing field vis-à-vis their retail customers. It therefore seems natural to forecast intensified merger & acquisition activities with much more cross-border elements than we have seen sofar. This will apply to most categories in the industry and does in no way exclude the distributive trade, both at distributor and retail levels. The process of building the balance-sheet and the power-base is a continuous one for all involved in the industry!

There is something that cannot be forecasted: to which extent are the partners in the industry prepared to jointly promote the use of products and services of the categories in which they operate? I sometimes hear that to grow the market, pet-keeping must be further popularised; with the consequence of seeing increased pet populations! This may be true in some very specific cases, but on the whole I strongly believe that in most markets and categories growth – both in volume and in value – can be generated by promoting the category jointly – while emphasising the benefits of using the products or services that fit in the category. Obviously this process of popularisation is of greater importance to the health of the category than the individual manufacturer's/supplier's brand interests. The perceived conflict between joint and individual interests will prove to represent the biggest stumbling-block to come to a joint initiative!

Do I forget – in the above - essentials that will influence the market? I'm sure I do!

Do I under- or overestimate possible consequences and effects? Inevitably!

Did I incite you to look at the industry's future also from a different perspective? I genuinely hope so!

]]> (Super User) Sat, 18 Feb 2012 15:31:22 +0000
CHAIN REACTION It's now about a year ago that the petfood industry faced – at least in certain parts of the world – massive recalls, probably unprecedented in the history of the industry.

Since then a lot of debate broke out with the aim to try and solve "the problem" for good.

Solutions brought to the table range from new committees, new regulations, additional ....... etc!

It looks as if the industry puts the blame of the disaster outside of its own court; is this justified?

Guided by some introspection the industry might come to the conclusion that it is not.

The chain reaction probably starts with somebody deciding what the end-buyer is prepared to pay for a product; whereas some consumer-research clearly indicates that price is not the key decisive factor for choice. Provided that the end-buyer perceives an added value relevant to her/him. Do 2 dollar-cents really make the difference?

Because the distributive trade is becoming more demanding re. margins (stockbrokers' analysts are watching over their shoulders), manufacturers are forced in a situation of extreme cost-diligence; they also have their stockbrokers' analysts who need to say some wise things each and every 3 months.

And, because manufacturers outsource, where can they put the burden of cost? Exactly!

After all, bonusses and careers dictate that the performance of the companies must be better than last year and taking market-circumstances into account would therefore be a silly thing to do.

So in a situation of – probably structurally – rising ingredient prices where can the compensation be found? Upstream?

Without wishing to imply that this has been the case with last year's recalls, I ask myself this:

"is the industry prepared to sacrifice the love for the animals - to which everybody in the industry pays at least lip-service - for just that little bit of extra profit?"

If so, we need only wait for the next disaster to hit us; it's consequence being diminishing consumer-confidence in industrially prepared petfoods: our business!

If players in the industry are prepared to shoot themselves in the foot for the sake of the quick buck, they will thus have lost the right to complain about being crippled.

]]> (Super User) Sat, 18 Feb 2012 15:30:22 +0000
Lab-burger: syfy or food-revolution? Only recently the first hamburger engineered from stem cell material was presented to journalists in London. The lab-burger, developed by Professor Mark Post et al. at Maastricht University (The Netherlands) was tasted and the expert-panel – which had to share one lab-burger costing around US$ 320.000 each - came to the conclusion that the product had the consistency and texture of a genuine hamburger given equal modes of preparation i.e the frying-pan; but, it lacked salt and spices.
I do believe that the hungry of this world – which are estimated to represent at least 1/6th of the world-population – would have no qualms about their lab-burger not being salty and spicy enough.
Of course it is still very early days. Nobody can safely predict whether making meat from stem cells is sustainable and economically viable; or if it needs to be interred in the mausoleum of brillant yet infeasible ideas.

Let’s assume the first. Which would be the consequences for our industry?
With meat being grown in industrial complexes, traditional and highly inefficient ways of meat production will (sharply?) decline. And as a result, so does the availability of animal by-products. While these are exactly the key building-blocks of our industry.
Furthermore, the engineered meat coming from the industrial complexes will provide zero by-products, because only the products which are seen to be fit for human consumption will be produced. After all, nobody in his right mind will think of using a high-end technology to produce a low-end product.

In the first stages of the development of the lab-burger bovine stem cells have been used.
Apparently 100,000 lab-burgers can be made out of one stem cell.
However, there doesn’t seem to be any proof that similar results can be expected from developments with porcine material. So the potential threat for our industry – but still a possible blessing for the hungry of this world – is maybe not universal. Other species will come more into play. Probably with a strong emphasis on fish/sea material.

In case the above scenario becomes reality (Professor Post predicts another 20-25 years of further development before having reached economic viability) our industry will have to deal with a structurally changing supply-chain for one of the key ingredients: animal by-products. Which leads to redefining pet food. Because we can not take a longer-term steady supply of traditional ingredients for granted anymore.
I think it is high time to ask ourselves “what if ………?” The answer to that question is vital and needs to be given more imminently than we now care to admit.

Marcel Blok
La Azohia, September 2013

]]> (Super User) Tue, 02 Jan 2018 11:48:25 +0000
Chain reaction Again, recently, the petfood industry faced – at least in certain parts of the world – massive recalls, maybe unprecedented in the history of the industry. A lot of debate breaks out again with the aim to try and solve "the problem" for good. Solutions brought to the table range from new committees, new regulations, additional ....... etc! It looks as if the industry puts the blame of the disaster outside of its own court; but is this justified? Guided by some introspection the industry might come to the conclusion that it is not.

The chain reaction probably starts with somebody deciding what the end-buyer is prepared to pay for a product; whereas exhaustive consumer-research clearly indicates that price is not the key decisive factor for choice. Provided that the end-buyer perceives an added value relevant to her/him. Do 2 dollar-cents therefore really make the difference?

Because the distributive trade is increasingly more demanding regarding margins, while offering less added value, (stockbrokers' analysts are watching over their shoulders), manufacturers are forced into a situation of extreme cost-diligence; they also have their stockbrokers' analysts who need to say some wise things each quarter. And, because manufacturers also outsource, where can they put the burden of cost? Exactly!

Bonus-schemes and careers dictate that the performance of companies must be better than the previous year; so, taking market-circumstances into account would therefore evidently be a silly thing to do. In a situation of – probably structurally – rising ingredient prices where can the compensation be found? Upstream?

Without wishing to imply that this has been the case with the more recent recalls, I ask myself this: "is the industry prepared to sacrifice the love for the animals - to which everybody in the industry pays at least lip-service - for just that little bit of extra profit?" If so, we need only wait for the next disaster to hit us; it's consequence being diminishing consumer-confidence in industrially prepared petfoods: our business!

If players in the industry are prepared to shoot themselves in the foot for the sake of the quick buck, they will then have lost the right to complain about being crippled.

]]> (Super User) Wed, 23 Oct 2013 15:03:37 +0000
Functionality is hot Trend-watchers tell us so. And looking around us – inside and outside of our own industry – we daily see the confirmation. Functionality has probably been hot for quite some time now. So is it a trend or has functionality gradually been embedded in a more general product-offer?

In other words, has it been put into a higher gear and has it gained a much broader acceptance over a period of probably 5 years? Looking at the human food shelves in hyper and supermarkets today would lead to the belief that functionality has become a fact of everyday life.You name it and you can find it; segmented to the extreme, to satisfy the most individual demands.

Is this also true for our industry? Most certainly not; at least not in the majority of markets. Of course we see so-called functional products, such as snacks and treats for dog and cats with an added ingredient to prevent something nasty to happen or to improve general health.

But all the same, our industry is still lagging far behind what has become custom in the human food industry in most regions of the world. Despite the fact that another trend that is much talked about in our industry is humanisation; the pet as part of the family, to be treated as such. Which apparently is still not reflected in the way owners take care of the perceived nutritional requirements of their animals.

What is functionality in relation to food and feeding?

The concise Oxford dictionary is very clear about this: functionality serves a function. Great! But when we, in our industry, talk about functionality we mean something special, something specific that cannot be found in the “normal” composition of a product. It has a special effect. In other words: we add something to a base (formulation of a) product. Because that provides the opportunity to attach an additional and valuable claim to the product

Most of these functions are health and wellbeing oriented and the reasons for their use can mostly be established by the owner himself. A poor skin and coat is after all visible to the naked eye as are some other symptoms. Furthermore, people around the globe (and that includes pet owners) potentially have 24/7 access to mountains of information; censored and uncensored, true and false. This information is absorbed and used at the next buying-occasion; be it brick-and-mortar or online.

The problem with the “amateur-diagnosis” is that pet owners step in the shoes of the veterinarians and can resort to self-medication. Which is contrary to the intentions of functional products that are typically over-the-counter (if not they would be called therapeutic); they serve a preventive purpose rather than a curative one. And that is where manufacturers and suppliers of these so-called functional products walk on a fine line; on the one hand they wish their claims to be as potent as possible whereas on the other they need to stay away from any claim that can be considered to be medicinal. In some regions of the world regulatory bodies have issued comprehensive regulations regarding the do’s and don’ts as far as claims are concerned. The burden of proof is then mostly a heavy one. Other regions take a more liberal stance in this respect.

As with a lot of other subjects, functionality is about sense and nonsense. Luckily most of the products offered today actually do make sense in it that they serve a recognizable purpose and its effects are well-documented. A trend-in-the-trend is that functional ingredients are commonly natural ones; not to interfere with an otherwise natural positioning of what could be called the base-product. This gradually leads to the intensified use of botanicals as functional ingredients, the efficacy of which is however still unclear due to the further processing of the ingredients.

Functionality is a big challenge for our industry; as it is a big opportunity. Hurdles need to be taken; on the regulatory side and on the technology one. The industry already has found some ways to overcome the difficulties; and will find new ways in the future. This will without any doubt be visible at the 2012 Interzoo where functionality as a trend is bound to be one of the hot items in this enormous basket called the global offering of the pet industry.

]]> (Super User) Sat, 18 Aug 2012 08:48:16 +0000
A healthy business The pet health care category has already for a long time been recognised as interesting and financially rewarding for those active in this field. Probably the following proverb applies to the category:

“He who has health has hope and he who has hope has everything” (Arab proverb).

Although true in general, we must not forget that the characteristics of the category are changing; partly through external influences that are outside of the control of the industry.

We can observe an increased interest in functionality, more stringent regulations, a more informed and critical consumer and not to forget the impact of social networks.

Functionality and pet health care are maybe not synonymous, but they certainly overlap each other to a great extent. After all, both deal with providing or administering a substance that aims to do something beneficial to the body (and the mind?) of pets. And as such, functionality looks to mimic what is happening in the human food categories. Because the functionality provides the reassurance that pet owners are looking for. They want to do the “right thing”.

Of course regulations play an important role as well; where pet health care products are concerned. These regulations can be more limiting or more liberal; depending on the region of the world where you look at them. But there is one common factor that can be observed already irrespective of the region: in a gradual process these regulations become more strict and less open to interpretation.

It becomes a matter of providing unbiased, scientific evidence for what is being claimed. So standards are being defined and made available to the public in general. For the sake of the transparency that consumer-organisations and consumers are craving for.

What in no way must be underestimated is that we now deal with well-informed and thus more critical consumers. And, pet-owners are consumers! Everybody who has excess to the Internet has an overwhelming abundance of specific data at hand. Some true, some false but always enough to form an opinion. And that their opinions can less and less be steered by manufacturers and their brands. Because everybody nowadays has the opportunity and the liberty to voice her/his opinion on the Internet. Which is increasingly available to the global citizen.

So manufacturers and brands better make sure that what they say and claim passes muster with these critical consumers; and not only with the regulatory authorities. Because if not, the punishment (whether justified or not) will be painful.

A clear reason for the success of pet health care is also the extended availability; i.e. the number of outlets where phc products are for sale is mushrooming. It’s no longer the domain of the specialist who can explain what the product is about and what it is supposed to do. People can now go to the online shops, read all they need to know on the shops’ websites – which is probably more than what the traditional retailer can tell them anyway – and make the purchase at any convenient time of the day or the night. And particularly phc products are popular in online business; because they represent a decent sales value and shipping cost are acceptable. But online is not the only differentiation in the distribution. Also modern mass-distribution is active in gaining market-share in the category; because they have a vast experience in dealing with over-the-counter human health products. This wider availability further promotes the purchase an use of the products in question.

The main question is of course: how bright is the future of the category? If we bear in mind that in most regions of the world we look at markets in an earlier stage of development. This applies to pet foods and even more so to phc.

But even in so-called saturated markets there still is plenty of room for growth as far as phc is concerned. By offering a wider variety of usage per animal and by tapping into the vast reservoir of, non-usage. More conscious pet owners with a growing affluence expressed in money that can be spent freely will boost the sales of the category in less developed markets.

And, the chaff will be separated from the wheat; the not-serious suppliers to the category whose only purpose is to line their own pockets like any other quack will be exposed and as a result the category will become even more mainstream than it is today. Because the intermediate trade has a growing trust in the category. Even more so if the manufacturers pump up the investments in making the category more popular and accepted by their trade-partners and pet owners alike.

If pet owners would treat their pets along the lines of “Health is not valued till sickness comes”(Thomas Fuller), the category would be in a deplorable state. But pet owners know better and that’s why pet health care remains what it already is today: a very attractive category to be active in. 

]]> (Super User) Thu, 02 Aug 2012 06:38:40 +0000
DISTRIBUTORS WANTED! When walking the aisles of tradeshows, when browsing through trade magazines, one can not help but being repeatedly confronted with the sign or announcement: "distributors wanted!"

This phenomenon looks to be the continuation of a business-model that has been developped in the dim-and-distant past; i.e. the manufacturer's thinking that the next station to be reached was (and is) their wholesale relations to whom the worries of getting product to the end-buyer could be delegated at a profit for both.

The distributors were supposed to be the external sales and logistics arm for companies that were not in a position to build their own structures. In the cooperation it was essential that the distributors had an asset that the manufacturers lacked: knowledge of and contacts in the market in which they operated. This applied (and still does apply) much more to the flow of products through the specialty trade than through mass markets.

This business-model proved to be a worthwhile one and in a growing pet market there was plenty of room for those who were dedicated to play their role in a professional way.

For manufacturers and distributors alike, the key questions today are: how likely is it that this business-model can and will be continued and if the role of the distributor will have to change, in which directions will this change take place?

Distribution is changing and will continue to do so because of its inherent dynamics. The main change that influences the way to market for quite a number of manufacturers is the formation of chains of petshops/stores – franchised or integrated – with their apparent or proven buying-capacity and their own logistics infrastructure. Granted, not all continents and/or countries are equally evolved with regard to pet chain formation but the overall trend seems to be in the direction less "independent" outlets in favour of pet chains.

The consequences of this continuous development seem to be clear: the role of the traditional distributor is changing and diminishing.

Changing because the manufacturers wish to have a direct influence in the negociations with the pet chains and diminishing because many of these chains have their own logistic infrastructures.

In fact, powerblocks are being built, both on the manufacturers' side and the retail-side. Through further consolidation and otherwise. With the objective to maintain the balance of power between them!

So, where does this put the traditional distributor?

In a position of being squeezed between the 2 powerblocks or at best in a follower's position without any genuine influence in the process. In fact, the distributors' strategies are increasingly going to be dictated by suppliers on the one hand and retailers on the other.

In this scenario, a substantial number of distributors will disappear because the room that was originally there for all of them, is shrinking.

To continue to make a contribution to the pet market, distributors will have to change course! So far, most of them have been active to help and build manufacturers' brands. Implicitely the brand-equity has always been for the manufacturer; the distributor was and is an executor of strategy without being in a position to build his own portfolio of meaningful and potentially valuable brands.

In most cases distributor-sizes are not such that they have the resources to build brands. International alliances will have to be sought if the "branded-scenario" is the chosen one. Because market-opportunities will thus multiply and the investments in the brands can be spread to make them bearable for the individual alliance-partners.

Having a small basket of own brands that can be developped into a sustainable position in the market will make the distributor less dependent upon manufacturers' strategies and will revitalise the trading-relationships between the distributor and his retail-partners.

There continues to be room for the distributor, assuming that the latter is prepared and in a position to adapt his business-model and approach to market to today's and tomorrow's requirements and opportunities

]]> (Super User) Sat, 18 Feb 2012 15:53:58 +0000
THE MARKETING RELEVANCE OF NEW AND NOVEL Today, more often than not, new has limited relevance from a competitive advantage point fo view. That is to say if newcan be imitated by competitors more or less overnight. I think one of the examples of the latter happening is the use of glucosamine-chondroitin in petfoods. The initiator of the use of these ingredients saw competitors follow suit within a period of not more than 6 months. So the uniqueness in claiming specific benefits got lost, and with that the competitive advantage. These ingredients can now be seen to be fairly standard in petfoods. It's novelty-value has disappeared.

On the technology-side we have seen the development of pouches for wet catfoods. For obvious reasons a branded operator started this development and before the new proposition got the chance to settle in the marketplace (and to give the initiator the opportunity to cream off to have a quick return on its development-cost), private label suppliers could offer a similar concept to the trade.

If I think of a genuine breakthrough that has sustained itself extremely well, I inevitably come to the development of the alu-cups by Mars. Clearly a new technology for petfoods as well as arriving at an outstanding (certainly from a palatability point-of-view) product-quality. Mars had the guts in the mid 80's of the last century to charge cat owners the price of prime beef for their Sheba brand. And they were successful in doing so. Of course they have been followed by others; but much more slowly then has been the case with the pouches, so the competitive advantage for the alu-cup product-concept lasted longer.

I think it is reasonable to say that the development of the alu-cups has been the last genuine breakthrough the petfood market has seen?

It becomes more and more fashionable in the industry to think about so-called novel ingredients. Certainly there where formulations drift increasingly in the direction of foods with more than a health and nutrition function. To an extent the inclusion of novel ingredients in formulations is in line with the trend towards more "natural" products. But what competitive advantage do they offer if these ingredients are freely available on the ingredient-market?. How long does it take to follow the initiator? And even more importantly, can the claims linked to the novel ingredient be scientifically substantiated? Various publications on this subject seem to indicate that the burden of proof is a very heavy one. From the point of view of sustainability of claims, the regulatory bodies continue to sharpen their knives. Within the EU, regulations regarding claims for human foods become very stringent. Legislation in this respect has already been approved by the EU Commission and will be applied before long. It is very likely that this will further effect the freedom with which one can use claims for petfoods.

Does the above imply that companies should stop looking for new and novel? By all means no!

There is always room for meaningful improvement, be it on the product and/or on the technology-side.

The challenge is to find the sustainable competitive advantages. Which can be developed into a monopoly! E.g. by assuring that one absorbs the entire world-supply of a novel ingredient (leaving the competitors to go for second best) or by applying human food technologies for petfoods, the investment in which creates entry-barriers for the competitors.

It all depends on the vision of the companies involved; do they seek to enhance the value of the brand – and thus implicitely of the company – by being at the forefront of developments or does one think it's wiser to wait and see how competitors' new and novel develop in the marketplace, before taking the initiatives to follow? Or, the choice between high risk/high reward and low risk/no reward.

]]> (Super User) Sat, 18 Feb 2012 15:51:00 +0000

The first signs of awareness regarding pets' health – more particularly the health of working dogs – became noticable in the late 19th century. It was then – rightfully so – perceived that the daily meal given to the animal lacked essential nutrients: vitamins & minerals.

Albeit from a small base, the product-category was perceived to be growing healthily (no statistics were available then) and started to attract lots of newcomers in the late 60's and early 70's of the last century, all wanting a slice of the growing and highly profitable pet health care (phc) pie. Certainly the pharmaceutical companies took an interest and developed scores of OTC products which were then primarily distributed through the veterinary channels. Smaller, non-pharma companies followed suit and numerous me-too's came to market.

Most of these non-pharma companies entered the segment, because they felt they could capitalise on the brand-image existing for the products they already brought to market. On the whole these entries were opportunistic rather than strategy-led.

Because the larger pharmaceutical conglomerates had a vested interest in staying loyal to the veterinary channel, the followers popularised the category by selling their products through the specialty outlets.. In essence phc thus became more readily available and more commonly known, initiating further growth of the category.

It was not until the mid 80's of the 20th century that mass-distribution hesitantly started to put some of the fast-moving phc products on their shelves.

The category developed gradually product-wise, from nutrition-supplementation for dogs (and to an extent cats) into a broad spectrum of products for all species. Nutrition wasn't the only issue anymore. Antiparastics became an important segment in the category. The biggest impact on the category was supplied by anti-flea and anti-tick products (now counting for some 60% of the total category). Development of new, more often than not solution-oriented products, brought further growth and new companies entered the category. The most recent development is the one of nutraceuticals. These provide on the one hand a new challenge (their efficacy cannot always be sufficiently substantiated), but are on the other hand threatened by the clearly noticeable trend of functional foods and snacks. i.e. complete foods with nutraceuticals added, e.g. to promote joint mobility or to take care of skin and coat problems.

The more the category evolved, the more regulatory issues had to be dealt with. Developments led to the potential of using strong claims but more often than not, regulations were significant roadblocks for the use of these claims. And the burden of proof gradually became such that only the bigger operators could finance the R&D investments that were involved.

Where will the category go? On the product-side natural, as opposed to synthetic, solutions will see a healthy growth. Preventive rather than only curative will become an issue. The marketshares of the various channels of distribution will change somewhat; mass-distribution and specialty will see some growth of share, to the detriment of the veterinary channel. But most importantly, the number of suppliers will diminish, partly because R&D and marketing-investments become prohibitive and partly because the non-specialised suppliers (this is not necessarily the same as manufacturers) will have to refocus on their core activities. Although it is bound to be a gradual process, a shake-out on the supply-side is to be expected. Companies will either have to drop their phc-activity or they will seek alliances with peers to build a power-block which puts them in a position of sustainability in an era where competition will further increase and where regulatory hurdles become even higher than they are today.

But those companies that stay in the market can look forward to healthy market-growth and attractive returns!

]]> (Super User) Sat, 18 Feb 2012 15:50:31 +0000
PET ACCESSORIES: OPPORTUNITIES GALORE? Although the main theme of this PIM's issue is Fashion & Bedding I aim to extend my views to the broader spectrum: accessories.

A broad spectrum indeed; the category "accessories" appears to be the reservoir for everything that is not food, pet health care and catlitter.

A reservoir one understands with difficulty; because it's not (always) animal specific, it's not purpose specific; the reservoir is a bit "everything for everybody".


And yet the category is a very attractive one from a manufacturer's and a retailer's point of view. Because of its business dynamics and its margin-potential.

Other than e.g. the food-categories, accessories are not top-of-mind for the average petowner. They partly fulfil a need like leashes and collars for dogs and cats or play on the human-animal bond like frisbees.

Accessories all seem to have in common that they do not appear on consumers'shopping-lists on a regular basis. And yet the number of accessory items on offer doesn't cease to grow; the last Interzoo was again a perfect showcase for this phenomenon.

With a few worthwile exceptions, accessories are not branded in the proper sense. Oh yes, they find their way to the consumer with a trade-mark attached to it, but in the vast majority of cases the trade-marks are nothing but "a name on a bag/pack". However, trade-marks in the accessory-category do seem to have some significance for the vis-a-vis the retailer, because the latter can identify with the manufacturing or distributing supplier of these accessories.


Does this all mean that there is no opportunity for successful consumer-oriented branding?

Quite on the contrary! I am convinced that there is, provided that meaningful and sustainable points of differentiation from the otherwise anonymous bulk of the market will be developped and exploited. And what is the business-relevance of consumer-oriented branding in the accessory-category? Although the market for pet accessories still shows very healthy growth perspectives and will probably continue to do so for some time the category will reach the stage of maturity. Typically in this stage retail will become more critical as to the ranges they carry. I have no doubt that retail will then favour those suppliers that support sales through end-buyer branding and promotion.

The stage of maturity will also lead to changes on product-level. As earlier mentioned, the offering in the category looks to grow like wildfire. Planned obsolescence doesn't seem to be part of the game. The possibilities that retailers have to absorb these "new and exciting" items will diminish; therefore the opportunity for further growing the market can also be found in an further expansion of distribution by going into channels not yet tapped into. Particularly for impules-oriented items.

All in all, the category is very much alive, has very real and highly attractive growth-perspectives and offers great opportunities for those companies that consciously seek to find the way to the end-buyer's heart and mind through branding and differentiation.

]]> (Super User) Sat, 18 Feb 2012 15:49:35 +0000
PACKAGING An often underestimated marketing-tool! We seem to flatter ourselves with the thought that packaging is an art, is a key issue for businesses. Of course it is, but let´s not forget that there is proof that also in pre-historic eras packaging was an issue that was considered. Primarily to play two important roles: transport and (food-)preservation. In the Western cultures this has been the case until probably the middle of the 19th century. In the wake of the industrial revolution things gradually changed. Soft soap could be got in an anonymus brown paper bag (hurry home before its starts to leak) into which the quantity required by the customer was scooped by the shopkeeper. Then the paper-tube with a cover and a message from the manufacturer on the outside entered the scene and became the alternative. Thus two additional functional elements entered the packaging arena: storage and branding. With one drawback for the consumer: instead of buying the quantity she wanted, she had to get accustomed to buying what the manufacturer wanted to sell. Because of the added convenience, manufacturers asked a higher price and got what they were looking for. Marketing had entered everyday business!

As did additional convience! Easy to open, easy to pour, easy to close, easy to ........

But haven't we all had the experience that some packaging was designed in such a way that difficult to open, to pour etc. was more applicable? And did we stick with that product or did we go for a more convenient option next time around?

I think that the influence of packaging can be overrated. How often do we see NEW, whereas only the graphic design has been changed? Or where glorious design needs to cover the mediocrity of the physical product involved. In the end of the day the contents must satisfy the needs of our customers. Excellent design can of course lead to trial purchase, but repeat is often very doubtful in case of mediocre products!

Packaging has gradually become a way in which companies try to distinguish their offering. And has thus become part of increasingly complex R&D programs. The complexity of the packaging-issue also leads to the development of new packaging-lines (lots of ideas are transplanted from the human (food) sector), that can "only" be invested in by the bigger players in the industry. They thus aim to grow their sustainable competitive advantage; the medium-sized players simply lack the funds and the required volumes to follow.

In this respect packaging has become of key strategic relevance, certainly for fast moving products.

A sometimes grossly underestimated function of packaging is communication: tell the brand-message!

Packaging is your closest and most real-life link with your (potential) customer. Your product is on the shelf and your customer is shopping. Your message will to a great extent define – assuming that there are products comparable to yours on the same shelves – whether you end up in their shopping-basket or not.

All in all, packaging should not be a side-line for our industry. It is not always merely a cost-factor.

Packaging protects, offers convenience to and communicates with your consumer. And therefore, from a marketing point-of-view, the development of packaging must get the financial and human resources it deserves

]]> (Super User) Sat, 18 Feb 2012 15:48:39 +0000
SMALL ANIMALS, BIG OPPORTUNITIES It can be argued that the small animal category, is one of the younger ones in the pet industry; also as far as foods are concerned. But amazingly, this category looks to be one of the most traditional in the industry, especially on the food-side! With some exaggeration one could say that the manufacturing-investment in a concrete mixer and a shovel could put you in business. However, despite the relatively low entry-barriers (in comparison to manufacturing foods for other species) there are not many manufacturing newcomers in the small animal food arena.

Other than for dog and catfoods, product-development for small animal foods only got genuine attention from the manufacturers in the last decade or so; some companies took the lead and improved concepts saw the light. In essence nothing revolutionary, because me-too products with (exactly?) the same proposition followed rapidly. New product development in most cases meant an upgrading of the traditional mixes of cereals and dried vegetables with an added spoonful of X. Probably more to please the consumer's eye (rabbits are colour-blind!) the number of components increased and foods became visually more attractive; the intrinsic nutritional propositions hardly changed.

Because of the lack of genuine innovation in the category, price remained one of the key weapons used in a highly competitive environment. The offerings of the various manufacturers did not allow for significant price-differentiation; at least not in the eyes of the distributive trade. After all, to a great extent the products looked alike!

The owners of small animals might take another look at pricing once the product – and brand-proposition changes in a meaningful (for the consumer) way. As with dogs and cats there is a category of small animal owners that seek the best for their animals; to enhance the animals well-being and to save on vet bills! There are already clearly noticeable tendencies where premium offerings fetch significantly higher prices and generate higher margins in comparison to the more standard products. But this segment, although growing, still represents a smaller part of the total market.

If we look at the statistics we can say that small animal populations grow worldwide. And small animals are increasingly seen to be a pet, a part of the family. This implies that the emotions surrounding the keeping of small animals are changing and thus the attitudes of the owners.

This manifest change offers great branding and new product development opportunities for manufacturers that seek to upgrade their portfolio of products; and wish to build a sustainable position in an increasingly attractive product-category. The market is there, the consumer is open to relevant change and the distributive trade will embrace any concept and brand that enhances the margin-potential of the category.

In upgrading their portfolio of products the food + concept can be a key element of differentiation. Comparable with the developments we have noticed in superpremium dog and catsfoods. Food + is a "merger" of excellent nutrition for wellness + some functional ingredients. The inclusion of yucca extract to fight nasty smells is a typical example; but now becoming so common in the formulation of small animal foods that the competitive advantage is eroded. Prevention is key in the proposition. But preventive claims are surely subjected to severe scrutiny from the regulatory authorities.

One of the biggest challenges in the small animal food-category will be the search for new technologies. To get away from the traditional mixes which for the untrained eye of the owner are one and the same. Extrusion is used as "another" technology, but extruded small animal foods sofar did not have a noticeable impact in the market. Manufacturers of small animal foods will be wise to look at human food technologies to achieve a breakthrough in the product-formats they can develop.

All in all small animal foods offer excellent business opportunities for those who will break with tradition by being genuinely creative and prepared to invest in technology and the market; and above all have the ambition to change the face of the category!

]]> (Super User) Sat, 18 Feb 2012 15:47:52 +0000
SNACKS: A SUITABLE CATEGORY FOR TREATMENT! Snacks: in the Thesaurus described as a bite, nibble, morsel, titbit. And that is their primary function: in-between meals, preferably without spoiling the appetite!

In that respect snacks fit the trend towards humanisation of the pet perfectly.

Arguably one of the most attractive categories in the pet industry; not so much from a volume, but much more from a value point of view.

Also a category which is in its earlier stages of development; less so from a product development point-of-view, but certainly in terms of household-penetration.

Taking this into consideration, you can say (with a degree of simplification) that the category offers very attractive opportunities for growth for players who take this category seriously.

When thinking about snacks, isn't it funny to observe that on the one hand one of the oldest technologies in the industry (baking) can be found in the same product-category as highly sophisticated technologies, some of which being a cross-over from the human food industry?

It does show that snacks offer a wide choice of options where product-formats are concerned.

However, technology available in-house seriously limits the options for the manufacturers. Once manufacturing-capacity is installed (which is always less versatile than one initially thought!) it will turn out that the market is not ready (yet) to absorb the volumes that would allow the manufacturer to produce with some degree of efficiency. It would not be the first time that the dilemma between volume (= efficiency) and value (= margin) shifts in the direction of volume at any price, thus leading to price-erosion; at a stage where the technology has not even had the opportunity to generate some initial ROI. From a consumer point-of-view there is no reason for price-erosion. The pet-owners who care (their numbers are growing quickly throughout the world) accept products that are reasonably priced provided that they offer the meaningful extra she or he is attracted to. With perceived benefits for the animal! Pet-owners want to do the best they can do for their animals (with the possible exception of chain-dogs that will never get a snack however cheap it wouild be); from that perspective the category is not as price-sensitive as other categories in the industry. After all, what is the price-tag for emotion?

There seems to be a general belief that snacks require more or less continuous new product development. This may often seen to be the case if you look at the frequency and number of "new" product-launches, but it is a known fact that products that were developped some 30 years ago for the US market still lead the category in that market; without major alterations to the original product-concept! Needless to say that these products are huge contributors to their manufacturer's bottom-line.

But what if you would start from scratch: would you tap into existing technologies or seek ones that are new to the industry?

The key driver for that decision is the orientation one has: volume or value?

The approach to the investment will clearly differ from cost-orientation = volume to versatility-orientation = value. Evidently the financial rewards will be different as well.

The volume-orientation more or less inevitably leads to the necessity of accelerated penetration, because copycats are bound to appear rather sooner than later; whereas the value-orientation allows for creaming the market from a niche point-of-view; the product being less prone to copying.

Product-formats have of course changed over the years: from an important part of the feeding-regime to indulgence and subsequently to functionality; the latter can be seen as part of the feeding-regime, in sofar that functional snacks provide the (nutritional) extras that are seen to be vital for the animals'health and wellbeing.

Particularly the functional snacks will have a lot of mileage, because they combine ratio = functionality with emotion = indulgence in a pet environment where the consiousness of pet-keeping – with its given set of responsibilities – increases rapidly.

In conclusion you could say: the category is a very interesting one; meaningful creativity is rewarded by the end-buyer and as long as manufacturers are not "trapped" in their own technologies, the spread of development-opportunites is enormous and potentially lucrative.

]]> (Super User) Sat, 18 Feb 2012 15:47:21 +0000
TAKING CARE OF PETS’ HEALTH! It can be argued that the pet health care category saw the light in the early 90's of the 19th century when Bob Martin started to manufacture and sell their conditioning powders for dogs; essentially a mix of vitamins and minerals to compensate for the lack of such in the then common regime of feeding table-scraps and meat-offal.

These conditioning powders were made available to the animal owners through traditional grocery outlets, i.e., the veterinarian community was not strongly involved in the marketing of these products.

Over the last 4 decades pet health care developped into a category in its own right; in fact it developped into a huge reservoir of products with "maintenance", preventive or curative purposes.

Which makes it difficult to define the category precisely. An attempt could be to say that pet health care is "the category of products that aim to promote the health of pet animals by either endogenous or exogenous absorption of the actives".

When accepting this definition, we accept the fact that also pet foods belong to this category. In my point of view they do!

The more so since petfoods, particularly the dry ones for dogs and cats, are enhanced with functional properties to promote joint mobility, to promote digestion, to promote strong and healthy dentals, to name but a few.

So far these functional aspects seem to apply primarily to dog and catfoods; isn't it time that attention is paid to other species as well, as far as functional extras in their foods are concerned?

It may have been the case that in the past typical pet health care products (I wish to exclude petfoods in this case) were the domaine of the veterinary community; or even their quasi-monopoly. This is history; pet health care products were popularised over the years and now enjoy wide-spread availablity. Certainly those products that do not need a prescription of any sort; the assumption being that the pet-owners are perfectly capable to decide for themselves which product suits which purpose.

Which brings us to "OTC or prescription?" There are signals the regulations are being changed in the favour of the veterinary community, certainly for those products that are based on synthetic actives. Whether this would be to the advantage of the industry and the pet-owners is questionable.

In the last decade or so we have seen the growing importance of natural actives and nutraceuticals. Depending on the claims used, neither of these require the pain-staking process of license and/or registration. This enabled a great number of manufacturers to enter the segment without huge R&D investments, while offering them the opportunity of wide-spread distribution.

I may be so that the efficacy of natural actives and nutraceuticals are questioned by some scientists, but antropomorphism tells us that the owners feel that what is good for them is good for their pet. So the growth of natural actives and nutraceuticals for human consumption can be seen as a measure for the potential of the same for pet consumption.

Even if regulations would tend to become more in favour of restricted distribution in the veterinary channel, I have no doubt that the industry will (have to) seek ways to increase the popularity and use of pet health care products sold on an OTC basis.

I foresee further developments in the use natural additives in petfoods; as I do foresee a shake-out on the supply-side of nutraceuticals (as end-products). The latter segment will have passed its current state of experiment before long and bringing the segment to its maturity will primarily be done by those suppliers that have the knowhow and budget to educate the pet-owners into the use of these nutraceuticals.

All-in-all, I do firmly believe that the pet health care category provides serious (not going for the quick buck) players, which are committed to the longer-term sustainability of the category, with very healthy business –perspectives.

]]> (Super User) Sat, 18 Feb 2012 15:46:33 +0000
Development in danger, or a dangerous development? When observing today's dog and catfood market in W.Europe I can not help but think that it has lost its drive and dynamism. This once vibrant and challenging market has become dull and predictable.

The (unexpected?) high impact of private labels/own brands - or whatever the current buzz-word may be - looks to be one of its causes.

The evident lack of genuine innovation is another one; what is called innovation now is nothing but tweaking some product-features.

However, what appears to be the main reason for this dullness is that there is so much focus on competitive ac tivity that market-chances are overlooked. It is as if management in the industry is frightened to take some necessary steps, let alone bold ones!

I maintain to say that as long as the W.European petfood industry has not reached prepared petfood penetration (PPP) levels as shown in the US market there is room for higher growth than is demonstrated today.

When do we return to "new and exiting"?

Most product-categories – and why should petfoods be an exception? - flourish on the basis of new product introductions. But then genuinely new and meaningful. Not the umpteenth line-extension or further segmented offering. These look to have shelf-dominance as their primary objective.

Yet, how can we expect "new and exiting" in an industry in which the key technologies have been introduced over 30 years ago?

Of course these technologies have been improved over time – mainly with manufacturing efficiency as its main objective -, but conceptually nothing changed.

So, which are the challenges that face the industry if it wants to return to the road of growing the market?

Ingredients is a key issue today and will probably remain so for some time to come. The need to search for alternative protein, fat, carbohydrate sources has clearly announced itself.

Companies that dedicate some of their resources to this search will end up with a strong and sustainable competitive advantage, the more so if they buy the bulk of a limited supply.

A.o. the African continent is likely to be a provider of alternative ingredients. What is now used as and in human food only can be a useful alternative in formulating outstanding dog and catfoods.

The other challenge is one of size.

The divide between the big operators in the industry and the medium-sized and smaller ones becomes wider by the day. This is certainly visible in the R&D/new product development efforts.

The big operators appear to be protecting what they have today, whereas their counterparts lack the funds to challenge them. The solution for this dilemma can be (and as far as I see it, should be) that the medium-sized and smaller operators join forces in new product development. Together they must be able to introduce new and breakthrough technologies in the industry (the human food industry provides some examples that can be borrowed and adapted), thus expanding the opportunities the market continues to offer.

By the way, most of the times it is exactly that: the smaller manufacturer that creates a new niche and in doing so gives new impetus to the market.

A market which is incidentally made up of end-buyers who appreciate added value and are willing to pay for it.

As far as I can see it the question-marks in the title of this article should in fact be exclamation marks. If no serious steps are taken to change one's tack, I foresee that the industry will remain as dull and predictable as it is today.

Who has the guts to bring drive and dynamism back to the market by taking the required bold steps?

]]> (Super User) Sat, 18 Feb 2012 15:45:52 +0000
The genesis of a new dog food: Eureka or a structured approach? There appears to be some statistical evidence that in mature markets (no market is saturated before having achieved close to 100% penetration and calorific coverage), the majority of growth is represented by new products. In fact, new products and their introductions drive our business. More from a value than from a volume point of view.

One of the key implications of this is however that product lifecycles become shorter.

How to define new?

How you define new is obviously open for debate. Is it new for the industry, is it new for the company? Is it a minor change to an already long existing theme or is it a major breakthrough that will change the life of the animal, its owner or both forever? The question is: do you take the initiator position – with its inherent risks – or are you satisfied with following; the latter is a good way to avoid risk. Both are very legitimate positions, but the higher risk one tends to be more rewarding than taking the position of the follower.

The choice between these two is fundamental to any New Product Development (NPD) process you want to embark on.

That's what it is: a process! Necessary to bring new and successful products to market. A structured, well-defined and well-planned approach rather than the spark of genius while sitting in the bathtub (Eureka).

And, as importantly, this process is not the monopoly of a few big players in the pet food industry. Any company that takes itself seriously can start an NPD process for dog food, the more so if it is prepared to join forces with peer companies also in search of new products, but servicing different geographical markets. With a bit of guts a lot can be done!

Your position in the market

The choice between initiating "new and exiting" vs. "we want the same as the benchmark" is of course heavily influenced by the way in which the company positions itself in the market.

Does it want to claim psychological leadership or is it focussing on following other initiatives.

If the latter is the case, price, more often than not, becomes a decisive factor: "as good as X, but (significantly) cheaper." Price-erosion will set in before long and the initiator needs to react. How? By revamping the product, while trying to find new attributes that appeal to the end-buyer.

But all based on technologies that are already in existence for at least 40+ years and which are in essence available to everybody who is in the industry or who wants to come into it. So the technology is or will not provide a Sustainable Competitive Advantage

How to start?

So, what's new, what's unique? And what is the starting point in your thinking process? The vested interest in the technology that you have or feeding a dog in a way which is pleasing both the animal and the owner irrespective of the technology necessary to manufacture that food? Provided of course that the product is nutritionally sound and keeps the animal in excellent shape.

In the first case you can not expect a breakthrough!. What you do is limited by and to your technology.

If you however want to feed dogs in a pleasant and nutritionally sound way but differently, a plethora of opportunites opens up. Just by looking at an adjacent industry: human food! New (for pet oriented foods) technologies become available as do – probably - new ingredients. And do dog foods (for animals that increasingly are part of the family and are treated as such) have to have a 12 to umpteen months shelf-life?; in an era where the trends in human foods are fresh, chilled cabinet, short shelflife, no chemicals, less processing etc.

With focus, perseverance and commitment new dog foods can be brought to the market successfully if you take the initiative to step out of the box of existing technologies and start to use the technological alternatives. Not necessarily by investing yourself in this technology, but by coming to an alliance (co-packing or more) with a company that has the alternative(s) available.

No more Eureka (reactive), but a deliberate and well-planned step in the direction of being meaningfully different (pro-active) will give you the icing on your future cakes.

Note: the essence of the above does of course not only apply to dog foods

]]> (Super User) Sat, 18 Feb 2012 15:45:11 +0000
Selecting your distributor In conversations I have with people in the industry, searching for and selecting distributors occasionally is a topic. And so it turns out that different people have - sometimes very - different ideas as to the definition of distributor.

To some a distributor is nothing but a logistics vehicle, maybe stocking product for their own account and risk, whereas for others a distributor is the all-in-one service-provider who takes care of sales, marketing, finance and logistics on behalf – but not for the account - of principal(s). Any variation between these "extremes" seems to be possible and negotiable.

The profile of the distributor.

In smaller countries it normally suffices to have one national distributor (in whatever shape or form) whereas in bigger countries (or in countries with complicated logistic requirements) it maybe wise to have more than one distributor to cover the territory effectively.

The latter can work, provided that the principal doesn't have to act as the referee between regional distributors in cases of disputes about e.g. territorial exclusivity.

I strongly believe that in most cases it is wisest – assuming that the choice for distributorships is the best option – to go for one national distributor and let him sort out the necessity (or not) of having a sub-distribution network. The advantage for the principal is having one point of contact on which the entire effort for the territory can be concentrated.

Why go the distributor-route?

Let's assume that if you have made the deliberate choice to build your national and international business through a distributor-network and you start to explore the options, the first question is: what do I expect to find? To assume that distributors in foreign countries are a blueprint of what you are accustomed to in your home market will prove to be a capital mistake. Some markets are more advanced than others and that reflects itself a.o. in the degree of "professionalism" of the distributors available and who are prepared to take on your product(s). Whatever the situation may be, go for the best, even if the distributor's set-up appears to be below your standards; after all, the set-up may be well above the standards of the country in which it operates. And if still in doubt, put the whole idea on the back-burner.

Is there a profile a the "ideal"distributor?

What does the ideal distributor look like? In the case of a full-service distributor I recommend to think about at least the following aspects:

- degree of introduction in the country (what is their estimated numerical and weighted distribution),

- logistics set-up (can they effectively store my products, also in a growth-situation?),

- what should my product-range represent in their turnover? (do I get the required attention of the sales-force if I only represent X% of their consolidated sales?),

- do they have the right contacts in the (franchise-)chains,

- can they deal with local marketing-issues,

- what is the size and calibre of the sales-force,

- are they accustomed to selling "my type of products?",

- are they financially sound (and even more importantly, can they finance growth?).

I recommend that once the profile is ready, to weigh the aspects mentioned! E.g. degree of distribution gets maximum 30 points out of the 100 in total for the profile.

Whichever the number of points that a candidate-distributor may "collect", the main criterion for selection is and remains the chemistry between distributor and principal.

How to build and enhance the relationship.

Assuming that the principal has chosen for a network of full-service distributors, how is he going to build and sustain the relationship? Very simple, by providing the support that the distributor needs to do a very good job.

E.g. by helping the distributor to put the annual sales/marketing plan for your (the principal's) product-range together, by helping to implement programs that have proven their value in other countries, by training your distributor's people about all relevant aspects surrounding your products. There are in fact many areas of management where principals can contibute to enhance the professional approach of the distributor.

How to put the relationship in jeopardy?

There are – at least in my book – a few things a principal should never do when there is a relationship with a distributor. Do not go behind the distributors back to an important client;

do not exclude interesting clients from arrangements you have with a distributor; do not "provide" the distributor with an annual plan which is in fact a dictate. After all, your distributor is an entrepreneur – that's why you have chosen him in the first place - who doesn't like too much interference from the principal's side!

Formalising the relationship.

So, the distributor of choice is selected, the plans are agreed upon, the principal and the distributor get on like a house on fire; what more can one want?

Well, maybe an agreement to formalise the relationship? Of course the issue of coming to an agreement has been mentioned during previous conversations between principal and candidate, but when it comes to reality, mindsets can start to differ.

The distributor wants a 10 years' contract, whereas the principal thinks in terms of 1 year with annual renewals. The distributor wishes to pay in 60 days and the principle is accustomed to pre-payment. Make sure that (these) things are dealt with - assuming full consent from both parties – before any concept-agreement is sent to the distributor. Agree on the principles of the contract and if required let the legal department deal with putting these principles in the right legal language; but not more than that!

And – this is sometimes forgotten – have standards of performance as an appendix to the contract. These provide the basis for the plan and are the yardsticks to measure the effectiveness of the distributor and to judge whether or not the relationship should be continued.

There are many ways to come to conclusions as to the desirability and implementation of a distributor-strategy. But, the effectiveness of the relationship is based upon one simple thing: mutual commitment!

]]> (Super User) Sat, 18 Feb 2012 15:53:22 +0000
RELATIONSHIPS IN DANGER? It has been prophesied before: the industry is on the eve of another round of consolidation.

Until now it was the league of the big players that dominated the acquisition-scene, but I am convinced that the time has come for the 2nd league to enter a consolidation-phase; because companies in this league, the incorporation of which traces back to the late 60s and early 70s of the last century have reached their peak and find it increasingly difficult to outgrow the market and find their ways in an increasingly brutal business-environment..

A consequence of consolidation.

In general, one of the key reasons for consolidation is cost-savings through synergies. One often sees sales and distribution set-ups overlapping after the acquired company gets integrated into the parent. Or brands become obsolete (or for sale) because they do not have any further strategic relevance in the combined portfolios of the acquiror and the acquired.

In those instances where sales and distribution of these products and brands are largely dependent upon the traditional route through the (national) distributors – in my point of view still a significant slice of the total pet industry – the latters' positions are threatened, in it that the acquiror will start to consolidate the distribution-network as well; or decides to integrate the acquired products and brands into his own portfolio and have his own – sometimes well-established – salesforce deal with these products and brands in the future.

The consequence of such is not only that the distributor stands to lose sales and margin by the discontinuation of representation(s), but also because the remaining portfolio of the distributor is weakened and thus less attractive for the retail-clients. And also the distributor will find it difficult to take important cost-cutting measures, because most of his cost will to a great extent be fixed. His cost per call are stable, whereas the average order-size is likely to diminish.

React or pro-act?

Is the distributor in a position to take fate into his own hands or does he just have to accept the status quo? Reaction is in my point of view not only a possibility, but from a business standpoint often also a necessity. But how to react? And, can the distributor only take a reactive position or also a pro-active one? And, equally important, can one distributor act just by himself?

It's all about which initiatives are taken when! Why would a distributor have to wait to take initiatives until he gets the boot by the manufacturer? If he wants to develop and implement his own way forward, pro-activity is a pre-requisite!

In most cases initiatives can only be taken by a group of like-minded distributors, facing the same challenges, because more often than not just one national market does not justify and can not absorb the investment in new initiatives, whether defensive or offensive.

How to go about it?

Whichever the options are, it is critical that the distributors are prepared to act as marketeers (which is more than just cutting corners in copying the products "lost" and sell them under a fancy name) and that the classic prejudices such as "my market is different from yours " are eliminated; because nationalistic thinking limits the options and in reality does not or at least should not exist from a business point of view.

Together with colleague-distributors (beware of possible territorial conflicts) one can and should develop products and brands. A joint approach is essential to provide the venture with strong enough a basis for a powerful international distribution and with that an acceptable pay-back period for the joint investment.

Is there a worthwhile opportunity?

Would the distributors have reasons to be afraid to play second fiddle in an orchestra that is dominated by manufacturers in the industry? Certainly not; the key asset of a distributor is his numerical and weighted distribution , which can be fully exploited, whereas the establishment (read manufacturers) needs the distributors to have access to this key asset.

There is an interesting terrain lying open for the distributors who want to become less or not at all dependent upon the strategy of their principals and who have the guts to take - in an international setting - product- and brand-initiatives that contribute to the sustainability of their businesses.

]]> (Super User) Sat, 18 Feb 2012 15:52:34 +0000
Structured product development as a strategic issue  

The previous meeting was another sign of the unstructured approach to NPD. People start to scratch their heads. Joe and Justin meet again.

Joe: I wonder if our NPD approach is still up-to-date

Justin: why don’t you call it Structured Product Development or SPD instead of NPD?

Joe: indeed, why?

Justin: because often  product development lacks structure and, product-development is for new anyway.

Joe: makes sense, but I continue to wonder if our approach is up-to-date

Justin: the shortest and best answer is: no!

Joe: you’re best qualified to give me the answer; it’s your responsibility after all. What do you plan to do about it?

Justin: I plan to start and put SPD in its strategic context and work from there

Joe: instead of what we are doing now.  Like “we need a few new products, let’s make them”. Is that what you mean?

Justin: exactly. Because I sincerely believe that with a bit more structure in our approach we can significantly diminish the failure-rate

Joe: looking at what we now spend on NPD, sorry SPD, that is a very attractive idea. What goes wrong nowadays?

Justin: to mention but a few flaws – have you got another 10 minutes? -  I can spontaneously say lack of focus. Sometimes we were working on 50 odd different development projects. The development-briefs are often so ambiguous that it looks as if we are working on a quack’s cure all. The lack of a team that can commit and dedicate time to projects is certainly felt. For most, the SPD effort is “when I have time”. And therefore we fail in the execution; because we cut corners to be ready on D Day.

Joe: that sounds ominous. What about this ambiguity you mentioned?

Justin: take for instance claims for which no proof can exist, or no clear positioning of the products, proposed brand-messages that are obscured by a plethora of information, no clarity as regards pricing-points, a list of deliverables that is way too long to be credible. Shall I go on?

Joe: so, are we talking discipline or approach?

Justin: both actually. With more discipline and a more focussed approach we can achieve much more in a shorter period of time. As I said, our failure-rate is bound to drop

Joe: can you send me a memo describing the current situation and your recommendations?

Justin: I did so about a year ago, but at that time you may not have wondered whether or not our SPD-approach is up-to-date. Product did not appear to be one of the priorities of the board. I am glad to see that this is changing.

Joe: oh, before you leave, don’t forget to put the memo in its proper strategic context. The board will love that.

Justin: consider it done. Without the proper strategic context the memo would hardly make sense anyway.

Marcel Blok

Change Stranamics BV/The Netherlands

 Appeared earlier in Petfood Industry’s E-Newsletter

]]> (Super User) Sat, 25 Apr 2015 16:59:29 +0000
How to stand out in a crowded pet food market?  

Imagine this conversation between Joe Zweifel (chairman of the board) and Justin Case (marketing director) at the HQ of FYP Inc. (Feed Your Pet)

 Joeit’s about time we bring something new to the market; more than our current run of the mill products


Justin: excellent idea. How about natural products?

Joethat is very old hat; I do remember that when I started in pet food this was already mainstream


Justin: organic could be an option


Joewhy not, but I fear we run into problems with raw material supplies

Justin: could very well be; so why don’t we opt for holistic, to be on the safe side?


Joeoh no! besides the fact that nobody knows what it is, this denomination is by now used by virtually every manufacturer in the industry


Justin: true, but it seems powerful. By the way, something that is not used by anybody in the industry is symbiotic.


Joethat has a nice ring. What does it mean?

Justin: dunno. But I will look it up straightaway


Joeso symbiotic is the adjective that describes an interaction between two different organisms living in close association usually to the advantage of both. Sounds complicated.

Justin: yes, great isn’t it. Mystery sells.


Joeso, what do you plan to do?

Justin: I want to turn this into a major programme. Our major launch of the decade. Think of what we can do: register Symbiosis as a global trademark, develop a dry and a wet line, approach the symbiots if they exist


Joethis can stand out. A new denomination protected through the trademark. Monopoly in this new segment. What are the consequences product-wise?

Justin: hardly any, because we do not want to rock the boat. Do we?


Marcel Blok

Change Stranamics BV/The Netherlands

Appeared earlier in Petfood Industry’s E-Newsletter

]]> (Super User) Sat, 25 Apr 2015 16:52:25 +0000
Food for thought for pet food  

Imagine this conversation between Joe Zweifel (chairman of the board) and Justin Case (marketing director) at the HQ of FYP Inc. (Feed Your Pet)


Joeit’s about time we bring something new to the market; more than our current run of the mill products

Justin: excellent idea. How about natural products?


Joethat is very old hat; I do remember that when I started in pet food this was already mainstream

Justin: organic could be an option


Joewhy not, but I fear we run into problems with raw material supplies

Justin: could very well be; so why don’t we opt for holistic, to be on the safe side?


Joeoh no! besides the fact that nobody knows what it is, this denomination is by now used by virtually every manufacturer in the industry

Justin: true, but it seems powerful. By the way, something that is not used by anybody in the industry is symbiotic.


Joethat has a nice ring. What does it mean?

Justin: dunno. But I will look it up straightaway


Joeso symbiotic is the adjective that describes an interaction between two different organisms living in close association usually to the advantage of both. Sounds complicated.

Justin: yes, great isn’t it. Mystery sells.


Joeso, what do you plan to do?

Justin: I want to turn this into a major programme. Our major launch of the decade. Think of what we can do: register Symbiosis as a global trademark, develop a dry and a wet line, approach the symbiots if they exist


Joethis can stand out. A new denomination protected through the trademark. Monopoly in this new segment. What are the consequences product-wise?

Justin: hardly any, because we do not want to rock the boat. Do we?


Appeared earlier in Petfood Industry’s E-Newsletter

]]> (Super User) Sun, 04 Jan 2015 10:33:27 +0000
What does it take? Shortages of all sorts and sizes have made the headlines during the last couple of months. Including dark pictures about the consequences for industries and consumers alike. Also for the pet food industry. Where ingredient-cost (can) weigh substantially in the total mix of cost.

However, what is much less reported upon is the search for solutions for these recurring events. Whereas it is beyond any doubt that structural solutions need to be found to fight the noticeable cyclical fluctuations with an upward trend.

Dry wellThe energy market is tightly controlled by a few hands full of countries and companies that own the oil-wells. On the short-term these few hands full can manipulate supply and thus price, but on longer-term nature will do so; the wells will be dry! So from an industry perspective there is not a great deal we can do. Or, is there? By applying more solar and wind-energy? Or by re-installing water-turbines where appropriate?

The scarcity of key ingredients for the pet food industry is becoming more evident by the year. And again, which initiatives does the industry take to find solutions for this scarcity? Not a great many; at least not noticeable to the naked eye.

Whereas the solution might be to dedicate more land surface to grow ingredients that make sense for the pet food industry. Not necessarily for commodities that have been part and parcel of this industry for the last 7-8 decades or so, but for commodities that are less known in the countries where the bulk of pet food manufacturing takes place. Ask yourself what would have happened if dry pet foods would have been developed surrounded by field of sorghum and flax instead of corn and wheat. One could argue that commodities then need to be shipped over big distances, but to an extent that already happens today anyway.

In other words can the tradition be broken by applying alternative ingredients that have a sustainable purpose? Probably to be found in Africa where the sub-Saharan landmass is in general very fertile and crops can be abundant if managed properly.

Maybe using land that is now under-utilised by growing crops that can be used for pet foods (and not so much for human foods) creates the desired win-win-win situation: countries get a higher income from agriculture, the pet food industry becomes less dependent upon world commodity supplies (and its fluctuations) and the industry doesn’t tap into a food source that is meant for human consumption.

The question however as always is: what does it take to start an initiative of these proportions and how can speculation that is at the root of the fluctuations today be kept at bay?

]]> (Super User) Wed, 19 Sep 2012 09:21:03 +0000
An industry on the move Despite what industry sources have said in the recent past, our industry has gone through turbulent times the last few years; essentially due to what is euphimistically called “the economic downturn” but what others refer to as the economic crisis

Industry observers started with saying that the pet food market (representing 65-70% of the global pet industry sales) was recession-proof.This was followed by the claim that the industry was recession-resistant; and only recently this same industry was mentioned to be recession-resilient. The fact that the BRICS countries showing exponential growth flattered the industry-figures led to the cautious observation that the industry may not be as resilient as global figures seem to indicate.

Although there are no strong – maybe not even modest – indications that the global economy is warming up again, we need to take into account that we will some time enter into a new period of prosperity.

But will this have as a consequence that our industry is getting back to the days when “the going was good?” Most likely not! Disposable income of pet owners (aka consumers) may flourish, but we will not have seen the end of the governmental austrity-measures for quite some time to come. And these will continue to have a negative effect in general, but also on our industry. Grants and subsidies for R&D projects and investments in general will diminish. Taxes and levies are likely to rise.

And this will influence the economic outlook of the individual companies in our industry!

Therefore it’s time to rethink your business. Do you want to go through another round investments, do you want to continue to face a further consolidating retail-trade? Do you want to ……..? Numerous questions need to be raised in this respect; and they all deserve an answer

But which are some of the factors that will increasingly influence the way in which you conduct your business?

More companies will become for sale, because their owners will answer most of the “Do you want to” questions negatively. This leads to intensified consolidation on the supply-side.

Ecology will further grow as an influencer of your business and of our industry in general. Not only through regulation and legislation, but also by the fact that more informed and more critical consumers judge your company and your brands according to your position on the ecology-ladder. Neglecting the consequences of this massive trend will prove to be fatal or at least very harmful.

Furthermore – and this applies more to quasi-saturated markets than to the emerging ones – we will see a further polarisation in our industry. The smaller niche-oriented and often family-owned companies stand very good chances to survive because their specialty is their strengths and not many other comapnies have a similar speciality. The big operators will continue to thrive; also because they have a broader offer than pet foods to bring to the concentrated retail-trade. Mars, Nestlé, P&G, Colgate all offer a big basket of products to their clients, of which pet food is only a (small) part. The consequence is that medium-sized players (particularly in pet foods) are facing tough times. They need to compete with the big boys but their pockets are by far not deep enough. So, what are their chances of longer-term sustainability?

Another possible trend – again this may apply more to the mature and quasi-saturated markets – is downgrading. Does it all have to be “superpremium” or is the consumer likely to stay with premium to which they downgraded during the economic crisis? There will be a large group of pet owners that will ask itself if the perceived differences in added value between premium and superpremium justifies the sometimes substantial price-difference in favour of premium. And part of that large group of pet owners will stick with premium instead of going back to superpremium; despite the fact that they can afford to do so. Remember, we are dealing with an increasingly informed and increasingly critical consumer!

Ingredients are obviously also a further matter of concern. Not only the availability in the strictest sense, but also the availability to whom. We enter an era where cereals - the key ingredient for pet foods representing (remember?) between 65-70% of our industry’s sales – are sold on 3 different markets: human food, pet food and energy. So looking at harvest-predictions to estimate future price-levels is not good enough anymore. Trends in human foods need to be followed and assesed more closely; also in view of more affluence in the BRIC countries that together represent 40% of the world-population. And what about the energy industry? Will the political pressure to become less dependent upon fossil sources increase? It most certainly will; so the trend is towards more renewable energy of which cereals is a part will become an important fact of life. This means that our industry is getting more influenced by factors that we can not influence ourselves anymore.

And that is the main difference with the past. Instead of “going with the flow”, because the market was healthily growing, we now have to try and anticipate the unknown caused by a market in turmoil.

It’s surely all about preparing for your business-future; which must of course be a healthy one if you want to stay in business, and enjoy it.

Therefore rethinking your business becomes relevant as never before. Ask yourself if your business-model of the past can be upheld in the future. Ask yourself to which extent the external factors will influence your business. Ask yourself what you need to do to minimise the probable, negative consequences of these external factors. And above all ask yourself if you are prepared to take the necessary steps to ensure a bright future.

Because after all “It is not the strongest of species that survives, nor the most intelligent that survives. It’s the one that is most adaptable to change” (Charles Darwin)

]]> (Super User) Thu, 26 Jul 2012 09:03:26 +0000
Marketing 3.0: a re-invention of the wheel? The title assumes that there have been predecessors; like marketing 1.0.

If they have been around this fully escaped me. Or can it be that marketing 1.0 never existed. But was invented after somebody came up with the idea of 2.0?  To which extent Marketing 3.0 is new and helpful in further leading and giving direction to our businesses.

Let’s have a quick look at what Google (or is it Google 5.0; I am getting nervous here!) has to say about it. This boils down to putting corporate values and believes at the centre of the attention rather than product (marketing 1.0) or customer (marketing 2.0). Actually Google wasn’t very forthcoming with regard to providing information about Marketing 3.0. Maybe Marketing 3.0 is not astute enough to put itself in the floodlight.

When we see marketing 1.0. described as little science, not systematic, little accountability, best guess, shooting from the hip, how did marketing evolve?

Some elaborations I found in Wikipedia say that Marketing 2.0. “refers to the new generation of marketing ideas emerging from the Internet era. The expression became popular in 2005 along with the idea of Web 2.0. It is a buzzword that forms part of the business jargon of corporate work environments pertaining to new means of marketing. The expression is most frequently used by a new breed of marketers who work primarily with the Internet. This new generation of marketers views media such as TV, newspapers, and radio as secondary means of communication”.

So the new breed doesn’t associate itself with the old breed: the people with no access to or no knowledge of the internet. This provides excellent grounds for further segmentation (one of those hobby-horses of marketers): Marketing for dummies! If this is already in print, I apologise to the author(s).

But obviously after customers (Marketing 2.0) became too common-place, it was time to think of something new, something that would change the face of the marketing-earth. By making marketing softer, by buddying with the stakeholders (I mean the ones that share our values and beliefs) to make the world a better place.

So, what does Wikipedia have to say about Marketing 3.0?

It isn’t for everyone. If you’re targeting older age groups, the old media solutions can still work. Your product or service may not be appropriate for these new paradigms. Even if you think you’re in the right space, you need to do your research (and we explore online survey tools that can make your job easier). You also need to do a reality check: are the 3.0 Tools available in your neighbourhood? It’s a global economy but some tools work better in some countries than others. Marketing 3.0 is a work in progress. New media arrive in the twinkling of an eye. Some have the half-life of a mayfly; others will be around for the duration.

So, is it about tools after all? And about a limited life-span for 3.0. Because somebody is already bound to work on Marketing 4.0.

I see a strong link between Marketing 3.0. and Corporate Social Responsibility; the latter for me includes sustainability. It’s about sharing in a responsible way, but not about sharing the responsibilities. Maybe marketing has appropriated CSR for the next stage of its own development. Because marketers are supposed to be the best positioned people when we think about corporate strategy and image. Or should CSR remain the domain of the boardroom? And which conflict arises when another billion acres of rain forest is “sacrificed” to grow cheap soya. Does the boardroom look at the planet or the profit? Or maybe the indigenous people that are driven from their homeland? Where does that figure in the corporate set of beliefs and values; and what does Marketing 3.0 do with that?

From whichever angle I look at it, I invariably come to the conclusion that conceptually not a great deal has changed since marketing (1.0) came to life; which I estimate to be around 8.000 years ago. There is still a supply that needs to be matched with demand in a tumultuous environment where everybody is fishing in the same pond. The objective of a company is not to share believes and values; the objective is economical and financial sustainability and sharing beliefs and values adds to a good way to reach this objective.

So marketing 3.0 is again about tactics and should not pretend to shake the world on its strategic foundations. Do I therefore imply that it should be discarded? Quite on the contrary, as long as it is understood that it’s a means to an end. Nothing more, nothing less.

]]> (Super User) Tue, 27 Mar 2012 05:11:34 +0000
NATURAL…. Is it to be or not to be? Natural is a confusing issue at best. From a legal and regulatory point of view. But probably even more so from a consumer-perception point of view. Do they not use natural, ecological, biological , organic and even holistic as adjectives to describe one and the same: products and ingredients not too much tampered with?

And does the petfood industry not add to the confusion in trying to segment a natural proposition into hardly meaningful and hardly understandable sub-segments?

As long as there is no internationally agreed definition of natural the confusion will remain. And, confusion sofar rarely led to broad acceptance (of products) by consumers.

An international agreement will be essential. The world (and not 1 continent) is becoming the marketplace and free movement of goods is in the best interest of all stakeholders involved. And these include the end-buyer!

What keeps the industry from paying more attention to and putting more emphasis on natural?

Agreed, partly the hesitation and confusion stems from as yet unclear regulations and legislation. And certainly also from the lack of availability of ingredients that meet the required standards.

Couldn't it however be such that - if the industry consciously makes natural part of its development-plans – the ingredient-suppliers will find ways (obviously not overnight) to meet the industry's qualitative and quantitative demands??

Is natural a mere fad that will blow over? Evidently it will be the end-buyer who takes the final decision. But don't we all see around us trends (for the moment primarily in the human food sector ) that seem irreversible?

Also because consumers become increasingly ingredient-sceptical and environment-conscious!

And doesn't antropomorphism lead to a further "humanisation" of pets?

If approached in the right way, i.e. with determination and conviction, companies can build a healthy, sustainable and long-lasting "natural" business.

]]> (Super User) Sat, 18 Feb 2012 15:59:47 +0000
Developing into alliances part 1 As virtually every industry on the road to maturity and consequently saturation, also the pet industry shows - sometimes clearer, sometimes weaker - signs of consolidation.

The dog & catfood category is most advanced in this respect. Masterfoods and Nestlé have acquired through autonomous growth and an aggressive acquisition-policy such power in the marketplace that for these companies anti-trust legislation will most likely prove to be a stumbling-block for further expansion through acquisition, apart from maybe buying into some smaller niche-operators of regional importance.

Other product-categories – obviously not of the same size as the dog & catfood category, but yet of a fair size if taken from a global point of view – sofar hardly show signs of consolidation. Partly because entry-barriers for some categories are still low, as is the perceived requirement for sophistication.

But there are reasons to think that also the non dog & catfood categories will become subjected to the need of further consolidation; because the drivers for this development generally apply to the pet industry as a whole.

One key driver is the global consolidation of the retail-trade – that turn improved manufacturing- and marketing-efficiencies into a vital component of the business-strategies of the suppliers to this trade. Shorter product-lifecycles is definitely another key driver for the consolidation-process, because they impel manufacturers to boost their R&D efforts to such a level, that they need a greater mass to cover this R&D investment.

Certainly for the dog & catfood category increasingly stringent regulations and legislation on the raw-material and processing-side are bound to lead to further investments which can only be absorbed if the manufacturing-company has the appropriate critical mass.

The market suffers from an overdose of brands; most of them being "names on a bag" because they have no strict relevance for the end-buyer. The days that new so-called brands could easily be launched - and got some shelf-space - are over. The retail-trade stops being the test-farm for manufacturers' brands. In fact, because of their increased power, they seek and find opportunities to further enhance their own house-brands; and in doing so leave less room for manufacturers' brand operations. Isn't it in this respect interesting to observe that Wal-Mart's Ol'Roy brand is most likely the biggest selling petfood-brand on this planet?

One could argue to say that retailers' house-brands are potentially a bigger threat to a manufacturer's brand than the brand of the manufacturing rival!

Where does this lead us?

More than likely to a further polarisation on the manufacturing-side. Big will get bigger, niche will thrive and medium-sized operators will face turbulent times!

The rationales: big has the power to effectively deal with an increasingly demanding retail-trade, niche will initiate new developments and will primarily operate under the radarscreen of the big operators and the medium-sized companies will have difficulties "to go" big or start up a niche operation. So, how what can the latter do to cope with this threatening future set of circumstances?

]]> (Super User) Sat, 18 Feb 2012 15:59:16 +0000
Developing into alliances part 2 Are medium-sized companies threatened by structural changes in the marketplace? I am convinced they are. But which are their threats?

Let's start with the manufacturing-discipline; the lifeline for most of the medium-sized suppliers. Can they continue with further cost-reduction and increase their manufacturing-efficiencies? Probably not, unless prepared to pass these efficiency-gains on to the market; the result is increased volumes sold without the financial reward of doing so. This is a strategic paradox.

To keep up with the big competitors, investments in state of the art equipment for manufacturing and packing is required. Investments that have a weak return, because capacities will be underutilised. And, these investments put a strain on the company's financial stretch.

Also let's not underestimate the power of the retail-trade. Certainly in grocery/mass markets, international groups continue to develop, if not through M&A, through international buying alliances. Maybe of no strategic relevance for the suppliers today, but I have no doubt that those alliances will grow into powerhouses in the near future.

Does this apply to grocery only? Definitely not! Also in the specialty-trade the importance of chains and buying-groups increases dayly. Not in all regions at the same speed; yet an irreversible development you are wise to monitor closely.

The implications of a changing retail-trade for the medium-sized companies are the ways in which selling and marketing take place; they need to be redesigned. But even more importantly, the brands the company sells possibly stop to be part of the evoked set of the retail-trade partners. The result is an eroded value of the company whose brand falls by the way-side..

We can safely assume that regulations become even more stringent than they are today. Certainly on the food-side disasters such as BSE, FMD, dioxin (what's next?) incite authorities to be increasingly sceptical regarding some ingredients and their applications. The likely consequence is additional investments to comply with these regulations. Will these investments ever pay themselves back?

The above constitutes a bleak prospect. Is there anything the medium-sized companies can do to turn the tide? I believe there is! Seriously consider alligning with peers!

The handicap to do so is not rational; i.e.understanding that something needs to be done. Emotion is often the true barrier. Medium-sized companies – often family-owned/privately held –enjoyed a healthy, but above all a very independent life during the past few decades. Why give up this "freedom"?

The fear of management is to relinquish (part of) their independance. How much independance needs to be given up in alligning with your peer? This peer having the same need to allign. And facing the same emotional uncertainties?

Alliances start with the readiness to do something together. Looking at synergies to be created, while retaining the operational versatilities the big boys sometimes lack. And appreciating each others strengths and weaknesses. Co-packing and R&D can be considered, as can joint logistics and sales; to name but a few examples of where economies of scale can be achieved while maintaining the control of your own destiny.

And, why not think outside the framework of your own product-category?. Seeking peers that are no direct competitors, but face similar problems, can be very suitable alliance-partners indeed.

Arguably alliances are seen to be a threat by the management of medium-sized companies. A threat they would wish to avoid. But what if the alternative is to slowly go under?

"it is our mission to help improve the professionalism, performance and sustainability of internationally oriented companies in the pet industry"


20 years' experience in the European pet industry in top management positions and as an independent consultant to the industry since 1995.

]]> (Super User) Sat, 18 Feb 2012 15:58:40 +0000
HOW GOOD IS THE GOING? Already for quite a long period dog and cat foods manufactured in N.America have found their way into the EU market. One might say that it have been some US brands that were at the origin of the superpremium category in Europe; a category in which today a plethora of brands from the USA and Canada can be found. The going has been good sofar!

However, rules and regulations are changing. The EU Commission takes a more stringent look at the imports of pet foods. In that respect regulation 1774/2002 plus its amendments will have far-reaching consequences. Its interpretation leads to the conclusion that exporting pet foods to EU countries becomes nearly impossible, unless manufacturers are prepared to invest in separate production for the EU market. This investment would most likely bring cost of goods sold to such a level that consequential price-setting in the EU market becomes prohibitive. The exporting manufacturers are bound to lose market-share! The going will not be good in the future!

The measures taken by the EU Commission will incite those manufacturers to rethink their business in and with the European Union. Pulling out altogether is clearly an option. But, wouldn't that destroy all investment sofar made in the brands in the EU?

The alternatives are clear as well: co-packing in Europe is one. The preconception that European manufacturers are not capable to bring excellent products to market is a ridiculous one! One could also think about licensing the brands and their formulations. Both options are constructive in the sense that brand-investments are not destroyed and the presence of brands in the EU can be continued. Those company-owners who take the opportunities the EU market offers seriously do well to consider alliances in the EU in case they wish to continue to play a role in the global dog and catfood market.

]]> (Super User) Sat, 18 Feb 2012 15:58:06 +0000
SUPERPREMIUM in EUROPE The first hurdles to take

In the late 80's of the last century some of the US manufacturers saw opportunities in Europe for their superpremium brands and products. Of course there were already diets available to be prescribed by the veterinary profession. The foods brought to market - these were imported from the USA - initially faced the problem of not understanding - by the trade and the dog & cat-owners - the concept of nutritional density, i.e. lower daily food-intake to enhance the animals wellbeing. Furthermore the prices chrged for a bag of food were at that time 2-2.5 times more expensive than those for the leading dry brands. To create demand for the new concepts, the manufacturers sought their way through market through the influencer-route, the breeders and veterinarians.

The definition

All official bodies have desparately tried to define superpremium, without - in my opinion - succeeding sofar. First of all we should not forget that superpremium is typical manufacturers'jargon. Our end-buyers do not relate to products as do manufacturers and as a co

nsequence their wholesale and retail-partners.

Key in the possible definition of superpremium are: high quality ingredients with superb digestibility resulting in maximum availability and subsequent absorption of the essential nutrients.

What continues to puzzle me is the wet products for dogs and cats that are sold under superpremium brands. What is superpremium about 70-75% of tap-water in a can of dog or catfood?

The misunderstandings

Partly because the superp

remium segment is - still - ill-defined, many manufacturers claims superpremium without really providing foods that fit this claim. I have heard people say that 30/20 is a superpremium; implying that anything with 30% protein and 20% fat meets the standards. Nothing is less true; superpremium is not about percentages but about metabolism and situation.

Another phenomenon that saw the light in the mid-90's of the last century was the rise of copycats, i.e. brands that claimed to meet superpremium standards, until then more or less imposed by American brands. The copycats came to market with basically a pricing-claim: "as good as X (the leader) but 40% cheaper". A claim unworthy of belief! Not only because the performance of these copycats could not even stand in the shadow of genuine superpremium products, but also because the final decision-maker - the dog or cat-owner simply did not want to gamble and stuck to the high-priced brands.

The market-development

The phase of pioneering probably lasted until the mid-90's of the last century. The superpemium concept got more appreciated and accepted, resulting in fast growth for the category. This was most certainly helped by a few factors: the growing appreciation for

dry foods in general (more for dog than for cat) nad linked to that increased levels of nutrition-consiousness among dog and cat-owners. What should also not be forgotten is that owners grew more concerned about the wellbeing of their animals, knowing that food is a main contributor to that wellbeing!

The growing popularity of superpremium led to further product-segmentation. Initially by extending the life-cycle/life-style concept; i.e. having more products available for the various stages in life and for the various specific situations (allergies etc.) one can perceive. The number of references sold by the manufacturers thus grew successfully.

The myth that surround the category

In some countries wholesa

le and retail-partners persist in believing that good superpremium products can only be developped and sold by the big multi-national companies. This may have been the case some 10 years ago, but manufacturers in Europe have caught up with their - primarily N.American - counterparts. I dare say that some of the European manufacturers bring excellent products to market; products that do very well in comparative testing against the leading superpremium brands. These products deserve to have

their chance in the market-place and therefore deserve the support of the trading partners.

The current situation

Superpremium does not enjoy the spectacular growth of the 90's of the last century anymore.

However, the concept has become understood and got popular. A rough estimation is that in Europe around 5% of the total volume of petfood sold is

superpremium. To compare, in the USA this is about 15%.

The European superpremium category is estimated to represent around € 1,600,000,000 PVP in 2004.

Through natural evolution superpremium now enjoys a fairly wide-spread distribution; not only in the traditional pet specialty outlets, but also in garden-centers, veterinary clinics, modern self-service agri-stores and do-it-yourself outlets. In some countries grocery retailers have tried to sell superpremium products but they essentially failed because they had no personnel available to tell the "superpremium story"! It has been stated by professionals in the industry that superpremium helped pet specialty retail to survive and to grow. I wholeheartedly agree with that statement. Before sup-repremium came to the European market o

ne could observe share-erosion for the pet specialty outlets. Mass distribution and other types of outlets grew their pet assortments and increasingly threatened the position of pet specialty. Because superpremium was and still is the domaine of pet specialty the increasingly nutrition-conscious consumer had but one option: buy the food in pet specialty!


The basis for the development of superpremium products has been the so-called life-cycle/life-style concept; i.e. it has taken into account the age of the animal and its degree of activity.

The graph hereafter visualises which plethora of development opportunities lay open to the manufacturers, ranging from food for very old and lazy

dogs (A) to foods for hyper-active puppies (B). The concept has historically been more adapted to dogs than to cats.

In the framework of the 4 quadrants products were developped; initiallyat a low speed, but gradually the development of products became so massive that the trading-partners of the manufacturers lost their way in the highly extended product-ranges the manufacturers brought to market. And find it increasingly difficult to cope with 190 references from one manufactuer.

Of course the manufacturers have - or claim to have - a justification for this exponential growth of their ranges. Science continues to provide them with better nutritional and physiological insights which provides the opportunity to develop yet another product. The question is how long one can pull on the elastic band before it snaps!

A more cynical view on the exponential development of superpremium product-ranges is - as some people in the industry suggest - manufacturers seek to dominate the retail-shelves.

The impact for the industry

Where does this continuous extension of product-ranges lead to? I have no doubt in my mind that smaller and medium-sized manufacturers will be hard-pressed to follow the development; i.e. only the global or multi-national manufacturers will have the R&D and marketing funds available (and spend them) to persist in this development. The consequence is that the smaller and medium-sized manufacturers will be marginalised. This leaves the trade (both at wholesale and retail-level) with a poorer choice of suppliers/manufacturers. I doubt if an oligopoly on the supply side is in the longer-term interest of the trade and the consumers. And I expect that ultimately the reaction of the trade will be to look for private label alternatives which would not be in the interest of the branded manufacturers.

The upcoming legislation

Regulations surrounding petfoods in general become more stringent and increasingly difficult to comply with. Because the petfood-regulations are a "derivate" of the food-chain regulations; which in my point of view is increasingly undefendable because dogs and cats are not part of the food-chain!

Although nothing is really certain at the moment, it can be that the regulations - a very important EU directive is waiting to be executed - become so stringent that non-EU suppliers will find it too difficult to continue to supply the EU market; i.e. N.American brands not manufactured in the EU will either disappear from the market or find ways to continue to supply the market by having their products manufactured in the EU. This will not change the market per sé, but the supply-side will definitely look different from today.

The future for the product-category

I have no doubt in my mind that the category continues to have growth-potential. Albeit with more conservative growth-rates than in the last decade or so, but still attractive enough to continue to pay special attention to this category.

In Europe the prepared petfood penetration (PPP) is still low as compared to N.America. And in Europe we see enormous differences among the various countries.

Given the fact that there is still an unexploited market open to all stakeholders, i.e. manufacturers, wholesalers and retailers, it stands to reason that also the superpremium category can enjoy a good and profitable future.

Our end-buyers - the consumers - have a natural inclination to upgrade their choice; after all they want to do the best for their animals - that do not have the means to express themselves other than by refusing the food they get - and therefore tend to be less price-consciouss than for the food they consume themselves.

It is my opinion that the price-weapon - price-promotions - is used too early in the development stage of the category which is by no means saturated. Instead of giving the consumer a price-reason to buy, the stakeholders would do better in using the margin given away in further educating the consumers as to the health and well-being advantages superpremium offers. To further popularise the superpremium category and thus increase the value of the market as a whole; to the benefit of all!

Functionality has gradually become a part of the superpremium proposition to the consumers.

The so-called "food +" concept! If initially the proposition was health and well-being oriented, one now sees that most of the superpremium products contain special ingredients to promote e.g. joint mobility, to help the immune system, to diminsih the formation of hairballs etc.

This today sets superpremium apart from the so-called premium segment (as superpremium ill-defined as to their standards) which narrowed the gap between standard products and superpremium ones. The quest for new and improved superpremium products will continue, most likely leading to a further expansion of product-ranges. Because the total offering of superpremium products becomes so complex for the end-buyer, manufacturers who restrain themselves in the development of their assortments (can one cover 90% of the requirements of dogs and cats with 6 and 3 products respectively?) will be successful, provided that they get the opportunity to be on the retailers'shelves; including the ones in super- and hypermarkets

To conclude.

The superpremium category is not a whim; it has found a solid foundation in the European market for dry dog and catfoods. The category has healthy growth-perspectives provided that the stakeholders have a focus on the market growth-opportunity rather than the short-term gain in marketshare. Global players will continue to bring new products to the market to increase their market-position and to dominate the available shelf-space. Local manufacturers of excellent superpremium products will get squeezed in this process unless their trading partners give them the opportunities their products deserve.

]]> (Super User) Sat, 18 Feb 2012 15:57:34 +0000