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 This e-mail address is being protected from spambots. You need JavaScript enabled to view it.

Petfood Forum Asia 2014 (Bangkok)


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!


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.


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.


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