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!

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