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.

Additional information