The UK pet
product market can be divided into 4 main sectors:
-
Pet food.
-
Pet
accessories.
-
Vet/insurance fees.
-
Kennelling
In 2005,
the
UK market
for pet products was worth approximately £4.2 billion
at retail prices, representing an estimated 4% increase over the
previous year.
In general,
the pet industry has experienced steady underlying growth in
recent years, reflecting the maturity of the market. Key
factors influencing overall performance of the pet market are
consumer confidence, personal disposable income (PDI) levels,
household pet ownership levels, the mix of pets owned, new
product developments and changes in retailing.
Within the
total UK pet market, pet food
holds the dominant share at approximately 44%, worth an
estimated £1.85 billion in 2005. This mature market has seen a
decline in volume sales of dog food as a result of the decrease
in dog ownership. However manufacturers have been attempting to
stimulate growth through investment in new product development
and premium products. For example, high nutrition foods with
added vitamin and mineral supplements, and single-serve products
have added value to the market.
Veterinary fees and insurance premiums
account for 30% of the market, worth £1.3bn in 2005. This
sector has seen an increase in share over the last 2 years,
largely due to a growing concern for pet welfare and growth in
the insurance area in
particular. Tesco, the
grocery multiple, operates in the insurance sector and markets
to customers with in-store promotional literature and special
offers. The veterinary fees sector
has seen some decline due, in part, to the growing number of
treatments available over-the-counter (OTC), for example, worm
and flea treatments. The large pet superstore,
Pets at Home, even has
veterinary surgeries in some of its stores.
Kennelling
is estimated to account for 8% of the pet products total market,
valued at £337m in 2005. This sector has been fairly stable, in
terms of market share, for the last 7-8 years.
Pet accessories
account for 14% of the total UK pet market, with an estimated
market value of £577m in 2005, an increase of approximately 3%
from the previous year. The market has seen steady underlying
growth for a number of years but since 2003 this has slowed.
High levels of competition are a feature of this market together
with high levels of imports, especially at the lower end of the
market, putting pressure on UK manufacturers. However, growth
has been stimulated by consumers trading up to higher quality
accessories and premium-priced products, particularly in the
bedding and collars/leads markets. Product innovation has been
important in several markets, including toy and care product
sectors, as companies attempt to differentiate their products
and increase sales. The market has also been affected by the
number and type of pets purchased.
Toys
hold the largest share of the pet accessory market at 36% and
growth has been higher then other product sectors, and is
expected to continue. The toys market is valued at £205m RSP in
2005 and the product range is extensive including scratching
posts, tunnels/wheels, fish-tank equipment and rubber toys. The
market is characterised by an increase in the number of
innovative toys, a degree of trading up with high quality toys
now available, and a relatively low unit cost when compared with
some other areas within the pet accessories market.
Additionally, toys benefit from ‘gift’ and ‘impulse’ purchases
and from the modern trend amongst owners of indulging their
pets.
The
care products sector, at 33% of
the pet accessories market, holds the second largest share, and
is worth £190m RSP in 2005. Flea
treatments/wormers hold a large share of the care
products market at 38% and have seen good growth in the last 2
years. Maintenance products
are a major sector at 29% and include the large cat litter
market, accounting for 84% of this sector. The
health and vitamins sector, with a share of 18%,
has seen a small decline due to the inclusion of vitamins and
minerals in many high-value pet foods, although other
supplements such as remedies and tonics have contributed
positively to growth. Grooming
equipment is a smaller market with a 15% share and is
showing signs of slowing rates of growth due to the decrease in
the ownership of dogs.
The care
products market has benefited from the increasing humanisation
of pets, with owners more likely to indulge them. The market
has also been stimulated by an increase in over-the-counter
treatments, previously only available from veterinary
surgeries. There is generally more consumer awareness of
preventative treatments, fuelled by information provided by
consumer magazines, television programmes, trade associations,
manufacturers and retailers.
Storage and feeding products
account for 21% of the market, with a value of £125m RSP in
2005, and have seen a small loss in share. Cages have gained
share in the last 2-3 years and now hold the dominant share of
the market at 27% with a market value of £34m. Baskets &
bedding, previously the dominant sector, now account for 26% of
the market closely followed by tanks/aquariums at 25%. The
remainder of the market is made up of hutches and feeding
equipment at 18% and 4% respectively. Poor performance has been
seen in the bedding market in the last few years although the
market has benefited from sales at the upper end of the market.
Sales of cages and tanks have seen good growth in the last 2
years and have benefited positively from increases in small
animal and fish ownership.
Collars, leads and harnesses
are a much smaller sector within the pet accessories market,
accounting for 8% and worth £46m at RSP in 2005. This sector is
in slow decline due to its dependence on dog ownership,
currently in decline in the UK. However, growth has been
stimulated by niche products such as cat collars and growth at
the higher quality and premium end of the leads and collars
market, for example, designer collars.
Competition
remains high in the pet accessories market and consequently the
market has seen a number of acquisitions, although it remains
highly fragmented. The leading suppliers in the market are
Interpet (Mikki,
Petlove, Four Paws, Super Pet),
Masterfoods (Pedigree),
RC Hagen and
Bob Martin, who account for
around 20% of the market.
Imports
account for a significant proportion of the market and these are
most commonly from the Far East, especially in the cat and dog
toys and collars and leads markets. Mostly these imported
products are aimed at the lower end of the market, although
there is some evidence that an element of trading up is taking
place with higher quality imports entering the market,
especially from the USA.
In terms of
distribution channels, the key change has been the rapid growth
of pet superstores, such as Pets at
Home. While independent stores have seen a gradual
erosion of market share to 27%, pet superstores have enjoyed
good growth and now account for the largest distribution channel
at 33%. Grocery multiples hold a smaller share at 12% and
supply a more limited range of pet accessories. DIY multiples
are a much smaller distribution channel at 4%, with a low
priority in pet products with the exception of
Focus DIY through their
PetWorld stores, although
these have seen decline in the last few years.
