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(Updated 27/7/01)

UK Pet Food market worth £1.8 billion

DOG AND cat food production is one of the fastest growing businesses in the Western world, according to a leading investment banker.

The pet food market in Britain alone is worth £1.8 billion, up a massive 22 per cent since 1995. Globally, the pet food market is worth a staggering £20 billion and has grown by more than a fifth in the past six years.

Kieran Mahon, analyst at investment bank Schroeder Saloman Smith Barney was quoted in the MAIL ON SUNDAY’S financial supplement Financial Mail On Sunday that the market promised even greater growth and profits in the years to come. “Pet food is a huge market and is still relatively underdeveloped,” he said.

“Growth is not only coming from an increase in (pet) ownership, but by maintaining a dramatic increase in how much owners are prepared to spend on their pets.”

The sudden growth in the worldwide pet market has led to a flurry of buy-outs and take-overs amongst international companies. The latest coup in the market came last week when Mars, owners of Pedigree Petfoods agreed to buy French pet food group Royal Canin for £1.1 billion.

But Mars is not the only confectionery company with a taste for petfood. In January of this year, Swiss giant Nestlé paid £6.25 billion for American pet food giant Ralston Purina.

As well as being one of America’s largest pet food groups, Ralston Purina manufactures Britain’s best selling dog food, Baker’s Complete. The brand will join Nestlé’s burgeoning pet food portfolio which includes dog and cat food favourites Friskies, Spillers, Winalot and Felix.

Two years ago, Proctor and Gamble, best known for household cleaning products got in on the pet food act by buying upmarket pet food giant Iams Eukanuba for £1.4 billion. It is now pushing the Iams brands heavily in Britain, placing them on supermarket shelves, accompanied with a £28 million advertising campaign focussing on pet health. Just last month, Iams reeled from an attack by an animal rights organisation which exposed ‘invasive’ experiments on cats and dogs carried out on behalf of Iams, although the company hotly denied that any such experiments would be sanctioned by the company under its own Code of Conduct.

Dick Raper, European President of Mars’ petfoods division Pedigree Petfoods denied that the company was buying Royal Canin in response to other take-overs.

However, Pedigree is rumoured to be in negotiations with former Spice Girl Geri Halliwell to use her pet Shih Tzu Harry in an upcoming advertising campaign. The logic of using a famous old dog to advertise dog food is sound, although whether Geri - or Harry - manage to convince people to buy Pedigree dog food in the same way that the loveable white cat Arthur, famed for dipping his paw into a can of cat food managed to increase sales of Arthur’s brand cat food, remains to be seen.

Lifestyle trends

Vet Richard Harvey, president-elect of the British Small Animal Veterinary Association says that trends in pet food sales and marketing are following those in products for humans.

“We are seeing lifestyle trends in pet foods,” says Harvey. “A dog is not just a dog. “It could be a puppy, an elderly dog, a nursing bitch or a working dog. We now have foods designed for every type.

“It’s a bit like what has happened to Marks & Spencer. The one-style-suits-all approach is being replaced by niche marketing.”

Keiran Mahon agrees, pointing out that dry pet food, once seen merely as a tasty snack for cats and dogs is now promoted as premium dried food as is now seen as a healthy way top provide all a dog or cat’s nutritional requirements in a complete package. Iams is the leading example of a company that has successfully promoted dry pet food in such a way.

“Premium dried food is two to three times the price of standard tinned food,” says Mahon. “And for makers the gross profit margins are three to four per cent higher.

“In the US, these premium products account for about 30 per cent of sales. In Europe, it is only about 11 per cent. so the potential is huge.”

With sales soaring and the European pet food industry currently fragmented between about 400 different companies and pet food suppliers, the market offers rich pickings in terms of both sales and take-overs.

UK's leading dog and cat food brands
Company Manufacturer Market Share %
1. Felix Nestlé 6.5
2. Whiskas Mars (Pedigree Masterfoods) 5.6
3. Bakers Complete Nestlé (Ralston Purina ) 4.7
4. Pedigree Chum Mars (Pedigree Masterfoods) 4.4
5. Pedigree Chum Complete Mars (Pedigree Masterfoods) 4.4
6. Friskies Go-Cat Nestlé 3.2
7. Kit-e-Kat Mars (Pedigree Masterfoods) 2.0
Source: Euromonitor
National Sales of Pet Food
Volume Value
Dog Food 785,000 tonnes £989.9million
Cat Food 503,000 tonnes £872.2 million
Other Pet Foods N/A £37.8 million
(Source: Euromonitor & Pet Foods Manufacturers' Association )