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Manufacturer Roundtable: Water Proof

Product manufacturers reveal a mix of optimism and concern about the state of the aquatics industry, the current challenges it faces and where it’s headed.


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Aquascaper Oliver Knott’s work serves as great inspiration for new and experienced hobbyists alike.

Roundtable participants:
Chris Clevers, president of Hikari Sales USA in Hayward, Calif.
Andy Hudson, R&D technician for Central Garden & Pet Co. in Franklin, Wis.
Frank Kudla, vice president of sales and marketing for Aquatop in Brea, Calif.
Chris LeRose, aquatics division manager for The Hagen Group in Mansfield, Mass.
Pamela Morisse, digital and media marketing manager for Central Garden & Pet Co. in Franklin, Wis.

What is the state of the aquatics industry in 2017? Is it growing or stagnant? And why?

Chris Clevers: We feel we are seeing growth, fueling our focus on new hobbyists and our focus on providing product that does not rely on marketing hype, but rather, product that offers high 
efficacy and that meets the needs of the consumer and their aquatic pets.

Frank Kudla: Aquatop’s present business model focuses on independent retailers, so I can only speak to that channel. Our sales data, combined with anecdotal evidence and conversations with our dealer partners, leads me to believe that the domestic aquatics industry is experiencing low single-digit year-over growth. Competition for consumers’ discretionary spending is fierce. Phones, video gaming, home voice-controlled entertainment systems, et al., seem to have the upper hand in capturing the lion’s share of that spending. Due to the small size of our industry, the funds to support a national promotional and educational program are simply not available. We rely instead on word-of-mouth and some social media. This form of promotion limits the size of the audience we can reach. 

While based only on my observation, we may also have a real estate problem as well. As we all know, the key to most brick-and-mortar stores’ success is location, location, location. I see many of our aquatic retail partners occupying the same locations that they’ve been in for 20, 30 or more years. At the same time, community demographics evolve over time while the big-box players grab prime real estate. The retailers that I know in prime locations are naturally outpacing the overall industry growth. I’m not sure that there is a simple solution, as margins and profits are being squeezed. But I do think aquatic retailers should take advantage of any opportunities to gain greater visibility.

Chris LeRose: The aquatic industry seems to be on a steady incline over the past few years. There has been an incline of aquarium kits in the marketplace to fill beginners’ to experts’ needs. The aquarium kits are a great starting point for the hobbyist, with a much better success rate to keep the beginners in the hobby.  

Pamela Morisse: According to the most recent APPA National Pet Owners Survey, fish ownership is on the rise. The study attributes this to the number of products available, as well as the media channels available to communicate to pet consumers. Freshwater is slightly up, and although saltwater is a smaller segment, its rise has been more significant in the last year. 

Another generalization made by APPA was that fish owners are more likely to have young children at home. Central Aquatics was able to support this finding by commissioning a research study conducted by a third party. A key takeaway of that study also showed that moms and dads often look to fish tanks as family pets. 

As younger consumers have families of their own, the expectation is that fish will continue to be in their consideration set when thinking about family pets. With our Aqueon, Coralife and Kent Marine brands, the goal is to grow lifelong relationships with these consumers. We want our brands to nurture children into adulthood, and we want for them to continue keeping fish throughout their lives and to pass fish knowledge on to their offspring. 

Information about how to be a successful fishkeeper is more available than ever before with easy access to the internet. Our goal is to continue to get the word out about fish being a great choice for families that want a pet. We are committed to supporting educational information that will help consumers both consider purchasing fish, and also succeed in the hobby by learning from our digital resources that contain rich content such as branded websites, and Facebook and YouTube pages. We also support online promotion of new products and have contests planned in the year to come that will generate consumer buzz and excitement around aquariums and fish.

What are the biggest challenges facing the aquatics segment today?

Clevers: Bringing new people in to the hobby and finding a way to energize children to want to connect with nature through aquatics. This task is somewhat simple because kids are always fascinated with live animals, and swimming fish, with their bright colors and activity, are always a crowd-pleaser. Also, kids are on electronic-device overload, so a return to a connection with live animals and nature is something all parents should be focusing on. 

Having said that, we still face issues with parents allowing their children to have fish. They have this typically erroneous notion that fish are hard to keep. With all the advances in tank design, filtration and maintenance products, those days are long gone if you set up the aquarium properly at the start. This is where the retailers come in. 

Kudla: There are a number of challenges. Our position at Aquatop has always been that the industry requires livestock in order to grow and thrive. Heck, without fish, there’s no need for any fishkeeping equipment. We believe that livestock sales will not completely migrate to the internet. While there are some very good online sources of aquatic flora and fauna, I think most hobbyists, casual or serious, like to explore options and see firsthand what they will be taking home. Where the challenge comes in to the equation is that keeping a broad selection of healthy livestock is labor intensive, making the cost of doing business for retailers higher than that of competitors (physical and online) who only sell dry goods. Combined with aggressive, dare I say, ridiculous online pricing, many livestock resellers face enormous financial pressure. It requires high business acumen and fiscal discipline to compete in this environment.

To combat this, many manufacturers are instituting MAPP (minimum advertised pricing policy) programs. While imperfect in many cases, and time-consuming and expensive in all cases, these policies are being embraced by the aquatic dealer community. It is imperative that we, as manufacturers, do everything we can to help keep the independent dealers competitive. I remain optimistic that, while not easy, we can all work together to keep this channel healthy.

Another challenge is the lack of new, young hobbyists. As I mentioned previously, this is partly due to competition for discretionary income from other industries. I also think that a lack of exposure to inspirational aquarium systems—complete, beautiful, thriving display tanks—contributes to a lack of enthusiasm from young potential fishkeepers. Stores where I see these kinds of inspirational and aspirational displays do much better at attracting new people to the hobby.

Yet another challenge is that the expense of fishkeeping is almost entirely frontloaded. While probably being the least expensive pets to own and maintain, keeping fish requires a larger upfront investment than many other animals. For example, the adoption fees for dogs and cats pale in comparison to the long-term expense of maintaining their health and well-being. The monthly cost of an aquarium is comparably negligible. We need to get this message out.

Our industry is still challenged by the myth that aquariums are time-consuming and difficult to maintain. This perception has never been more out of date. Advances on modern filtration, lighting, water conditioning, cycling, etc., make aquariums easier to maintain successfully than ever. Again, as an industry, we need to get this message out. The best way to communicate with potential aquarium owners is through our independent dealer network.

Despite these and other challenges, the potential for growth exists. Depending on which survey you subscribe to, only about 12 to 13 percent of American households have fish. In my own informal discussions with general consumers, over half have an interest in owning an aquarium. That presents a huge opportunity if we can address these challenges.

All of us really need to focus on getting new hobbyists set up with the right products to bring success rather than tailoring a setup to a budget that is not realistic. No retailer ever went out of business for selling someone something that worked as advertised and made their entry in to the hobby pleasant, but the landscape is littered with closed stores that have taken the wrong path and sold someone something they knew was going to be problematic because of a budget constraint.

Morisse: Education and that overall knowledge of how to be successful is most important. We want to encourage our consumers to connect with their local societies and to visit neighborhood stores often to keep the conversation flowing about best practices in fishkeeping. For example, the simple fact that bigger is actually easier! It is intuitive for newer hobbyists to think that a smaller fish tank equals ease. On the contrary, larger aquariums are more forgiving and are, therefore, a better way to get started. There seems to be an exception for almost every rule and lots of opinions out there regarding aquariums. It is important to seek information out from reputable sources.

Some might also say that over-regulation and the danger that the aquatics industry might be forced out of existence down the road [is a challenge]. We need sensible and fair laws that use sustainable and ethical practices. People from every level can become involved, whether they’re manufacturers, importers, wholesalers, retailers or consumers.

What are the latest consumer trends happening in the aquatics segment of pet? Where do you see the most growth and consumer interest? 

Clevers: We see lots of activity on the freshwater fish side of the business, especially in the bread-and-butter tropical fish. Of course, bettas are still popular, and we are getting more and more calls from consumers looking for fancy goldfish. There seems to be a big opportunity here for retailers from what consumers are telling us. 

Marine continues to be a dependable part of the business, but we do see some migration back to freshwater for those who made the jump from freshwater to marine some years back.

Nano tanks and desktop units are still a popular category, but recently, we have seen a renewed interested in 50-gallon and larger aquariums. This segment of the business has been nonexistent for some time, so the resurgence is a pleasure to see.

Andy Hudson: On the marine side, new and exotic color variants of captive-raised corals are all the rage. In addition, importers continue to seek out rarely seen fish and invertebrate species from remote areas of the world, and clownfish breeders strive to be the first to develop the next unusually patterned specimens. Finally, captive breeding of popular fish such as yellow and hepatus tangs at the commercial level, and the potential for success with other species, has gained worldwide attention. 

On the freshwater side, live planted aquariums and the concept of “living art,” where décor is as important, if not more so than fish, is on the rise again. Nano tanks with colorful shrimp and dwarf fish species are gaining ground as well. Small aquariums are notoriously difficult to keep, especially for beginners, but filtration and lighting equipment is becoming more sophisticated, making it possible for virtually anyone to own one.

Kudla: Small, or nano, tanks—fresh and marine—bettas, upgrading lighting and reef aquariums are leading the trends in the business.

LeRose: Nano tanks have been on the rise for the past few years. We have been seeing more in style and design to fit anyone’s décor choices—plus the added benefit of proper equipment to have a better success rate in the hobby. Also, aquatic plants have been on the incline along with all the equipment needed to maintain a planted aquarium.

Morisse: Foremost, LED lighting. In addition, unique aquarium designs, betta and desktops continue to be leading categories. Also hot is smart equipment like phone apps and remote controls that can monitor and control equipment remotely, which continues to gain momentum. Another buzzword is “energy efficiency,” and that speaks to our national trend as a whole. If something can perform better, at less cost and resources to power it, it’s a sure sell to shoppers.     

Looking back over the past year, what would you say have been the most impactful or game-changing innovations in the aquatics segment? 

Clevers: Not much has been offered [in this segment]. It seems there is more focus on trying to copy someone else rather than bring innovation to the marketplace. For us, our probiotic-enhanced diets have been popular given that they offer lots of visible benefits to the user and can, with exclusive use, provide better water quality, which can lead to reduced fish illness issues caused by bad water.

Kudla: The continued evolution of lighting, making live plant and coral keeping easier. The development of “turnkey” aquarium systems, making the buying experience much less complex. Over the past several years, I’ve been excited to see the advancements being made in the water conditioning/cycling of new aquariums. This allows a new aquarium owner to add fish sooner and be more successful in the long run. One thing we battle against with newbies is their impatience—too much livestock too soon. Accelerating the cycling process means not only will the livestock be less stressed and healthier, but also the aquarium owner is satisfied sooner. A true win-win.

Morisse: Shoppers want to purchase products that perform better, use less energy and also key: save them time. As product innovations continue to get perfected and refined, the expectation is that costs to manufacture them will continue to come down and user friendliness will improve. The idea is to make aquariumkeeping easier and yet still affordable, which will help keep consumers engaged. People are busy, but they want to enjoy aquariums in their homes and workplaces. They don’t want it to be complicated, too time-consuming or too expensive. 

As in many segments of the pet industry, the aquatics segment has to stay on top of developments in government legislation that affects the trade. Are there any specific legislative issues that may affect that industry that you are currently monitoring or concerned about? 

Clevers: Lots of them. There are all sorts of bans being pushed all over the U.S. 

Kudla: We’re keeping an eye on legislation in Hawaii aimed at shutting down live fish collecting despite overwhelming evidence of responsible collection techniques and environmental protection. Also, we are concerned about recent developments in India, where new legislation, if enforced, will eliminate the aquatic industry through the entire country.

These types of misguided legislation are almost always the result of misinformation. PIJAC [the Pet Industry Joint Advisory Council] and other trade organizations work diligently to deliver the facts to lawmakers. It’s an uphill battle, but one that we must fight. We encourage anyone in the industry to support PIJAC’s efforts and be proactive when faced with poor legislation. The industry can’t afford apathy.

LeRose: There is always the threat of a ban on certain species of marine fish and corals. This has been an ongoing process that has been on the minds of most retailers and hobbyists.

Do you foresee the aquatics hobby growing, remaining stagnant or declining in the next few years? And what specific factors do you think will determine the future of the aquatics segment?

Clevers: We remain optimistic that it will continue to grow. As the millennials come up and start families, we see them being great potential aquarists. Many of them have an affection for nature, and keeping an aquarium to reduce the stress of their daily life could be just what they are looking for as they become parents. Given their firsthand experience with electronic overload, what better way to swing the pendulum the other way? 

Isn’t all innovation really consumer driven? If we are all focused on providing products that work rather than offering some marketing marvel that fizzles, and we work hard to help the consumer be successful in the hobby, we’re all technically being driven by their needs.
 

Kudla: I remain very optimistic that the aquatic segment of the industry will continue to grow. As witnessed by the popularity of public and private aquariums nationwide, people like fish. And it’s never been easier to be a successful aquarium owner.

LeRose: I truly believe that we will see growth in the aquatic hobby over the next few years. Aquascaping and planted aquariums have been on the incline. This is due to more choices of aquatic plants and tissue culture species—also with the introduction of aquarium kits with suitable aquatic plant needs and accessories.

Morisse: The expectation is that the hobby will grow in 2018 for similar reasons it grew the previous year. The number of products available, ease of shopping in multiple channels as well as the number of media channels available to communicate to pet consumers will feed growth. We need to support the notion that a fish tank is a great family pet or child’s first pet. And take it further by always offering newer, better products and rich content for consumers at all levels of experience to consume. The improvements in product technology, as mentioned above, will also help drive adoption and longevity in aquatics.

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