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Pet Product News Editorial Blog:

Friday, December 4, 2009

GUEST BLOG: Looking into the Pet World’s Future

By David Alderton

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Innovation is something that has never been in short supply in the pet industry. It dates back to its earliest days in the 1800s, when American inventor and entrepreneur James Spratt purchased stale ships’ biscuits, which he then sold to the wealthy aristocracy in England as dog food.

This marked the start of a multi-billion-dollar global business.

In these uncertain economic times, the need for innovation has never been greater. However, what about in the future? A number of visitors to the recent Petindex--the U.K.’s major trade show--lamented the lack of interesting new products on view. There are those who think the increasing globalization of the industry bears some of the blame. Many attendees think various large corporations have lost touch with what is required. Others view the decline in company representatives visiting retailers--thus lessening the links between manufacturers and customers--as the culprit.

Is the pet industry becoming a victim of its own success? In part, this may be a valid criticism. Furthermore, although some of the smaller manufacturers are definitely full of ideas, unfortunately, the credit crunch has made the R&D progress difficult. It is ironic that such R&D could ultimately result in a profit upturn for most manufacturing businesses—even with a long lead-time (e.g., it can take a company five years to bring a new aquarium lighting product to the market with confidence).

Nevertheless, there is very little evidence, certainly in the U.K., that the pet industry overall has been adversely affected by the recession. In the U.S., the industry’s total annual turnover has come in ahead of predictions. The American Pet Products Association (APPA) predicted close to $41 billion by the end of 2008, but in spite of the economic gloom, sales actually climbed higher, to $43.2 billion. APPA suggested this figure would then rise a further 4.9 percent to $45.4 billion by the end of 2009.

A further indication of the recession-proof nature of the pet care sector came from CSV (UK) Ltd, a group that operates a series of 62 veterinary practices across the UK. Its turnover rose to $126.4 million, representing a rise of 23 percent, while operating profits grew by a staggering 72 percent, to $11.55 million. However, herein lays a danger. At present, one of the major growth areas in the U.K. pet market is insurance. It is now possible to purchase policies for virtually any type of pet, ranging from dogs and cats to conures and chameleons.

While there have been significant advances in terms of veterinary care over recent years, driven in part by investment in equipment, there is an underlying feeling among some in the pet industry that costs of veterinary care have risen disproportionately, on the back of this surge in insurance protection. The problem is people could easily find themselves priced out of having a pet, unless they can afford insurance.

The tendency toward large amalgamations of practices is also worrying for pet owners. It poses a risk of decreased competition in the marketplace, which in turn is likely to drive prices up even more.

Veterinary work in the U.K. is indisputably the one remaining professional area where the public views its practitioners as dedicated and committed, rather than mercenary. What the veterinary profession needs to appreciate is the tremendous goodwill that will be lost if the public thinks this situation is changing. Once broken, that trust--forged over the course of some 200 years--would be destroyed forever. That would undoubtedly be to the detriment of all involved in the care of pets.

David Alderton is a journalist based in the U.K. who writes about all things pet-related. He is also the editor of a herp magazine in Britain.

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Reader Comments
The U.K. is seemingly far ahead with its concerns regarding pet insurance than here in the US. Yes, there are more companies offering it, but we have not seen the interest climb all that much. Our experience has been that consumers may pick up a pet insurance brochure but show concern at the fine print and have the feeling, like human insurance, that when it comes down to their specific pet's medical needs, that the coverage is not all that great. this is their perception and not necessarily the fact.

Regarding the "big box syndrome, swallowing up independent vets, we share your concern. If pet lovers begin shopping their vets like their pet's food, where price is a growing factor over quality, then we've got trouble ... and not just in
River City.
Lewis, Redondo Beach, CA
Posted: 12/5/2009 3:45:17 PM
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