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IVPD Congress 04/05/2009

IVPD Congress 04/05/2009. Objective. What % of Sales in your practise comes from Retail?. For 58% of vet clinics, retail constitutes more than 40% of their revenues. Vet Med Retail Survey – Dec 2009. The South African Pet food Market. A – Pet Population. 7 million dogs 1.5 million cats.

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IVPD Congress 04/05/2009

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  1. IVPD Congress04/05/2009 1

  2. Objective 2

  3. What % of Sales in your practise comes from Retail? For 58% of vet clinics, retail constitutes more than 40% of their revenues Vet Med Retail Survey – Dec 2009 3

  4. The South African Pet food Market A – Pet Population • 7 million dogs • 1.5 million cats B. ... Important potential on nutritional market Total calories needs Total dry petfood 247, 000 T Health Nutritional dry : 17000T SPT 42000 T 4

  5. Dog andCat Calorie Conversion Comparison: Calorie Conversion = Calories from Prepared Petfood as % of Total Calorie Requirementof Pet Population W. Europe S Africa 41 21  Catalyst 5

  6. Calorie Conversion correlates to Income per Head Calorie Conversion%  Dog  Cat Developed Markets GDP/head(nominal) in $  Catalyst 6

  7. % Owners of dogs or cats (2005) Only 18% of households own a Dog in SA and spend circa R110 per month 60% Hungary USA 50% Romania New Zealand 40% Latvia Kazakhstan Belgium Lithuania Estonia Poland Slovenia Canada Bulgaria Netherlands Portugal Ireland Italy 30% Australia Ukraine France Argentina Czech Republic Chile United Kingdom Austria Croatia Slovakia Switzerland Brazil Thailand Spain Finland Mexico 20% South Africa Japan Greece Germany Philippines Russia Colombia Venezuela 10% Taiwan Malaysia GDP/headin $ (at PPP) South Korea Morocco Hong Kong Singapore Turkey Vietnam China Indonesia Saudi Arabia Costa Rica UAE Lebanon Egypt 0% India Kuwait Peru 0 5000 10000 15000 20000 25000 30000 35000 40000 45000 7

  8. Summary • The South African Pet Food market is emerging • Pet ownership should increase with GDP per capita • Responsible pet ownership increases $ spent/pet • Opportunity for the veterinary profession to accelerate • the market potential 8

  9. The South African Pet food Market Specifics B – Numerical Distribution A – Market by Channels • Vet Clinics: 700 • Vet Shop: 150 • Pet Shops: +/-250 Total dry Value market share (%) Total Value market share (%) 9

  10. What’s new in the South African Pet Food Business (1) • For the 1st time in 2008, Grocery grew faster vs Specialised Trade. +27% in Grocery vs +17% in SPT 10

  11. What’s new in the South African Pet Food Business (2) • Premiumisation of the Grocery Channel (products) -8% 11

  12. What’s new in the South African Pet Food Business (3) • Premiumisation of the Grocery Channel (Service) 12

  13. What’s new in the South African Pet Food Business (4) • Retail Price increase in all channel +/- R 23.5/kg +/- R 22.75/kg +/- R 27.5/kg 13

  14. The Specialised Trade will need to change too! Vets Petfood Retail relies for >50% on “Premium” products But their “premium” product market is at risk… 14

  15. Analysis of the Value Chain differences: SPT vs Grocery Grocery SPT RRP VAT excl: 150 ZAR Vet average Markup: 35% RRP: 117 ZAR The Solution?: Retail Markup: 17% WRP: 111 ZAR WRP: 100 ZAR Distribution Costs: 15% Distribution Costs: 6% WRP: 94 ZAR COGS: 97 ZAR 15

  16. Key Success Factor: Differentiation Differentiation in Products: Health Nutrition The right precise nutritional answer for the specific nutritional requirements of each dogs and cats Differentiation in Service: Advice, Expertise, Merchandising… 16

  17. 7 Differentiation according to the consumer expectations CONSUMER Nutritional sensitivity LowHigh Pre-sold products, Price,PURCHASE PROCESSAdvice, service. expertise convenience GroceryPLACE OF PURCHASEPrescribers (Breeders + Vets) Specialized Distribution Wet food (canned) PRODUCTDry, technical, nutritional food, precise Standard dry Market Size Market Size Europe : 6 b€ Europe : 2 b€ USA : 6.5 b€ USA : 3 b€ Growth Rate : -10% to +5% / year Growth Rate : +8 to +15% / year Royal Canin 03/93 : +28,4% / year Pedigree, Wiskas, Friskies, locals… Royal Canin, Eukanuba Hill’s Pull Business Push Business 17

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