According to Euromonitor the global percentage volume growth for pet products between 2008 and 2015 is lower than value growth.
Growth in the treats
Value growth has been driven by increased raw material costs mainly due to shortage of ingredients whereas volume growth has been affected by the general world decline in purchase of consumer goods. However, treats remain the best performing sector in the pet care market. The global market for dog treats is approximately $7.5 billion (€6,7 billion) and for cat treats is circa $1.8 billion (€1,6 billion). Treats are perceived as a natural way for pet owners to bond with their pets, reward suitable behaviour and contribute to pet welfare by the addition of functional ingredients in the treat. This growth in the treats market has given rise to bespoke manufacturers. Some using local ingredients and selling locally, others manufacture distribute nationally and the global players distribute globally.
Visit any pet products show in any part of the world and there will be exhibited row upon row of pet treat products. Many treats have the same function, just a difference in packaging and many sourced from Asia. Several of these Asian manufacturers have their own farms which supply the raw materials for their treat production.
A particular issue when buying pet or human food products which are not produced in your own manufacturing unit is you have to rely upon the quality systems of the third party manufacturer and their accepted quality procedures. In 2014 Food Safety News highlighted problems when buying from Asian meat processing plants as the workforce can be poorly trained in quality procedures and this is generally coupled with minimal testing for food contaminants e.g. bacteria. As to be expected many treats are formulated using meat products.
Locally sourced products
Owing to consumer awareness of purchasing products where the quality is perceived to be poor there has been a trend for consumers to buy locally sourced products as the quality can be ‘trusted’. In the UK, ASDA a large supermarket chain (part of the Wal-Mart Group) has a local sourcing team. This purchasing department has arisen because of customer demand for local sourced products. ASDA claims: “This initiative has been a launch pad for a range of projects to find local products from small and micro suppliers for all ASDA stores.”
Local products are defined as those that are made locally, grown locally and reared locally; are a local taste or delicacy and recognised by customers as local and for which there is significant customer demand. Meanwhile in Asia there is a growing trend for branded products at the expense of home manufactured products. Whilst mature economies are moving away from globally produced products growing economies are seeking branded products probably sourced throughout the world.
Unlike some industries e.g. chemicals and car manufacturing which produce for the global market food (human and pet) are predominantly regionally manufactured.
McKinsey assessed global manufacturing and found food businesses were part of a group of industries defined as regional-processing and made up 28% of global manufacturing value. These industries were categorised by low R&D, relatively automated and costly logistics. The map below shows the market share by top ten countries of regional-processing industries.
It is claimed the next two decades will see a change in the location of manufacturing units.
It is to be expected technology will play a central role in driving this manufacturing change. Some of the value being created in the mid-century will derive come from wholly unanticipated breakthroughs but many of the technologies that will transform manufacturing, such as additive manufacturing, are already established or clearly emerging.
In the future pet food and pet treats, as with other consumer products, will become personalised and the historic split between cheap mass produced products creating value from economies of scale and more expensive customised products will be reduced. Direct customer input to design will increasingly enable companies to produce customised products with the shorter cycle-times and lower costs associated with standardisation and mass production. Consumer research shows that customers might be prepared to pay an additional 10% for some degree of personalisation. Customisation will be a significant opportunity for local manufacturers targeting both the domestic market and other developed economies.
The factories of the future will be more varied, and more distributed than those of today. Urban sites will become common as factories reduce their environmental impacts. The factory of the future may be at the bedside, in the home, in the field, in the office and on the battlefield.
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