Thursday, August 13, 2009

Looking for an Opportunity: Consider the Pet Industry

As an opportunity for entrepreneurs, I love the pet industry. I love it because there are lots of neat niche’s out there for companies to find and exploit, the boomers are aging and with their kids leaving the house are spending more time and money are their pets, and perhaps most importantly it continues to grow even in difficult times. Take a look at the article in today’s Wall Street Journal: Nestle Finds Pet Owners More Willing To Spend by Goran Mijuk and Anita Greil.

Some quotes of interest from the article:

Nestlé SA, the world's largest food and drink producer by sales, reported a drop in first half profit and revenue Wednesday as consumers scaled back purchases of items like bottled water, prepared meals and dairy products. But the company did a lot better with animals than it did with humans. The same focus on premium, higher-margin products that may have put a damper on overall sales growth paid off in the company's big pet-care division, as recession-stressed consumers still found ways to spend more on their dogs and cats.

The strength of spending on pets has caught the eye of companies across the world economy.
The main beneficiaries are companies selling pet food, but the growing market is drawing increasing interest from players in sectors ranging from health care to insurance.
"Growth in pet care remains resilient," said Nestlé Chief Financial Officer Jim Singh. The company, Mr. Singh said, is scaling back underperforming and mainstream products in favor of premium offerings "that are delivering improved nutritional benefits for pets."
The American Pet Products Association, a trade group, estimates U.S. spending on pets will rise to $45.4 billion this year, from $43.2 billion in 2008.

Purina and Friskies are among Nestlé's fastest growing brands, with sales of each up by more than 6% in the first half. Dog Chow, which saw sales jump by more than 16%, had the second-fastest growth among Nestlé's major products, outstripped only by coffee system Nespresso, which has a growth rate above 20%.


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