By Marcel Blok

Email:stranamics@worldonline.nl

The first signs of awareness regarding pets' health – more particularly the health of working dogs – became noticable in the late 19the century. It was then – rightfully so – perceived that the daily meal given to the animal lacked essential nutrients：vitamins & minerals.

Albeit from a small base, the product- category was perceived to be growing healthily (no statistics were available then) and started to attract lots of newcomers in the late 60's and early 70's of the last century, all wanting a slice of the growing and highly profitable pet health care (phc)pie. Certainly the pharmaceutical companies took an interest and developed scores of OTC products which were then primarily distributed through the veterinary channels. Smaller, non-pharma companies followed suit and numerous me- too's came to market.

Most of these non-pharma companies entered the segment, because they felt they could capitalise on the brand-image existing for the products they already brought to market. On the whole these entries were opportunistic rather than strategy-led.

Because the larger pharmaceutical conglomerates had a vested interest in staying loyal to the veterinary channel, the followers popularised the category by selling their products through the specialty outlets. In essence phc thus became more readily available and more commonly known, initiating further growth of the category.

It was not until the mid 80's of the 20th century that mass-distribution hesitantly started to put some of the fast-moving phc products on their shelves.

The category developed gradually product-wise, from nutrition-supplementation for dogs (and to an extent cats) into a broad spectrum of products for all species. Nutrition wasn't the only issue anymore. Antiparastics became an important segment in category. The biggest impact on the category was supplied by anti-flea and anti-tick products (now counting for some 60% of the total category). Development of new, more often than not solution-oriented products, brought further growth and new companies entered the category. The most recent development is the one of nutraceuticals. These provide on the one hand a new challenge (their efficacy cannot always be sufficiently substantiated), but are on the other hand threatened by the clearly noticeable trend of functional foods and snacks. i.e. complete foods with nutraceuticals added, e.g. to promote joint mobility or to take care of skin and coat problems.

The more the category evolved, the more regulatory issues had to be dealt with. Developments led to the potential of using strong claims but more often than not, regulations were significant road- blocks for the use of these claims. And the burden of proof gradually became such that only the bigger operators could finance the R&D investments that were involved.

Where will the category go? On the product-side natural, as opposed to synthetic, solutions will see a healthy growth. Preventive rather than only curative will become an issue. The marketshares of the various channels of distribution will change somewhat; mass-distribution and specialty will see some growth of share, to the detriment of the veterinary channel. But most importantly, the number of suppliers will diminish, partly because R&D and marketing-in-vestments become prohibitive and partly because the non-specialised suppliers (this is not necessarily the same as manufacturers) will have to refocus on their core activities. Although it is bound to be a gradual process, a shake –out on the supply-side is to be expected. Companies will either have to drop their phc-activity or they will seek alliances with peers to build a power-block which puts them in a position of sustainability in an era where competition will further increase and where regulatory hurdles become even higher than they are today.

But those companies that stay in the market can look forward to healthy market-growth and attractive returns!

PETS International Magazine No.5-July 2004