Investment opportunities in the New Zealand Petfood industry - v1.02; February 2014 Part of the Food and Beverage Information Project ...
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Investment opportunities in the New Zealand Petfood industry v1.02; February 2014 Part of the Food and Beverage Information Project www.foodandbeverage.govt.nz
Contents
Summary & conclusions
Large & attractive global market
New Zealand petfood exports are growing
Modern and robust value chain
Strong drivers of success
Track record of innovation
Investment opportunities
Appendix 1 – Key firm profiles
2
Objectives of Coriolis’ assignment
Petfood emerged as one of the six best “emerging growth opportunity” sectors of the New Zealand food & beverage industry in previous research
§ All 559 food-related HS trade codes were screened and ranked using qualitative and qualitative methods
§ Petfood was achieving strong export volume and value growth
§ Petfood had strong comparative advantage and clear links into existing New Zealand strengths
§ See related document (http://www.med.govt.nz/sectors-industries/food-beverage/pdf-docs-library/information-project/coriolis-report-investors-guide.pdf)
Coriolis was asked to develop the case for further investment in the New Zealand petfood industry
§ Make the case for further investment in the industry
§ Targeting investors, both domestic and international
§ Provide a potential investor with a preliminary overview of the industry
§ Including the facts and analysis required to “come up to speed” on the industry and the opportunity
Project incorporates extensive, recent independent research
§ Interviews with all multinational industry participants and most key domestic firms
§ Extensive quantitative analysis of all available data sources on the industry
§ Surveys, benchmarks from other countries, commercial research and Coriolis expertise
3
The New Zealand petfood industry presents investors with a strong potential opportunity for growth
Key Takeaways
§ Petfood is an attractive market with strong fundamentals
– Petfood is a growing global market
– Petfood is strongly on trend with changing global consumer behaviour
– Petfood is a profitable industry, particularly in the growing super-premium (cat and dog) sector
– Petfood is attracting investment from both global multinational companies and private equity
§ New Zealand has a vibrant petfood industry with strong comparative advantage
– New Zealand has a strong supply of safe raw materials, some of which are unique, and there is a strong and
competitive Petfood ingredients sector
– New Zealand has a vibrant retail Petfood industry of both global leaders and innovative local firms driving industry
growth
§ There are clear opportunities for growth in both products and markets
– Continued marketing, innovation and new product development leveraging strengths in safe, fresh, free-range meat
– Continued market development to build position in both existing and emerging new markets
4
New Zealand has the opportunity to be part of the growing global demand for petfood, taking advantage of
its strong reputation as a safe, free range supplier of unique meat based ingredients and brands
Global Demand New Zealand’s disease free status allows preferential access into key markets.
Demand for petfood is growing globally. The increasing number of pet-owners are treating their
pets as part of the family, demanding better quality and spending more on their companions. The second export area is in value added retail ready petfood products. Two distinct exporting
Trends in petfood are strongly mirroring trends in human food. groups are in New Zealand; MNC’s and medium sized New Zealand based firms. Mars, for
example, is a significant exporter of pouched cat food to Australia. Many medium sized firms
Key markets for petfood are richer Western markets with high pet penetration and numbers, in also exist in New Zealand, some are already exporting petfood globally while others are looking
particular USA, Australia and Western Europe. But strong growth, and a higher dollar per kilo, is to export super-premium meat based products to new markets through specialty channels and
occurring in key Asian markets and South America where small dogs in particular are treated invest in extrusion based cooking of dry pellets.
with premium dog foods and treats.
New Zealand firms have successfully innovated in this space, both in product and processes.
Dry foods dominate the petfood market, seen as more convenient and logistically easier. Large Firms are required to overcome the real challenges involved in exporting meat based products.
multinational corporations (MNC’s) such as Nestle and Mars take the lion share of this market. To assist in this, technology has focussed on packaging and producing petfood and treats in
Their large factories are located close to major markets (USA, Europe) or in developing rolls, frozen, freeze-dried and air dried states.
countries, such as Thailand.
Challenges also exist around supply. As meat processors become more efficient at maximising
New Zealand use and value of the carcass, less waste is produced. New human consumption markets (e.g.
New Zealand is traditionally a primary based exporting economy, specialising in: dairy, meat, China) have been found for offal and by-products traditionally used for petfood. Reducing stock
fruit, and food and beverages. Food and beverage products make up 56% of all exports. Petfood numbers of both sheep and deer also add supply pressure. Companies must develop strong
comprises 1.4% of this, reflecting New Zealand’s low penetration in the global market and supply relationships and consider vertical integration or investment along the supply chain.
almost no presence in the dry category (Tux baked biscuits have a large share in New Zealand
but are not exported and Addiction dry kibble is produced solely for the export market). Opportunities
Opportunities exist throughout the supply chain for investment to increase the quality of
However, New Zealand’s comparative advantage in meat and protein is driving growth in its ingredients and to highlight and target key high value customers and markets. In retail ready
petfood industry, particularly due to the availability and reliability of meat based ingredients (in petfood products, multiple opportunities exist in the super premium categories of cat and dog
particular lamb and beef) and innovation around retail ready products. food and treats. For medium sized companies, the biggest opportunity is in finding in-market
partners to enhance sales and distribution. To attract additional investment, New Zealand must
promote its unique species, good reputation, disease free status as well as its Asian positioning,
Petfood exports can be separated into two main areas, the first being ingredients consisting of
with its close proximity and free trade agreements providing access into these key markets.
either frozen MDM (mechanically deboned meat) or MBM (meat and bone meal). Ingredients
are exported to large multinational corporations who then manufacture the finished retail ready
petfood. Our advantage in this space is in having unique species such as lamb and deer.
Advantages are also in having high food safety standards/regulations and free range stock.
5
Contents
Summary & conclusions
Large & attractive global market
New Zealand petfood exports are growing
Modern and robust value chain
Strong drivers of success
Track record of innovation
Investment opportunities
Appendix 1 – Key firm profiles
6There are a large number of pets around the globe; companion pets such as dogs and cats are in over a third
of households in many markets
Total number of cats and dogs Households owning a cat Households owning a dog
Animals; millions; 2013e % of households; 2013e % of households; 2013e
New Zealand 47% USA 37%
USA 74 72
Canada 38% Canada 35%
China 11 28
USA 32% Australia 34%
Japan 10 12
United Kingdom 26% New Zealand 30%
United Kingdom 99
Australia 22% United Kingdom 18%
Germany 8 5
Germany 17% Japan 17%
Canada 95
Japan 10% Germany 14%
Australia 23
Hong Kong 4% South Korea 14%
3
South Korea 0.3 Cats Dogs China 2% Hong Kong 7%
New Zealand 1 1 South Korea 2% China 7%
Source: Euromonitor; Coriolis analysis & classification 7Petfood supports a wide range of prices, from discount store brands to super-premium products
EXAMPLE: Retail shelf price per kilogram of select dog food products in the United States
US$/kg.; actual; 1/2014
$45.74
$33.05
$12.12
$7.91 $8.33
$4.85 $5.58
$3.14
$2.12
$0.88
Ol' Roy bag Pedigree Ol' Roy can Eukanuba Nutro Hills Iams Woof Vital Missing SmartBones
Prescription
Diet
Source: Wal-Mart online; PetSmart online; photo credit (fair use; low resolution; complete product/brand for illustrative purposes); Coriolis analysis 8Pet owners globally spent a total of $92 billion on pet care in 2012; almost three quarters ($67b) was on dog
and cat food; petfood is a large category globally
Global Petcare retail sales Global retail sales: Cat and dog food vs. select categories
US$b; 2012 US$b; 2012
Cheese $130
Oils and fats $117
Bottled water - off
Dog Food $101
trade
$41
45%
Pet Products Cat and dog food $67
$20
22% Cat & Dog
Total $67b
Baby food $52
$92 billion 73%
Other Food Noodles $46
$5
5%
Cat Food Baby milk formula $36
$26
28%
Breakfast cereal $32
Snack bars $12
Source: Euromonitor; Coriolis analysis & classification 9Retail cat and dog food sales are growing at a compound annual growth rate (CAGR) of 4% and global trade is growing at
10%
Global cat and dog food retail sales Global cat and dog food export trade
US$b; 2008-2013e US$b; 2002-2012
CAGR
(08-13)
4% $10.42
$69.0 $9.93
CAGR
$64.9 $65.3 (02-12)
10% $8.78
$60.0
$8.52 $8.34
$56.7 $57.2
$7.27
$6.23
$5.63
$5.23
$4.60
$3.86
2008 2009 2010 2011 2012 2013 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Euromonitor; UN Comtrade; Coriolis analysis & classification 10Global retail cat & dog food exports were more than $10b in 2012; Europe is strong in the trade, followed by
North America and Asia
Global export value share of retail cat & dog food (HS230910) by country/region Top 25 petfood exporting countries
US$m; FOB; 2012 US$m; FOB; 2012
UK
France $1,473
$359
Denmark 3% Belgium USA $1,312
Hungary $231 Switz.
$443 Italy
$425 2% 4% $267Spain Austria $155 Germany $979
4% 3% $218 $212 1%Lithuania Netherlands $882
2% 2% $145
Germany 1% China $835
$979
Thailand $828
9%
Belgium $443
Other Europe Hungary $425
Europe 62% $762
United Kingdom $359
7%
Netherlands Canada $323
$882 Italy $267
8% Australia $187 2%
New Zealand Denmark $231
Total Australasia 2% $62
$10,424m Poland $224
S. America $289 3% 1%
Other Spain $218
$92
Austria $212
1%
E/SE Asia 16% Australia $187
Thailand
France $828 Czech Rep. $157
$1,473 North America 15% 8% Switzerland $155
14%
Other E/SE Asia Lithuania $145
$66
1% Ireland $139
China Argentina $123
Canada $835
$323 Sweden $91
8%
3% USA
$1,312 Russian Federation $74
12% New Zealand $62
Mexico $28
Note: Denmark, Italy & Austria uses 2011 data as 2012 not yet filed with UN; Source: UN Comtrade database (custom job); Coriolis classifications and analysis 11Global retail cat & dog food exports have been growing at a 10% CAGR over the past decade; exports still
dominated by the European countries
Global export value of retail cat & dog food (HS230910) by sending country/region
US$m; FOB; 2002-2012
10y Absolute 10y CAGR
$10,424 Growth (02-12)
$9,931
$10,000 China +$828 61%
E/SE Asia +$43 11%
10y CAGR Thailand +$592 13%
(02-12) $8,783
$8,519 Other +$77 20%
10% $8,344 S. Amer. +$125 15%
New Zealand +$28 +6%
Australia -$17 -1%
$8,000
Other Europe +$615 18%
$7,267 Lithuania +$73 7%
Switzerland +$75 7%
Austria +$116 8%
Spain +$144 11%
$6,233 Italy +$205 16%
Belgium +$362 19%
$6,000 $5,635
UK +$226 10%
$5,233 Denmark +$57 3%
Hungary +$316 15%
$4,600
Germany +$631 11%
$3,857
$4,000
Netherlands +$497 9%
France +$785 8%
$2,000
Canada +$175 8%
USA +$613 7%
$-
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Note: Denmark, Italy & Austria uses 2011 data as 2012 not yet filed with UN; Source: UN Comtrade database (custom job); Coriolis classifications and analysis 12Petfood is a robust global market with both large multinationals and a strong long tail of regional leaders and
specialist or niche players
Global petcare sales by key manufacturer and other Top 25 petcare firms by sales
US$b; 2011 US$b; 2011
Mars $16.2
Nestle $10.4
Colgate $2.2
P&G $1.8
Del Monte $1.8
Heristo $0.6
Other $12.8 25% Agrolimen $0.5
Nutriara Alimentos $0.5
Mars $16.2 31%
Unicharm $0.4
Total Alimentos $0.4
Blue Buffalo $0.4
American Nutrition $0.4
Total = US
Mogiana Alimentos $0.3
$50b
Next 15 $3.8 7% Partners in Pet Food $0.3
V.I.P. Petfoods $0.3
Natural Balance $0.3
Total $0.4 1% Arovit Petfood $0.3
Unicharm $0.4 1% Ainsworth Pet $0.3
Del Monte $1.8 4%
Nutriara Alimentos
$0.5 1% P&G $1.8 4% Nestle $10.4 20% Dibaq Mascotas $0.2
Colgate $2.2 4% WellPet $0.2
Agrolimen $0.5 1%
Vitakraft-Werke $0.2
Heristo $0.6 1%
Nippon Pet $0.2
Maruha Nichiro $0.2
Top 2 = 51%
Top 5 = 63% Sunshine Mills $0.2
Top 25 = 75% Marukan $0.2
Source: Pet Food Industry magazine; Coriolis analysis and estimates 13Manufacturing and marketing petfood is a highly profitable enterprise
EXAMPLE: Operating profit of Nestle pet care division EXAMPLE: Operating profit % of sales: Nestle divisions & select NZ
%; CHF; FY2012 %; CHF or NZ$; FY2012
21% 20%
Beverages 22%
17% Pet Care 20%
16%
15% 16%
15% Infant formula 18%
15% 15% 14%
13% Nestle Confectionery 17%
Operating
divisions
Dairy 15%
Prepared foods 14%
Water 9%
Fonterra 5%
Silver Fern Farms-2%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: various Nestle annual reports; Fonterra and Silver Fern Farms annual reports; Coriolis analysis 14The industry is attracting investment from large global FMCG/CPG firms
Presence in Petfood by large FMCG/CPG multinationals
1935-2013
Year
entering Method of
Firm Petfood entry Key acquisitions Key brands
Mars 1935 Organic - Kal Kan Foods (1968) Cesar, Greenies, Nutro, Pedigree, Royal Canin, Sheba, Whiskas, KiteKat,
- Royal Canin (2001) Chappi, Catsan, Goodlife Recipe
- Nutro (2007)
1998 Acquisition - Carnation (1985) Purina, Purina One, Alpo, Beneful, Busy Bone, Chew-rific, Deli-Cat, Dog
- Spillers Petfood (1998) Chow, Fancy Feast, Friskies, Gourmet Gold, Mon Petit, HiPro, Kibbles and
- Ralston-Purina (2002) Chunks, Kit ‘N Kaboodle, Mighty Dog, Pro Plan, TBonz, Purina Veterinary
- Waggin’ Train (2010) Diets, Whisker Lickin's
Colgate 1976 Acquisition - Hill’s Pet Products (1976) Hill's Science Diet, Hill's Prescription Diet, Hill's Science Plan
P&G 1999 Acquisition - Iams (1999) Eukanuba, Iams, Evo,
- Natura Pet Products (2011)
Del-Monte 2002 Acquisition - Heinz’s North America Petfood (2002) Meow Mix, Kibbles n' Bits, 9Lives, Milk-Bone, Pup-Peroni, Pounce, Gravy
- Meow Mix Holdings (2006) Train, Jerky Treats, Canine Carry Outs, Snausages, Nature's Recipe (Cat
- Kraft’s Petfood brands (2006) and Dog), Meaty Bone
- Natural Balance Petfoods (2013)
Unicharm 1986 Organic - Hartz Mountain Corp (2012) Aiken Genki, Neko Genki, Gaines
Source: various published articles; various company annual reports; Coriolis analysis 15The industry has also proven attractive to private equity which is attracted by its stable cash flow and strong
profitability
Major global private equity investment in the Petfood sector – current or recently exited
2007-2013
Firm Target Year Activity Detail
KKR Del-Monte 2007 - Acquisition Acquired producer and distributor of premium branded pet and consumer food
products for the USA market
KKR Pets at Home 2010 - Acquisition Leading UK based specialty retailer of Petfood and accessories and services
Berwind Corp. WellPet LLC 2008 - Acquired Sold by Catterton $400m
In 2012 unveil a $20m dog food processing plant expansion increasing capacity to
80,000 tons pa
Pegasus Capital Halo Purely for Pets pre 2008 - Majority ownership Part owned by Ellen DeGeneres 2008
Advisors
Catterton Partners M.I. Industries/ Nature's - - Investment Premium petfood, kibble, raw an canned, gluten free and grain free
Variety
VMG Partners Natural Balance Petfoods 2013 - Merged with Del- Founded in 1989 by actor Dick Van Patten and company. The company, based in the
Monte Southern California makes super-premium Petfood for dogs and cats.
Aim to expand Del Monte's presence in fast-growing pet specialty channel
VMG Partners Waggin’ Train 2010 - Sold to Nestle Real-meat dog treats business
Advent International Provimi Petfood (PPF) 2011 - Acquisition The third largest producer of private label wet and dry Petfood in Europe, from the
Provimi Group for an enterprise value of €188 million.
Motion Equity Partners Acraplanet (Italy) 2010 - Acquisition Purchased petfood and accessory business for €46m
Retail operation with 50 pet stores
Archer Capital Growth Best Friends Pet Supercentre 2012 - Investment Investment to support expansion plans
Funds
Quadrant Private Equity City Farmers (AU) 2013 - Majority stake Majority stake in petfood retailer for A$93m. Support the expansion of the 31 large
format stores nationwide
Source: various published articles; various company annual reports; Coriolis analysis 16Contents
Summary & conclusions
Large & attractive global market
New Zealand petfood exports are growing
Modern and robust value chain
Strong drivers of success
Track record of innovation
Investment opportunities
Appendix 1 – Key firm profiles
17New Zealand exports four classes of petfood product; some unmeasured amount of meat and offal exports
will also end up in Petfood
Simplified petfood industry supply chain
Model; 2013
Primary ingredients Petfood ingredients Retail-ready Petfood
processors processors manufacturers Markets
Grains Retail-ready Domestic market
4
Product form
- Canned
Vegetables
- Refrigerated
- Frozen
- Air dried
Other ingredients - Freeze dried
- Baked biscuits Export markets
- Kibble, extruded
Packaging
2&3
Meat, organs, offal,
? bones, blood & by- Further-processed
products meat-based ingredients
- Rendered MBM*
- MDM**
Seafood & by-products
1
*MBM – Meat and bone meal **MDM – mechanically deboned meat; Source: Coriolis 18New Zealand petfood exports – both ingredients & retail ready products – are showing strong growth
New Zealand export value of select animal feed codes
US$m; FOB; 2000-2012
$260.1 Absolute 12y CAGR
(00-12) (00-12)
$230.6 Retail Cat and
12y CAGR $221.0 $61.5 dog food +$47m 12.6%
(00-12) $212.5 $216.2 (HS230910)
9%
$49.4 4
$41.4 $46.1 $56.5
Mechanically
Deboned Meat
$64.6 (MDM) +$42m 9.2%
$153.0
$146.9 $60.4 (HS051199)
$135.2 $53.1 $49.3
$129.8 $35.9 $52.5 3
$38.0
$111.5 $113.5 $28.3
$100.8 $37.8
$92.5 $33.2 $36.9
$33.5 $36.1 Meat & Bone Meal
$25.8 $33.5 +$66m 9.5%
$14.8 $99.2 (MBM)
$31.1 $95.7 $91.4
$92.5 $80.3 (HS230110)
$22.5 $19.2 $27.2 $24.2
2
$50.6 $49.8 $58.2
$33.3 $34.2 $31.2 $35.3 $43.6
Seafood Meal
$31.8 $29.4 $34.8
$21.9 $21.6 $19.6 $20.8 $22.2 $23.5 $22.0 $25.5 $25.2 (HS230120) +$13m 3.9%
$17.3
1
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Note: HS trade codes; Source: UN Comtrade database (custom job); Coriolis classifications and analysis 19All classes of petfood exports showing long term value per unit ($/kg) growth; retail has been major
standout performer
New Zealand export dollar per kilo of select animal feed codes
US$/kilo; FOB; 2000-2012
3y CAGR 12y CAGR
(09-12) (00-12)
$3.00 Retail Cat and 28.9% 10.3%
dog food
4
$2.50
$2.00
Seafood Meal 9.5% 3.7%
1
$1.50
Deboned Meat 3.4% 6.8%
$1.00 3
$0.50
Meat Meal -15.4% 4.7%
2
$-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: UN Comtrade database (custom job); Coriolis classifications and analysis 20New Zealand’s total petfood exports of $260m – both ingredients and retail-ready – went to a wide range of
export destinations
New Zealand pet/animal feed export value by destination region New Zealand pet/animal feed export value by country
US$m; reported FOB; 2012 US$m; reported FOB; 2012
Other E/SE Asia
USA $75
Includes all four $5
product types on 2% Indonesia $47
pages prior
Australia $45
Thailand
$4 China $20
2% Japan $14
Indonesia Taiwan $10
$47 USA
18% $75 S. Korea $8
29% Canada $7
North America Netherlands $5
$83 Thailand $4
S. Korea E/SE Asia
$8 $108 Germany $4
3% Total
Taiwan Papua New Guinea $2.2
$260m
$10
Fiji $2.0
4%
Canada France $1.6
China Europe $7
$20 $16 Philippines $1.5
3%
8% Other Germany
$3 Australasia Netherlands Belgium $1.4
$4
$51 $5
1% Hong Kong SAR $1.2
Japan 2%
$14 France $2 1% United Kingdom $1.2
5%Pacific Islands
$6 Australia Other Europe Italy $1.1 HS Codes
2% $45 $6 2% 051199
Malaysia $1.0 230110
17%
230120
Singapore $0.9
230910
Source: UN Comtrade database (custom job); Coriolis classifications and analysis 21New Zealand exports petfood ingredients (including some animal feed) to a wide range of countries;
destinations that are primarily for use in poultry and aquaculture feed earn a lower dollar per kilo
New Zealand export MDM (HS051199) by market New Zealand export rendered meat meal (HS230110) by market
US$m; FOB; 2012 US$m; FOB; 2012
$/kilo $/kilo
USA $40.0 $1.05 $0.26
Indonesia $42.9
Australia $4.7 $1.65 USA $28.8 $1.16
“All of the MDM going to the
USA is going into Petfood,
it’s the meat component. Its
Indonesia $3.3 $0.86 China $5.1
going to the large Petfood “The rendered meat going $0.66
companies.” CEO, Meat to Indonesia is going into
Processing Company, 2013 pig and poultry feed. Most
Canada $3.0 $1.32 Canada $3.2 other countries are pet
food.” CEO, Rendering $0.96
Company, 2013
Netherlands $2.5 $0.97 Thailand $2.6 $0.71
Belgium $1.3 $2.68 Other Asia $2.4
$0.72
Thailand $1.3 $1.48 Netheralnds $2.4
$1.04
China $1.2 $0.82 Germany $2.0
$1.18
Italy $0.9 PNG $1.9
$3.57 $0.58
UK $0.7 Fiji $1.9
$16.18 $0.58
Source: UN Comtrade database (custom job); Coriolis classifications, analysis, interviews 22Total NZ retail-ready industry turnover of $375m, of which $234m domestically produced; 32% of domestic
production is exported; domestic industry developing, but supermarkets still 80% of market
New Zealand total retail ready petfood market New Zealand petfood wholesale value by channel
NZ$m; export FOB; domestic and import wholesale; 2012e NZ$m; 2012e
Total Domestic Production 62% NZ$234m
32%
Domestic
production
$158 42%
Pet stores $24
8%
Total Domestic
Market
Total = Total = Rural retailers
Exports $76 NZ$300m Supermarket
NZ$375m NZ$300m $16 6%
20% $241 80%
Vet $10 3%
WHS $6 2%
Imports $141 Other $3 1%
38%
Source: Coriolis estimates 23Both the New Zealand domestic petfood market and exports are showing strong growth; many in double
digits
Five year New Zealand petfood market growth rates (CAGR): by domestic channel and by export market product
%; CAGR; last 5 years
Domestic
by channel Pet superstore 17%
Grocery 7%
Pet shops 6%
Vet clinics 6%
Other 12%
Exports Retail C&D 11%
by product
MDM 12%
MBM 11%
Seafood meal 10%
Source: UN Comtrade database; Euromonitor; Coriolis analysis and estimates 24Two-thirds of New Zealand’s retail cat/dog petfood exports by value go to Australia (primarily Mars); only
the US and Japan also took more than US$5m worth of product in 2012
NZ exports of retail cat & dog food (HS230910) by country/region Top 25 export destinations for NZ retail cat & dog food
US$m; FOB; 2012 US$m; 2012
Australia $39.4
USA $6.7
Japan $6.2
Australia
$39.4 Taiwan $2.3
64% Canada $1.0
Hong Kong SAR $0.9
Germany $0.9
Rep. of Korea $0.6
Aus/Pacific 65% Cook Isds $0.3
Netherlands $0.3
Denmark $0.3
Turkey $0.2
Total Finland $0.2
$61.5m Other 1% Pacific Islands $0.5 1%
Other $0.3 1% United Arab Emirates $0.2
Sweden $0.2
E/SE Asia 18% United Kingdom $0.1
Japan $6.2 10% India $0.1
Europe 4%
North America 12% Italy $0.1
Fiji $0.1
China $0.1
Other Europe Taiwan $2.3 4%
Samoa $0.1
$1.4
Canada Other E/SE Asia $2.8 4% Belgium $0.04
2%
$1.0 USA
Germany 2% $6.7 Russian Federation $0.04
$0.9 11% French Polynesia $0.03
1%
Kuwait $0.02
Note: Global imports do not match global exports (for a range of understood reasons); Some countries use 2011 data as 2012 not yet filed with UN; Source: UN Comtrade database (custom job);
Coriolis analysis 25New Zealand’s existing export markets can be grown significantly; targeting the high growth, high value
markets
New Zealand’s top destinations for retail-ready petfood (HS230910)
US$; CIF; %; 2012
NZ import NZ share of
value in receiving
Total Petfood 10yr Import Share of receiving countries NZ’s $/kilo by Total $/kilo by Overall
Imports CAGR global country import value receiving receiving attractiveness
Country ($m) (%) imports (%) ($m) (%) country country
Australia $195 15% 2% $35.9 18% $2.92 $2.49 !"
Japan $831 3% 9% $6.4 1% $2.23 $2.76 !"
USA $736 17% 8% $3.7While New Zealand currently has a strong presence in Australia it has a wide range of growth opportunities
in other major markets
Top 25 retail cat & dog markets by imports 10y CAGR of import value NZ share of import value by country
US$m; CIF; 2012 % on US$; 2002-2012 US$m; CIF; 2012
Germany $857 Germany 5% Germany 0.1%
Japan $831 Japan 3% Japan 0.8%
United Kingdom $785 United Kingdom 8% United Kingdom 0.0%
USA $736 USA 17% USA 0.5%
Italy $603 Italy 11% Italy 0.0%
Canada $580 Canada 9% Canada 0.2%
France $515 France 12% France 0.0%
Belgium $469 Belgium 6% Belgium 0.0%
Netherlands $353 Netherlands 10% Netherlands 0.1%
Austria $259 Austria 12% Austria 0.0%
Spain $229 Spain 8% Spain 0.0%
Russian Federation $222 Russian Federation 26% Russia 0.0%
Australia $195 Australia 15% Australia 18.4%
Sweden $182 Sweden 9% Sweden 0.1%
Switzerland $178 Switzerland 5% Switzerland 0.1%
Poland $158 Poland 20% Poland 0.0%
Czech Rep. $156 Czech Rep. 21% Czech Rep. 0.0%
Portugal $152 Portugal 9% Portugal 0.0%
Denmark $140 Denmark 6% Denmark 0.2%
Rep. of Korea $113 Rep. of Korea 12% Rep. of Korea 0.8%
Note: Global imports do not match global exports (for a range of understood reasons); Some countries use 2011 data as 2012 not yet filed with UN; Source: UN Comtrade database (custom job);
Coriolis analysis 27Contents
Summary & conclusions
Large & attractive global market
New Zealand petfood exports are growing
Modern and robust value chain
Strong drivers of success
Track record of innovation
Investment opportunities
Appendix 1 – Key firm profiles
28New Zealand has a modern, robust, well-developed petfood value chain
Simplified model of key players in the New Zealand petfood value chain
Model; 2013
Beef, lamb & venison processors
Specialist petfood abattoirs
Nick's Petfoods Petfood manufacturers
Fordes Petfood
Down Cow Others…
Poultry Specialist renderers
Export
Markets
Others…
Pork
Seafood
Local
Market
Vegetable processors
Grain traders
Source: interviews; Coriolis analysis 29New Zealand meat & seafood production growing long term and country is not intensively farmed, indicating
significant spare capacity to produce more meat
Total New Zealand meat and seafood production volume Meat production in tons per square kilometre: NZ vs. peers
Metric tons; millions; 1961-2011 Metric tons/square kilometre; 2011
Wild Capture
Aquaculture
2.0 Other
Venison Singapore 166
Pork
Chicken
Lamb & mutton
Beef
1.5
Netherlands 79
1.0 Denmark 48
0.5 Ireland 14
New Zealand 5
-
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Note: 2011 is latest data available from United Nations; Source: UN FAO AgStat database; UN FAO FishStat database; CIA World Fact Book; Coriolis classification and analysis 30New Zealand is a major meat exporter and has significant global trade share across a number of meats
New Zealand share of global export value by meat product Situation/drivers
% of US$; 2011
New Zealand and Australia combined command
almost two thirds of the global lamb trade
35% – NZ is the largest lamb exporter in the world
– NZ has a large industry with ample supply
– NZ has a wide range of processors
– If petfood suppliers are using lamb, it is
coming from the Australasia region
New Zealand pioneered deer farming and in the
global leader in farmed venison production
– Venison is sustainably produced
19% – Animals are processed similarly to beef and
lamb (not wild caught by hunters)
17%
Meat “not elsewhere specified” is a catch-all code for
meats undefined when the trade codes were set up
New Zealand exports under this code include possum
(sometimes described on packaging as brushtail);
5% while possum are protected in Australia, they are
3% culled in New Zealand as an introduced pest
1% – NZ is effectively the only global supplier of
this meat
Sheep & lamb Deer & all other Meat "not Boneless beef Prepared beef Goat New Zealand has a large rabbit population that has
game elsewhere the potential to enter the meat supply chain in
secified" quantity
Source: UN FAO AgStat database; Coriolis analysis 31While New Zealand has a secondary position overall in the beef trade, it is strong in “manufacturing beef,”
partially as a offshoot of the growth of the New Zealand dairy industry
Number of dairy cows in New Zealand EXAMPLE: New Zealand share of US frozen boneless beef imports
Head; million; 81/82-10/11 % of US$ value; 1996-2012
5.0
22%
4.5 21% 21% 21%
29y 20%
19% 19%
4.0 CAGR 18%
18% 18%
2.8% 18% 18%
17% 17%
3.5
16% 16%
15%
3.0
2.5
2.0
1.5
1.0
0.5
-
1981/82
1983/84
1985/86
1987/88
1989/90
1991/92
1993/94
1995/96
1997/98
1999/00
2001/02
2003/04
2005/06
2007/08
2009/10
1996
1997
1998
1999
2000
2011
2012
2004
2008
2006
2009
2001
2010
2002
2007
2005
2003
Source: DairyNZ New Zealand Dairy Statistics 2010-11; UN FAO AgStat database; UN Comtrade database; MAF/MPI; Coriolis analysis 32New Zealand has a robust meat industry with a wide range of firms participating; no single supplier
dominates any key species
New Zealand meat slaughter and primary processing share: beef and sheep meat
% of volume; 2012 or as available
Beef & veal Sheep & lamb
Wilson Hellaby
2%
Lean Meats
Alliance
Taylor 3%
9%
Greenlea Preston
8% 5%
AFFCO Wilson Alliance
29% Ovation
17% Hellaby 7%
7%
UBP
5% Other
Taylor Preston
10%
3%
Lean Meats
0%
ANZCO Other
20% 1% AFFCO
12%
SFF
SFF 23%
ANZCO
30%
9%
Source: New Zealand Meat Board; Coriolis analysis 33Livestock and meat processing plants are spread across the country with no single region dominating any
key species
Share of total livestock numbers by region Location of all export certified beef and sheep plants in NZ
As of 30 June 2012 2013
1%
1% 0%
1% 1%
8% 6% Northland
7% 2% Auckland
2% 12% 14%
15% 8% 3%
27%
9%
21%
5% 52% Waikato/B.O.P.
25%
0%
8%
3% 28%
20%
17%
7% Hawke's Bay/Gisb.
4% 57%
7% Tara./Mana./Wel.
3% Tasman/Marl./W.C.
16%
37% 11% Canterbury
31%
14% 12% Otago/Southland
4%
Cattle Sheep Deer Pigs Goats
Source: Statistics New Zealand; Beef + Lamb New Zealand (http://www.beeflambnz.com/Documents/Market/Meat%20processors%20in%20New%20Zealand%20map.pdf ); Coriolis
analysis 34Like livestock, petfood manufacturers are spread across the country; many regions appear to have “spare
capacity” for more processors
Location of key retail pet food manufacturing firms in New Zealand
2014
Data and interviews give
strong indications of spare
capacity in the Waikato/
BOP region
Data and interviews give
strong indications of spare
capacity in the South Island
Source: Coriolis 35Contents
Summary & conclusions
Large & attractive global market
New Zealand petfood exports are growing
Modern and robust value chain
Strong drivers of success
Track record of innovation
Investment opportunities
Appendix 1 – Key firm profiles
36There are strong drivers in place for the further growth of the New Zealand petfood industry
Conclusions on the future growth potential for the New Zealand petfood industry based on supporting drivers
Model; 2013
Conclusions Supporting drivers
Petfood manufacturers leverage New - Primarily low cost pastoral farming systems (lamb, beef, venison, pork)
Zealand’s position as a low cost producer of - 80%+ of meat production is exported; local price is freely traded world price less shipping
protein - New Zealand exports meat to the US market, itself the world’s largest meat exporter
Petfood manufacturers leverage New - New Zealand has a well-regarded, world-class food safety system
Zealand’s reputation for safe, secure, - New Zealand is an island in the middle of the South Pacific ocean out of the path of migratory birds
disease-free meat - New Zealand has strong biosecurity laws and systems in place to keep out introduced pests and diseases
- New Zealand is free of many of the key global livestock diseases (e.g. foot-and-mouth, BSE, bird flu)
Petfood manufacturers can choose from a - New Zealand has a robust meat industry
wide range of suppliers - Meat production is widely distributed across the country; no single region or species dominates
- New Zealand has 66 export grade meat plants spread across the country
There is ample available supply of raw - New Zealand is not intensively farmed indicating capacity for further production growth
materials for further industry growth - Production of key meat species is growing medium term, other than lamb which is flat
- New Zealand exports 3x as much petfood ingredients by value than retail petfood indicating available supply
New Zealand petfood manufacturers have - Leading petfood firms are strongly leveraging New Zealand unique ingredients to differentiate their products against the
demonstrated an ability to innovate competition
- New Zealand firms are innovating with product states, including freeze dried, cooked rolls and air-dried products
- New Zealand firms are innovating around functional ingredients, unique to New Zealand
- New Zealand firms are well positioned in and pushing the “Prey Diet”, the replicating a wild animals natural diet
- New Zealand companies are producing products that are firmly “on trend”
Source: Coriolis 37New Zealand has an excellent range of meats available to Petfood manufacturers – some are unique to New
Zealand
Major exporter Domestic production
Lamb Free range beef Seafood Poultry
Possum Deer/Venison Rabbit Pigs (farmed & wild)
Unique to New Zealand
Source: various; photo credit (Copyright free or public domain); Coriolis analysis 38New Zealand is a trusted supplier of food, particularly in Asia, as this example from Japan shows
Japanese public image of foreign products
Index
100
80
Japan
60
Lower cost
& trusted High cost
Safety 100 = safe, -100 = unsafe
40 & trusted
EU
Scandinavia
NZ & 20
Australia
0
-100 -80 -60 -40 -20 0 20 40 60 80 100
-20
Lower cost &
lower trust USA -40
-60
Asia (excl. China)
-80
Low cost &
China low trust
-100
Cost 100 = expensive, - 100 = inexpensive
Source: USDA Gain report JA8713; Coriolis 39New Zealand is a well known and trusted source of ingredients, in particular lamb; “New Zealand” is often
stated front of pack
Ingredients exported from New Zealand, manufactured offshore
Manufactured in, and exported from, New Zealand
Source: various; photo credit (fair use; low resolution; complete product/brand for illustrative purposes); Coriolis analysis 40New Zealand has particular strength across a number of attractive market niches
Particular niches where New Zealand has strength/opportunity
Model; 2013
Category/ Core NZ strength Consumer angle/marketing pitch Opportunities
segment Driver of NZ success
Lamb Major lamb producer Exotic meat in most markets Further leverage this exotic ingredient
Largest lamb exporter in the world Consumer visualises their dog “chasing a lamb”
Strong food safety systems
Excellent product quality
Farmed deer/ NZ pioneered deed farming Exotic meat in most markets Further leverage this exotic ingredient
venison Largest global producer Consumer visualises their dog “chasing a deer” Leverage sustainable production angle
Perception as a “wild” or “natural prey”
Possum Effectively the only global source of the Highly exotic meat in all markets Create clear point-of-difference vis-à-vis competitors
“Brushtail” product Appeals to consumer as “natural prey” Pitch as helping protect native NZ forests
Animal is introduced pest Can be positioned as sustainable pest control
Rabbit Animal is an introduced pest Appeals to consumer as “natural prey” Pitch as helping protect native NZ plants
Can be positioned as sustainable pest control
Roll or chub Strong in meat; weaker in grains “Fresher”, more natural, more healthy Continue to lead segment growth and innovation
packaging Pioneered in New Zealand Drive growth in the US market
Freeze-dried Strong in meat; weaker in grains More efficient (less weight) Continue to lead segment growth and innovation
Pioneered in New Zealand More health (high meat content)
“Prey diet” Strong in meat; weaker in grains More healthy Embrace emergence of this new positioning
Pioneered in New Zealand More natural for the animal
Source: Coriolis 41In particular there is widespread recognition of New Zealand’s strength in lamb ingredients
Quotes from interviewees supporting New Zealand strength in lamb Examples of global leaders products containing NZ lamb
2013 2013
“New Zealand lamb is highly sought after as it’s BSE free, we have no foot and
mouth disease and we have a good food safety record. This is really important to
the large companies.” CEO, multinational, MDM supplier
Nestle P&G
“New Zealand’s specialty is ovine (lamb). Cats and dogs like variety and New
Zealand is a good high quality supplier of lamb. We are disease free and have high
volumes. Our lamb gets a premium. We have an excess we need to export.” MD,
major renderer
“Brand NZ is very strong in petfood, especially with lamb and venison.” Manager,
medium sized export company
“We use ‘NZ lamb’ on the label because we are perceived to be very near the top of
the quality tree. We are leading the way in super-premium.” CEO, New Zealand
medium sized company
Source: various; photo credit (fair use; low resolution; complete product/brand for illustrative purposes); Coriolis analysis 42New Zealand petfood manufacturers use a wide range of ingredients, most of them sourced locally
Ingredients being sourced wholly or partially from New Zealand by key petfood manufacturers May not be NZ manufactured or sourced
2013
Firm Lamb Beef Deer Chicken Seafood Fats & by- Veget- Grains Other Vitamins & minerals
products ables
Vegetable oils
Mars ✓ ✓ ✓ ✓ ✓ ✓ ✓ Natural flavours
Some colours
Nestle ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Flax seeds Some grains & cereals (e.g. rice)
Whey protein
Cheese Gelling agents & emulsifiers
Dextrose
Heinz ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Taurine
Methionine
Butch ✓ ✓ ✓ ✓ ✓ ✓ Garlic
Soy
Bombay/ ✓ ✓ ✓ ✓ ✓ Horse
Jimbo’s
Fond Foods/ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Garlic
Chunky Possum
Ziwipeak ✓ ✓ ✓ ✓ ✓ Dried kelp
Parsley
Omega-3
Natural ✓ ✓ ✓ ✓ ✓ ✓ Fruit
Food/ Eggs
K9 Natural Garlic
PetfoodNZ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Fruit
Biophive ✓ ✓ ✓ ✓
Natural Pet ✓ ✓ ✓ ✓ ✓ ✓ ✓ Greenlipped
Treat Co/ mussel
Zeal Omega 3&6
milk
Source: interviews; various company websites; various product ingredient lists; Coriolis analysis 43Leading petfood firms are strongly leveraging New Zealand unique ingredients to differentiate their products
against the competition
EXAMPLE: Ziwipeak Venison & Fish air-dried dog food
2013
Venison offal
28%
Hoki (Blue Grenadier) is
fished commercially only in
New Zealand New Zealand and Australian
pioneered deer farming waters
Hoki fish
and is the largest 12%
global producer Green Lipped Mussels (Perna
canalicula) is a NZ-unique
species farmed in aquaculture;
Green lipped
it is used as a supplement for
mussel
joint health and mobility
3%
Other Lecithin
7% Chicory Inulin
Dried Kelp
Parsley
Naturally preserved with
Vitamin E
Venison meat Vitamins
50% Chelated Minerals
Source: Ziwipeak website and package; photo credit (fair use; low resolution; complete product/brand for illustrative purposes); Coriolis analysis 44As a result of its strength in meat, but limited position in grains, the New Zealand pet food industry has a
strong focus on wet products for export
EXAMPLE: Mars/Whiskas pouch range produced in Wanganui, New Zealand currently being EXAMPLE: Sample ingredients
sold in Coles Australia
Ingredients:
Sheep and/or Chicken
Core NZ Beef
strength Gelling Agents
Vitamins and Minerals
Colouring Agents
Vegetable Oil
Flavours
Plant Extracts
Taurine
Source: Coles Online (accessed January 2014); photo credit (fair use; low resolution; complete product/brand for illustrative purposes); Coriolis analysis 45Contents
Summary & conclusions
Large & attractive global market
New Zealand petfood exports are growing
Modern and robust value chain
Strong drivers of success
Track record of innovation
Investment opportunities
Appendix 1 – Key firm profiles
46New Zealand companies are innovating with product states, including freeze dried, cooked rolls and air-dried
products
EXAMPLES: Innovative New Zealand products leveraging new product forms, temperature states and meal occasion
As of 2013
K9 Freeze dried cat and dog “A natural, raw diet provides your dog “When we first went to the US we were
food with nutrition it needs to thrive, the the first freeze dried company on the
way nature intended.” shelves. You see more now.”
“Freeze drying preserves the product in its
natural state; it also makes the product
light.”
Butch dog roll A lightly cooked and wrapped meat based “Globally customers aren't used to meat
product with over 75% meat; no sugar, no rolls this product is new for them.”
wheat, no gluten, no yeast, no artificial
flavours
Zeal air-dried treats “Absolutely no 'nasties' – no vaccines, “We have a range of 18 real dried Veal,
hormones, steroids, antibiotics, Sheep and Venison meat and bone treats
colouring, flavouring, and are also non- to choose from.”
HTP. We have a range of real dried Veal,
Sheep and Venison meat and bone treats”
Source: various; photo credit (fair use; low resolution; complete product/brand for illustrative purposes); Coriolis analysis 47New Zealand companies are innovating around functional ingredients, unique to New Zealand
EXAMPLES: Innovative New Zealand unique ingredients added to petfood
As of 2013
Ingredient Health Benefits Product Example food
Green-lipped mussel – Pain relief Glucosamine
– Hip and Joint Health Liprinol
– Movement and Mobility Mucopolysaccharides
– Anti inflammatory Betain
omega-3 fatty acids
Deer antler/velvet – Promote growth and Chondroitin Sulphate
immune system Glucosamine
development Collagen
– Cardiovascular and Amino acids
nervous system health
King Salmon – Brain function Omega 3 & 6 & oils
– Shiny coat Protein
– Control of inflammation in Amino acids
the digestive tract Bioactive peptides
– Support for joint cartilage
Manuka honey – Dental care Antibacterial
– Gut health Antiviral
– Skin care
Flax seed oil/flake – Omega 3 Immune, circulatory and
structural systems
Source: various; photo credit (fair use; low resolution; complete product/brand for illustrative purposes); Coriolis analysis 48New Zealand companies are well positioned in and pushing the “Prey Diet”, the replicating a wild animals
natural diet
EXAMPLES: Innovative New Zealand products replicating wild prey
As of 2013
K9 Sausages Possum Patties
minced chicken Possum, heart, kidney, liver,
frame, heart, ground bone.
“animals diet should kidney, liver, green
replicate an animal with tripe and Power Patties are made
bone, offal and meat” tukkathyme. with minced chicken frame,
green tripe, heart, kidney
and liver.
Lamb Feast Venison Feast
Lamb meat, lamb bone, Venison meat, venison blood,
lamb blood, lamb green venison bone, venison green tripe,
“natural goodness of fresh tripe, lamb liver, broccoli, venison liver, broccoli, cauliflower,
whole foods, blended into cauliflower, carrot, spinach carrot, spinach (chard), cabbage,
a convenient feed (chard), cabbage, apple, apples, pears, venison hearts,
product.” pear, lamb hearts, lamb venison kidneys, eggs, green
kidneys, eggs, green lipped lipped mussel
mussel and garlic.
Air dried Venison cuisine
Moist Lamb – cat food Venison - Meat (includes up to 3% finely
Lamb - Meat, Liver, Tripe, ground bone) Venison - Liver, Lung,
Heart, Kidney, Green- Tripe, Heart and Kidney, New Zealand
“designed to mirror wild prey” Lipped Mussel, Vitamins, Green-Lipped Mussel, Lecithin, Chicory
Minerals, Taurine, DL- Inulin, Dried Kelp, Parsley, Naturally
Methionine. preserved with mixed tocopherols
(Vitamin E), Vitamins, minerals
Source: various; photo credit (fair use; low resolution; complete product/brand for illustrative purposes); Coriolis analysis 49New Zealand companies are producing products that are firmly “on trend”
EXAMPLES: Innovative New Zealand products that are inline with identified global petfood industry trends
As of 2013
Trend Description Example Producer Example Product
Natural and Organic – No preservatives, added colours, Zeal
flavours Jimbos
– Free from hormones, antibiotics Butch
– Free range cows, sheep, deer
Humanised Food – Reflecting products available for human Zeal (pet milk)
consumption Addiction (Homestyle
venison and cranberry
dinner)
Raw Food / Dried / – 100% Natural ingredients Addiction (dehydrated)
Dehydrated – Fast re-dehyration times more ZiwiPeak (dried)
convenient K9 (freeze dried)
Biophive (air dried)
Gluten free (grain free) – Move away from allergen inducing Ultra
grains Zeal Grainfree
Superpets
Convenience Packaging – Convenient and easy opening food , Maranui free flow frozen
single serve pouches and cans or patties + resesalable fresh
resealable containers meat
Jimbos free flow patties
Mars pouches (x12)
Weight management – Use of lean meats such as venison, Addiction (weight
turkey management)
Source: various; photo credit (fair use; low resolution; complete product/brand for illustrative purposes); Coriolis analysis 50New Zealand has world-class food and beverage research and development capabilities, including a long
history of meat-specific research, spread across a wide range of universities and research institutes
Key Food & Beverage Industry research bodies in New Zealand
2013
RESEARCH AND SCIENCE ORGANISATIONS UNIVERSITIES
Source: Coriolis analysis 51Mars is working with AgResearch to leverage New Zealand’s meat science capabilities to develop successful
new products
“Mars Incorporated has already confirmed new research funding and is “Mars worked with AgResearch to create a premium petfood product,
making an ongoing commitment to research and development in New being made at Mars’ Wanganui manufacturing plant, to grow export
Zealand, with product innovation being a core part of our long term markets.” Jonathan Cox, Product and Innovation Manager, Mars, FoRST, Press
vision. [I am] optimistic there will be further growth opportunities for release, May 2009
Mars in Wanganui.” Jonathan Cox, Product and Innovation Manager, Mars, FoRST,
Press release, May 2009
“Agriculture Minister David Carter will be in Wanganui today to sign a
memorandum of understanding between the three partners [Mars,
“In 2007, we started some work with AgResearch and Massey AgResearch & Massey] and also to launch a new range of pet care
University that was looking at new ideas for pet food. We have products produced by Mars Petcare factory. The product is the result of
developed a new protein innovation with them. The research has funding received from TechNZ and the signing will form a new group
allowed us to bring out a new range of products under the Whiskas called Protein Innovation NZ.” Wanganui Chronicle, May 2009
brand, which we have launched in Australia… … That launch has been
reasonably successful, and we've seen a marked increase in volumes
required for that market. This project and growth in demand for our
product were linked." Colin Fergus, plant manager, Mars Petfood Wanganui, May
2009
52As a result of being an island nation with strong biosecurity controls, New Zealand is free of a wide range of
animal diseases; this leads to higher yields and excellent market access
EXAMPLES: Livestock diseases that are and are not present in New Zealand*
2013
Major global diseases
Species Present in New Zealand Not present in New Zealand (select)
Cattle Bovine TB Foot-and-mouth
Johne’s Disease Bovine Spongiform encephalopathy (BSE)
Bovine Brucellosis
Sheep Footrot Scrapie
Foot-and-mouth
Blue tongue
Deer Bovine TB Foot-and-mouth
Chronic Wasting Disease
Horse - Potomac horse fever
African Horse Sickness
West Nile virus
Equine encephalomyelitis
Poultry - Highly Pathogenic Avian Influenza (Bird flu)
Infectious Bursal Disease
Newcastle’s Disease (Fowl pest)
Pigs - Foot-and-mouth
Porcine Reproductive & Respiratory Syndrome
Porcine Brucellosis
Classical Swine fever
Salmon - Infectious Salmon Anemia (ISA)
* Full list available at MPI http://www.biosecurity.govt.nz/pests/surv-mgmt/surv/freedom 53Looking beyond food, New Zealand has clear comparative advantage in a some other product categories; of
these nutraceuticals/supplements stands out for growth
Screen of potential/emerging opportunities across wider pet products and petcare
Model; 2013
Product Overall Growing Growing NZ Growing NZ Traditional sources of comparative advantage Comments/notes
category global production export
market Safe/secure Unique raw Low cost Lack of key
systems materials protein diseases
Supplements/ Leveraging unique plants & animals
nutraceuticals
#" !" #" !" #" #" $" #" Growing in human-grade space
Emerging market for pet supplements
Veterinary !" !" !" !" #" $" $" #" Lack of diseases key driver of success to date
medicines Leveraging strength in farm animal health
Pet litter (cat, Growing hay, straw & bedding exports
small animal)
!" !" $" !" !" !" $" !"
Cages/housing Capabilities in metal fabrication
!" $" !" $" $" !" $" $" Major exporter of wood and some metals
Pet apparel China dominates global trade
$" !" $" $" $" $" $" $" No clear leverage or drivers for success
Grooming China dominates global trade
supplies
$" !" $" $" $" $" $" $" No clear leverage or drivers for success
Pet diapers/ Limited market outside Japan
nappies
$" !" $" $" !" $" $" $"
Toys China dominates global trade
$" !" $" $" $" $" $" $" No clear leverage or drivers for success
Live pets Trade is typically breeding stock not volume
$" $" $" $" #" $" $" #" Growing cultural and ethical issues
$%%!%%#"
Low Medium High
Source: Coriolis from interviews; Coriolis estimates & analysis of available data 54Contents
Summary & conclusions
Large & attractive global market
New Zealand petfood exports are growing
Modern and robust value chain
Strong drivers of success
Track record of innovation
Investment opportunities
Appendix 1 – Key firm profiles
55New Zealand has a robust petfood industry with a wide range of firms participating
Key firms in the New Zealand petfood industry
2013
Manufacturers Example Companies
Multinationals*
Retail-ready
Product form
Larger
- Canned
- Refrigerated
- Frozen
- Air dried
- Freeze dried
- Baked
- Dry kibble
Medium
Smaller/Other
*Significant petfood imports; Source: Coriolis 56Three major multinationals have petfood operations in New Zealand
Profiles of the key multinational firms in the New Zealand petfood sector
NZ$m; various; 2013 or as available
Year Production Turnover % Employees
Company founded (tpa) (NZ$) Export1 (FTE) Ownership Brands Note/comments
~1988 14-18,000 $70-$75m 80% 250 Private USA (Mars Pedigree, Whiskas, - Mars Petcare
(NZ) (190 manuf) Family) MyDog, Schmackos, - www.mars.com/global/
Optimum, Royal brands/petcare
Canin, Temptations,
Nutro
1926 ~10,000+ $65-70m 0% ~40 (manuf) Public Swiss; listed Purina, Tux, - Nestle – Purina
(NZ) 100-140 (Nestle) Friskies, Tux, Cat - www.purina.co.nz
Chow, Fancy Feast, - Tux production only in NZ
Waggin Train
1932 ~30,000 $80-90m 15% 150 Private Equity: USA Champ, Chef, - HJ Heinz
(NZ) (Berkshire Hathaway PurePet, Nutriplus, - www.heinzwatties.co.nz/
and 3G Capital) Bruno, Gourmet - NRM, Farmlands contract
manuf. dry
1. NZ production value; Source: interviews, various industry publications; various published articles; company websites and annual reports; Coriolis analysis 57Multinationals in New Zealand – and those sourcing from New Zealand – have a wide range of supply options
Further details on multinationals in New Zealand or sourcing from New Zealand
2013 or as available
Global position Location of NZ factory Location of NZ Source of supply Meat processors with plants near the
NZ facility tonnage (tpa) head office factory
Firms with own manufacturing in New Zealand
Mars #1 petfood firm globally Manawatu- 14-18,000 Auckland Primarily lower North AFFCO, Alliance, ANZCO, Inghams,
Wanganui Island Kintyre, Ovation, Progressive Meats,
Silver Fern Farms, Taylor Preston,
Nestle #2 petfood firm globally Manawatu- ~10,000+ Auckland Primarily lower North Tegel
Wanganui Island
Heinz Former global petfood Hawke’s Bay ~30,000 Auckland Primarily Napier, AFFCO, Alliance, Crusader, Greenlea,
major; sold US business Gisborne, Waikato and Inghams, Ovation, Silver Fern Farms,
to Del Monte; NZ Lower North Island Tegel
potentially a portfolio
orphan
Firms identified to be sourcing from New Zealand
Unicharm #2 Japan petfood firm None - None Canned meat based -
#9 global petfood firm product currently
contract packed in NZ
P&G #4 global petfood firm None - Sales agency Nationwide Nationwide
Colgate #3 global petfood firm None - Auckland Nationwide Nationwide
Source: Coriolis from interviews and analysis 58New Zealand has a robust group of larger petfood producers
Profiles of the key larger-sized firms in the New Zealand petfood sector
NZ$m; various; 2013 or as available
Year Production Turnover % Employees
Company founded (tpa) (NZ$) Export1 (FTE) Ownership Brands Note/comments
1976 10-20,000 $15-20m 5-10% 50-60 Private NZ: (Roby Butch, Golden Boy, - Butch Petfoods
Family) Wag, Hound Dog, - www.bpfstore.co.nz
Bow Wow, - Dog rolls
GingerTom, Carnivore
1967 3,500 $14m 0% 40-50 Private NZ: Jimbos - Bombay Petfoods
(Lawson, David Purely Petfoods - www.jimbos.co.nz/
Allan, others) First Choice - Fresh meat products
Max
2007 2-2,500 ~$10- 0% - Private NZ: (Baker, Superior Chunky, - Fond Foods Ltd
$12me Larkman, Page, Chunky, Possyum - www.superiorchunky.co.nz
others)
2007 500 $10-15m 97% 43 Private NZ/USA: ZiwiPeak - Ziwipeak Ltd
(Stewart, Woodd, - www.ziwipeak.com
Mitchell (USA))
2006 800-900 $5-10m 75% 25 Private NZ: (Smith, K9 Natural - Natural Food Group
Stewart, Bowers, - www.k9natural.com
others)
2013 3,000 $6m 98% 14 Private NZ/Sing: Petfood NZ - PetfoodNZ International Ltd
(2005) (VLR Global, 60%, - www.petfoodnz.com
Moulds,20%, Taylor - Started in 2005, sold, bought back
20%) 2013
2011 250-300 $5-10m 95% 15-20 Private NZ: (Signal, Biophive - Biophive NZ
(dry) Lloyd, others) eN’vee - www.biophive.com/
“Superior Farms Pet - www.superiorfarmspetnz.com
Provisions” - Venison and lamb based treats,
chews, supplements & ingred’s
(bulk & private label)
e = Estimate ; 1 NZ production value; Source: interviews, various industry publications; various published articles; company websites and annual reports; Coriolis analysis 59You can also read
