IBISWorld Market Research
Private labels have hurt producers of less popular branded products, by reducing available shelf space in supermarkets
Melbourne, Australia (PRWEB) September 22, 2014
Pets have traditionally been an important part of Australian families. Rising discretionary incomes and the increasing number of time-poor consumers have created a gradual shift away from home mixed pet food, in favour of manufactured pet food. Furthermore, the Pet Food Production industry in Australia has begun to recover from the high volume of imports that flooded the market during the late 2010s. The Pet Food Production industry is projected to post annualised growth of 1.4% over the five years through 2014-15, to reach $1.4 billion. This includes forecast growth of 3.3% in 2014-15. Rising discretionary income levels have helped drive the premiumisation trend over the past five years. Consumers have increasingly sought out high-quality products that are good for their pets. According to IBISWorld industry Analyst Brooke Tonkin, “manufacturers have responded by releasing gourmet product varieties, such as salmon and white fish with olive oil for cats, and products of dietary benefit, such as grain free and reduced-grain dog food.”
The industry has not been immune to private-label pressures, with an increasing number of budget-conscious consumers opting for cheaper private-label products. This has benefited producers that specialise in manufacturing products for private labels. However, “private labels have hurt producers of less popular branded products, by reducing available shelf space in supermarkets,” says Tonkin. Overall, rising competition has hurt profit margins over the past five years. The industry underwent significant regulatory change in 2011, when an industry standard was introduced for the first time. Prior to this, a voluntary code of practice was in place, although many products on the market did not adhere to this code. The standard was developed in response to a number of food-induced pet deaths and disabilities, caused by inferior quality imports during 2008 and 2009. Now all products on the market, regardless of their country of production, must meet standards for manufacturing and marketing of pet food, which cover ingredients, food safety, labelling and auditing requirements.
The Pet Food Production industry is characterised by a high level of market share concentration. Major companies Mars and Nestle have solidified their share of the market over the past five years, as they benefit from having vast economies of scale and a broad range of pet food brands. Given that they are local subsidiaries of global corporations, they are boosted by the production innovation of their respective parent entities. Strong brand loyalty and promotional efforts have also enhanced the standing of the major players. Smaller firms that operate in the industry tend to specialise in niche segments, where many are able to thrive. Market share concentration is expected to increase over the next five years, with the proposed acquisition of Procter and Gamble's (P&G) pet food brands by Mars.
For more information, visit IBISWorld’s Pet Food Production industry in Australia report page.
Companies in this industry are primarily engaged in the production of domestic pet food. This industry excludes the production of livestock feed.
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