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Top Global Trends

14 Sep 2012 | by DogSpot Team | Posted in: Wag Wiki

Until now, pet food private label products have been largely confined to the economy segment, with the exception of Germany and, to a lesser extent, the US, but they are beginning to develop a presence in the premium and mid-priced segments.Pet food superstores are particularly well placed to exploit this trend. In the developed world, this may be facilitated by the shadow cast over branded products by the Menu Foods recall, as well as growing economic insecurity,particularly in the US.

Euromonitor’s report also proposed that in addition to the growing threat of private label encroachment, issues such as the quality and tractability of ingredients will be brought to the fore by the US Menu Foods recall.Consumer’s faith in branded pet food products, as markedly superior to their private label counterparts, will be weakened. As a result, products that contain human-grade ingredients will gain a significant advantage.

Source: freedogfoodrecipies.com

In developing economies, the economy products will be the main driver and much of the growth is expected in this segment.As the economy segment in developing markets is price sensitive, it will be very difficult for producers to add value. The very nature of this segment precludes significant innovation. The private label products are likely to gain in such markets which will put additional downward pressure on margins.Most of the growth in retailers’ private label sales is likely to come from the economy segment, as rising employment boosts disposable income and reduces poverty,adding millions of new consumers to the bottom of the market.

Branded pet food products can address these issues by aggressively pushing into developing markets in terms of both distribution and marketing. It could be argued that such an investment would be uneconomic. But the potential for growth in these markets over the medium and long term is huge.

As a result of the limited affordability of premium products in developing markets and the ability of pet food producers to increase sales volumes will be limited.While there will be some potential for premium products in locations with concentrations of affluent consumers,including Moscow, Beijing, Shanghai,Mexico City and Rio de Janeiro, these will be niche, rather than mass, markets.

However, the foreign pet food manufacturers, could use their niche markets to facilitate the distribution of their products in developing markets, making it more difficult for indigenous manufacturers to develop their own premium offerings.

But one strategy that indigenous firms in developing markets can use to gain an advantage over foreign rivals at the very top end of the premium segment is to market their products in terms of their freshness.

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