Demand

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 

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. Trends in petfood are strongly mirroring trends in human food. 

Key markets for petfood are richer Western markets with high pet penetration and numbers, in particular USA, Australia and Western Europe. But strong growth, and a higher dollar per kilo, is occurring in key Asian markets and South America where small dogs in particular are treated with premium dog foods and treats. 

Dry foods dominate the petfood market, seen as more convenient and logistically easier. Large multinational corporations (MNC’s) such as Nestle and Mars take the lion share of this market. Their large factories are located close to major markets (USA, Europe) or in developing countries, such as Thailand. 

New Zealand 

New Zealand is traditionally a primary based exporting economy, specialising in: dairy, meat, fruit, and food and beverages. Food and beverage products make up 56% of all exports. Petfood comprises 1.4% of this, reflecting New Zealand’s low penetration in the global market and 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). 

However, New Zealand’s comparative advantage in meat and protein is driving growth in its petfood industry, particularly due to the availability and reliability of meat based ingredients (in particular lamb and beef) and innovation around retail ready products. 

Petfood exports can be separated into two main areas, the first being ingredients consisting of 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. 

New Zealand’s disease free status allows preferential access into key markets. 

The second export area is in value added retail ready petfood products. Two distinct exporting 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 also exist in New Zealand, some are already exporting petfood globally while others are looking to export super-premium meat based products to new markets through specialty channels and invest in extrusion based cooking of dry pellets. 

New Zealand firms have successfully innovated in this space, both in product and processes. Firms are required to overcome the real challenges involved in exporting meat based products. To assist in this, technology has focussed on packaging and producing petfood and treats in rolls, frozen, freeze-dried and air dried states. 

Challenges also exist around supply. As meat processors become more efficient at maximising use and value of the carcass, less waste is produced. New human consumption markets (e.g. China) have been found for offal and by-products traditionally used for petfood. Reducing stock numbers of both sheep and deer also add supply pressure. Companies must develop strong supply relationships and consider vertical integration or investment along the supply chain. 

Opportunities 

Opportunities exist throughout the supply chain for investment to increase the quality of ingredients and to highlight and target key high value customers and markets. In retail ready petfood products, multiple opportunities exist in the super premium categories of cat and dog 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, with its close proximity and free trade agreements providing access into these key markets. 

 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