Robins Named Top Pet Journalist for 2013

Congratulations to Sandy Robins for being selected as 2013 recipient of Global Pet Expo’s annual “Excellence in Journalism and Outstanding Contributions to the Pet Industry Award.”

Global’s organizing partners the American Pet Products Association and Pet Industry Distributors Association unveiled her selection on Monday. She will receive her award during a media reception during Global Pet Expo.

“With such dedication to spreading life-enhancing information on behalf of pets, we couldn’t be more confident and pleased with our decision to award Ms. Robins,” said Bob Vetere, president and CEO of APPA. “Her enthusiasm and passion for both pets and the journalism profession is what this award is all about and we’re thrilled to honor her.”

She certainly deserves recognition for her prolific writing about pet topics and other activities, including serving as a spokesperson for Petco, a pet safety advisor for Toyota, and a featured blogger of Sergeant Pet Care Products’ Pet Health Central blog. Incidentally, Sergeant’s has generously sponsored the Global Pet Expo press room and the official APPA press conference for many years running, helping many journalists to provide coverage of the trade show.

Robins is vastly more deserving than some past selections, notably Rachael Ray and Ellen DeGeneres. With no disrespect intended toward either of those women, to honor them as “journalists” borders on the absurd. It is akin to awarding me the Miss Congeniality Award. I understand bestowing those two with the “Dick Van Patten Award for Best Celebrity Owner of a Pet Food Company” or “Pet-Friendly Media Personality of the Year,” but for journalistic contributions to the pet industry, I don’t think so. But maybe I’m just a bit of a scold about what it means to be a journalist. Or perhaps I'm bitter that I've never been selected for either the Global award or Miss Congeniality.

I greatly admire (and know) most of the recipients of the award for what they have done for the benefit of animals and their people through their work. Past recipients such as Dr. Marty Becker and Steve Dale are both larger-than-life icons that have inspired me deeply on a personal level. I have a tremendous amount of professional respect for Gina Spadafori, Janice Brown and Victoria Stilwell.

With all that said, I wish Global Pet would retire or rename the award.  It is a generous and well-meaning gesture that inadvertently places the most deserving recipients in the awkward position of accepting an award for contributions to an industry rather than contributions to their readers. Most journalists seek to serve their readers and, in this field, their readers’ animals.

And those journalists are indeed who this award is intended to recognize: “…individuals in the media who have the power to influence millions of people and use this to positively promote the joys and benefits of pet ownership. Whether via print, broadcast or internet mediums, these distinguished members of the press produce stories that highlight responsible pet ownership and all the exciting services, products and activities that make spending time with our pets even more enjoyable,” according to the sponsors.

So here’s to Sandy Robins winning the final Global Pet Expo “Excellence in Journalism and Outstanding Contributions to the Pet Industry” award.

Hot Segments? Natural, Naturally.

The natural/super premium pet food and treats market posted the strongest growth over the past two years, but both hard goods and the small animal and aquatics sectors are beginning to see life again, according to Scott Bender in his “Sales Trends in the Pet Industry” from the PIDA Management Conference.

This probably doesn’t and shouldn’t surprise anyone. On a broader scale, many Americans (certainly not all) are paying more attention to what they eat and paying more for what they eat. This trend applies to their children and, to a greater extent, their pets (animals don’t seem to resist eating healthful foods like people can). Although pricier, America’s pet owners also see premium nutrition as a hedge against higher veterinary costs.

This, of course, isn’t new information, but the numbers continue to support the validity of this trend. Natural is the fastest growing sector within foods and treats, the largest slice of the pet care pie, accounting for 38 percent of overall pet expenditures, followed by 28 percent for veterinary care and 22 percent for supplies, according to the American Pet Products Association.

The food and treats category has grown between five and seven percent annually for the past three years, worse than its 10 percent pre-recession rate but better than a 2 percent slip in 2009, Bender said, citing APPA statistics.

But natural grew 15 percent in 2012, vs. 5 percent of the overall pet food and treats market. The segment is now approaching 15 percent of the total pet food/treats market, Bender said. Natural’s home is pet specialty, where it accounted for at least 60 percent of the food/treats market in 2011. Natural could grab another 5 points of market share in pet specialty in 2012, Bender estimated.

That growth is likely to slow, possibly as soon as 2013, simply because such a rate of growth is not sustainable, even if the ingredients are. And, of course, other channels are paying attention and trying to gain share back (i.e., Walmart’s Pure Balance launch). But the natural/super premium category should continue to grow, especially as it makes greater inroads within cat foods and treats from dog food.

Far more exciting news for the broader pet industry, however, is the recovery of hard goods and the small animals and aquatics sector.

Hard goods (such as bowls, crates and beds) are now growing more in line with consumables, at least for Petsmart, Bender reported. Growth in both categories fell sharply during the recession, with hard goods sales at Petsmart actually shrinking 2 percent in 2009. Petsmart continued to grow due to continued, but slower, growth in consumables (nearly 9 percent in 2009).

There is still room to grow for hard goods, which are still about 5 percentage points below precision mix levels at Petsmart. In 2012, Cleveland Research estimates hard goods would account for about 33 percent of Petsmart sales, compared to the nearly 40 percent in the years preceding 2008. That suggests there is continued room for growth in hard goods sales, which average twice the margin as consumables at Petsmart, Bender said.

Bender tied the hard goods growth to the housing market and new pet acquisitions. Most hard goods are purchased in the first couple years after a pet acquisition, naturally, and if housing trends continue to improve, so will pet acquisitions, Bender said.

Indeed, Petsmart is seeing live pet purchases (primarily small animals and fish) improve, with growth possibly exceeding 10 percent for 2012, Bender said. These sales had been essentially flat from 2008 to 2010. Petsmart plans a fish category reset later this year, Bender said.

Again, pet specialty is poised to benefit from a continued recovery of small animal and fish keeping as it dominates live animal sales, which spur sales for associated consumables and hard goods.

Antibotics Prompt Hartz Chicken Chews Withdrawal

Hartz Mountain Corp. of Secaucus, N.J., is the latest company to pull its chicken treats for dogs off the market after testing the Chinese-made items for antibiotics. Hartz is at least the fifth company to jerk the treats off the U.S. market after residue of unapproved antibiotics were detected in samples.

 

In Hartz’s case, the antibiotic residue was detected in about one-third of tested samples after the company began testing for it following the initial withdrawals by Nestlé Purina and Del Monte and subsequent ones by Publix and IMS Trading Corp.

 

"Upon learning about the nationwide voluntary withdrawal of several other brands of chicken jerky products through media reports, Hartz acted immediately to begin additional testing to determine if the same unapproved antibiotic residues were present in our products," said Sean McNear, senior director of quality and regulatory at Hartz.

Hartz is voluntarily withdrawing all of its Hartz Chicken Chews and Hartz Oinkies Pig Skin Twists wrapped with Chicken for dogs because of trace amounts of the residue. 

Antibiotics detected include sulfaclozine, tilmicosin, trimethoprim, enrofloxacin and sulfaquinoxaline. The FDA withdrew enrofloxacin’s approval for use in poultry in the United States in 2005 due to concerns that it was contributing to fluoroquinolone-resistant strains of Campylobacter, a bacterium that can cause foodborne disease in people. Although the antibiotics are not approved in the U.S. for use in poultry, they are approved elsewhere in the world, notably China and Europe. 

While there has been widespread safety concerns regarding Chinese-made chicken jerky treats (and other jerky-type treats) for pets, the U.S. FDA has been unable to definitively link the products with adverse event reports. All of the recalls thus far have been because of this antibiotic residue, which all concerned have described as a technicality rather than a safety issue. Thus, pet owners will be able to find the Hartz products on Canadian shelves even though they’re being recalled in the U.S.

 

 Consumers with these products can contact the Hartz Consumer Affairs team at 800-275-1414 for a product refund or go to www.hartz.com for additional information.

Growth Factors Favor Pet Specialty

Several of the trends driving per pet spending favor the pet specialty sector, which is gaining overall market share from supermarkets and discounters, Scott Bender of Cleveland Research Co. said during his “Sales Trends in the Pet Industry” presentation at the Pet Industry Distributors Association’s management conference earlier this week.

While mass market still commands the greatest pet products market share at 47 percent, pet specialty (currently 24 percent) is poised to surpass grocery (25 percent) if current trends continue.  More than half of pet owners (55.7 percent) purchased at least some pet products at pet specialty stores in 2011, up from 49.5 percent in 2007. During this time, the purchasing rate for pet products at supermarkets slipped to 42.8 percent from 47.4 percent and at discount stores to 27.5 percent from 30.6 percent, according to Packaged Facts data shared by Bender. By comparison, 6.4 percent of pet owners purchased at least some pet products online in 2011, compared to 5.7 percent in 2007.

The key trend driving pet specialty’s resurgence remain the oft-cited “humanization of pets,” which includes pet owners wanting to feed their pets better (presumably with natural and super premium foods exclusive to pet specialty) and pamper their pets  with goods (pet specialty has greater selection of hard goods, such as toys and beds, and treats) and services (obviously, pet specialty is more likely to offer services such as grooming and daycare than mass or grocery), Bender noted.

It also helps that the price difference between pet specialty and grocery/mass on products carried by each is less than 10 percent, Bender reported.

Is Petsmart's performance driving pet specialty's growth
or is pet specialty's growth driving Petsmart?

The biggest component of pet specialty’s resurgence is Petsmart, which now accounts for 44 percent of overall pet specialty sales and 14 percent of overall U.S. pet product sales.  Petsmart’s nearest competitor in pet specialty is Petco Animal Supplies, at 21 percent, or less than half the size of Petsmart.  Pet Supplies Plus is the third largest pet specialty player, with pet specialty market share of 4 percent, 11 times less than Petsmart.

And Petsmart is generally running on all cylinders, with 10 consecutive quarters of comparable store sales growth of at least 5 percent. Cleveland expects that streak to end in 2013, although it does expect comp store sales between 4 and 5 percent (from about 7 percent in 2012) that are higher than Petsmart’s guidance (2-4 percent).  

(It will be interesting to watch how smoothly Petsmart transitions its leadership and what effect that has on future earnings; on the day Bender presented, Petsmart announced a succession plan in its leadership. The moves, effective June 14, 2013, will see current president and COO David Lenhardt become CEO; current CEO and chairman Bob Moran become executive chairman; and executive vice president of merchandising, marketing, supply chain and strategic planning Joseph O’Leary become president and COO.)

Bender also said that Petsmart, with roughly 1,250 stores and a long-term target of 1,600 stores) may be testing a sub-10,000-square-foot format somewhere in Arkansas. A smaller format store (most Petsmarts are larger than 20,000 square feet) would allow Petsmart to increase its number of locations by fitting into smaller market areas, much like Petco’s “Unleashed” format allows it to enter more urbanized areas (where retail space is more expensive).  

Speaking of Petco, it has been performing “much better” in the past couple years, Bender said, noting that its comp store sales are similar to Petsmart’s, that it is improving its pricing to be in-line with Petsmart, and has been remodeling to improve store conditions. Petco operates more than 1,150 stores.

Pet Supplies Plus, which has also been remodeling stores of late, expects to accelerate its rate of store openings in 2013, having spent much of 2012 preparing for growth by building a new distribution center, Bender said. Pet Supplies Plus has more than 250 locations.

As to the independent pet stores, the trend seemed to be a matter of the strong getting strong and the weak getting weaker or disappearing altogether, Bender said. Net store count among independents was expected to decline slightly and most new openings will be by existing retailers, especially small chains, adding additional locations.

The number of pet owners that purchased pet products at independent pet stores has stabilized at slightly more than 12 percent, up from a low of below 11 percent in 2009, according to Bender and Packaged Facts.

Outside of pet specialty, Walmart seems to be performing best, gaining market share from other mass merchandisers and supermarkets. Walmart has launched larger, convenience packs as a result of consumers making fewer shopping trips; has begun adding more assortment of pet products following a round of SKU reductions; and is really focusing on reestablishing its everyday low pricing reputation. It has also launched Pure Balance, a private label natural pet food, but sales results have been mixed, Bender said.  Presumably, the mass customer is not as interested in “natural” as the specialty shopper.

Target is also gaining market share from supermarkets and other discounters, but likely loses some to pet specialty, Bender said. Its “Boots & Barkley” brand lacks the strength of Walmart’s “Ol’ Roy,” Bender said, and Target’s merchandising strategy has led to perceptions of higher price than Walmart and lower quality than pet specialty—a perilous gray area that is not translating to optimal value for pet owners.

The bottom line is that supermarkets are not only losing share to pet specialty and mass, but also the emerging channels of dollar, farm & fleet (especially Tractor Supply Co.), and online dealers. Those smaller channels are all growing, but are all still relatively minor. 

So you can expect grocery stores to pay more attention to their pet aisles in the future. For example, Kroger has experimented with a “re-invented” pet aisle in about 15 stores that is driving strong growth, Bender said, although it is not clear what Kroger’s roll-out plans are. Similarly, Safeway will be increasingly using its Just for U program to convert pet shoppers; however, that program has not yet performed as well as expected, Bender said.

Research Firm: Pet Industry Sales Still Trending Up

Overall pet product sales continue to grow on multiple fronts, with many driving trends, notably the humanization of pets and the rise of natural products, especially beneficial to the pet specialty segment, according to Scott Bender, senior research analyst and partner at market research firm Cleveland Research Co., during his “Sales Trends in the Pet Industry” presentation Tuesday at the PIDA Management Conference.  

As these trends are expected to continue and the rate of pet acquisition appears to be accelerating, Cleveland expects the pet industry’s growth outlook to continue to be stable and positive. Moreover, the industry would benefit from further improvement in the economy and especially the housing market.

That household penetration of pets has held steady in the United States for more than 10 years has provided a foundation for this continued growth, despite the recession. Although that penetration peaked at 63 percent in 2004 and 2006, it has held steady at 62 percent since then and has been above 60 percent since 1998, Bender presented.

Bender cited American Pet Products Association data showing that the annual pet industry growth rate has remained fairly steady for the past 10 years in the mid-single digits, although a “touch softer post-recession” at about 5 percent compared to 7 percent before the recession. APPA’s 2012 estimate was actually 4 percent, the lowest rate since at least 2003, when the industry grew 10 percent.

Overall, industry expenditures contine to grow toward $53 billion in 2012, with a new APPA estimate for 2013 expected to be announced during Global Pet Expo next month.

But what really drives the growth has been annual expenditures per pet, which has nearly doubled (up 80 percent), over the past 10 years from about $80 in 2002 to $140 in 2012, according to Cleveland Research estimates.

That type of spending would offset modest declines in overall pet ownership, as reported recently by the American Veterinary Medical Association.

Although Bender didn’t address the AVMA data directly (or I completely missed it), he did report that new pet adoptions and acquisitions appeared to be picking up, based on improvements in the housing market and Pethealth Inc.’s PetPoint report that tracks adoption trends at shelters using Pethealth’s shelter management software. That data showed pet adoptions were up 6 percent in 2012 vs. up 2 percent in 2011.

Similarly, Bender reported that, although still softer than before the recession, the housing market had improved slightly over the past 12 to 18 months, both for existing home sales and new housing starts. This is significant for the pet industry in that new pet acquisitions tend to rise with the housing market.

Reflect Forward: PIDA Program Pleases Plenty

The Pet Industry Distributors Association (PIDA) concluded the formal activities of its “Reflect Forward” management conference and annual meeting in Carlsbad, Calif., last night with the installation of new officers and directors at a dinner event. The conference continues through Thursday with private meetings between individual manufacturers and distributors (essentially a speed-dating approach to allow executives to discuss business relationships) and various networking and social activities. (For example, as I write this, more than a busload of attendees have set off to Escondido to tour Orfila Vineyards and Winery and Stone Brewery—and to sample their wines and ales. What a treat. Sigh.)

During the dinner, Perry Parks of Wolverton Inc. assumed the chairman position from Fred Schober of Phillips Feed & Pet Supply. Randy Reber of Animal Supply Co. became vice chairman and Scott Rath of Central Garden & Pet Supply became secretary/treasurer. 

With this election, PIDA changed its by-laws to consolidate the first and second vice chairman positions into a single vice chairman, in part due to industry consolidation and other by-laws that limited the number of officers and directors from any member to one). Rob Chouinard of Gardner Distributing Co., first vice chairman until last night, retired from the PIDA board, as did Mike Copeland of Summit Pet Product Distributors, which merged with Reber’s company earlier this month. 

Rath was also elected to a new three-year term as a director, as was Robert Johnson of Pet Food Wholesale. Newly elected to three-year terms were Ced Damby of Pet Food Ltd. Inc. and Steve Thoeny of RFG Distributing.

In addition to the second vice chairperson position, PIDA did away with its annual Distributor and Manufacturer awards, at least for the year. The group is looking to revamp the program in an effort to recognize more specific achievements. The past several years the awards went to the companies with the highest marks on bench-marking surveys. (Both manufacturers and distributors still receive their “report cards” from the bench-marking surveys, when their respective partners rate them on various attributes, but the program has been disengaged from the awards).

PIDA will, however, be promoting itself more this year at trade shows and within the trade press. Specifically, PIDA will be emphasizing the collective size of its distributor members. Together, 55 regional distributors boast annual sales of more than $3 billion at wholesale ($4.13 billion in retail sales). They deliver these products through 124 distribution centers, 9.5 million square feet of warehouse space, 600 field sales reps and 6,700 overall employees. In addition, more than 39,000 attendees from 19,000 retail accounts attend 98 regional trade shows hosted by these distributors.

A highlight of the dinner was the auctioning off of two paintings created earlier in the day by artist Erik Wahl, one of the featured speakers, during his presentation. (A third painting of basketball legend Michael Jordon was given away to Craig Brummell of Essex Topcrop Sales during the presentation itself.) The auction, a benefit for the Pet Care Trust and its Pets in the Classroom program, raised $5,500, with Michael Baker of Pet Food Experts buying a painting of the Statue of Liberty for $3,200 and Marsha Seekins of Absorption Corp. buying a painting of Steve Jobs for $2,300.

Wahl created each painting in about five minutes during his “The Art of Vision” presentation, which tried to help attendees nurture and develop “unconventional wisdom,” creativity and innovation. Because an element of his presentation is surprise, I won’t share much of it lest I spoil the fun of any fortunate enough to see him in the future. One point he made was that our schools mis-educate our students by training them to seek the one right answer rather than rewarding them for discovering alternative possibilities. (See his blog on “Broken Education.")

Overwhelmingly, attendees were very pleased with this year’s speakers, including Wahl, Rick Barrera, Scott Bender and Michael Johnson. I wrote about Johnson’s Battleground Pet presentation yesterday and will be providing more details on the Barrera and Bender presentations in the coming days.

The meeting also included an overview of the Pet Industry Database (PIDB) by Craig Cervenka of EdgeNet, a partner in the repository of pet product information. In addition to participating manufacturers and distributors, the database now also provides “certified product information” to search engines Google and Bing. EdgeNet’s status as a recognized provider of product data to Google should allow its product information to appear higher in search results.

Battleground Pet: Strategic Targets for the Future

Hispanics and Generation Y are two demographic populations that will be instrumental to intermediate and long-term success for pet industry companies that can effectively capture them, according to Michael Johnson, vice president of marketing and information at Chuck Latham Associates Inc., during his “Battleground Pet!” presentation at the Pet Industry Distributors Association’s Management Conference and Annual Meeting in Carlsbad, Calif.

These are two segments, especially Hispanics, that the pet industry doesn’t currently excel at reaching but that represent huge potential markets for pet products. Johnson sketched multiple demographic segments during his presentation.

“Hispanics are hugely important, and we’re not doing a good job addressing them in pets,” he said, noting that he often sees bilingual packaging in English and French (presumably for the French Canadian market) but rarely in English and Spanish, despite the significant and burgeoning Hispanic population.

Relatively young and growing, the Hispanic segment tends to be very brand loyal albeit price sensitive, Johnson said. They currently shops for pet products largely in the grocery channel because no one is reaching out to them, he said, even though they are highly apt to consider their pets as part of the family—a factor in willingness to spend more. They are not, however, particularly swayed by a product’s “natural” attributes. Natural, of course, has been a key and growing driver of pet products, and other goods, in recent years.

Because the Hispanic segment tends to be family- and friend-oriented, they are likely to share product information, good and bad. As a segment, Hispanics are also highly involved with social media and receptive to television and radio advertising, he said.

Generationally, Generation Y (people born between 1982 and 2000) is looming larger in the pet industry’s future. Not that such strategically significant segments as “seniors” and the Baby Boomers can be neglected, but Generation Y represents a huge population bubble of more than 100 million people, eclipsing Gen X. But the pet industry must turn them onto pets, Johnson said.

Unlike the Hispanic segment, where the battle might be which companies do the best job in reaching out, Generation Y may represent an industry-wide challenge of building pet ownership. 

Generally speaking, this generation is deferring and minimizing pet ownership: they are marrying later and having children later. They are also increasingly urbanized, meaning they live in apartments and condos that are smaller than the houses of past generations. Smaller places mean smaller pets. Multi-unit housing is also more likely to include pet-restrictive policies, potentially limiting size, type and number of pets.

As a group, Generation Y tends to be deal-motivated (hello, Groupon), brand switchers and likely to decide at the store which brand to buy. On the other hand, they value natural and sustainable products and the charitable affiliations of manufacturers and retailers, Johnson said.

Whale of a Donation

San Luis Obispo, Calif.-based Cloud Star Corp. donated more than 21,100 pounds of product, equivalent in weight to a Minke whale or 10 hippos, to non-profit organizations during 2012, the company reported Monday.That's a lot of Buddy Biscuits.

The product donations are in addition to thousands of dollars in cash donations made by the makers of Buddy Biscuits treats and other natural pet products. The company also collected more than 3,000 proof of purchases in the first three months of its Proof of Purchase Donation Program, which I wrote about earlier, in part for its elegant use of social media. (See "Gold Star to Cloud Star for Social Media, Cause Marketing."  That program, launched in October 2012, will have Cloud Star donate $1 to a designated charity for every proof-of-purchase submitted.

Not surprisingly, Cloud Star's customers supported pet causes most. (Cloud Star itself supports charities supporting animals, women, children and the environment. For the first quarter of the promotion, the three most supported charities Best Friends Animal Society, The Petfinder Foundation, and write-in candidate California Animal Rehabilitation's Care Free Rehab program, which raises funds to pay for pet rehabilitation services for pet owners who could otherwise not afford the treatment. 

Under the program, Cloud Star designated 12 initial charities but allowed anyone who submitted more than 100 proofs of purchase to nominate additional causes. Other write-in causes for 2012 include Adopt for Life Center for Animals, All Animals Matter, Cocker Pals Rescue, National Greyhound Adoption Program, and Spring Farm Cares.

“Supporting causes on both a local and national level has always been an integral part of our company,” says Jennifer Melton, co-founder of Cloud Star. “For us, doing good business includes doing good things for others, and we thank our loyal customers for helping us continue to do so."

ELSEWHERE: Aquascape Inc. has posted its 2013 catalog online and plans to mail printed copies to customers in early February. New this year, all Aquascape and AquascapePRO products are featured in a single catalog. The catalog also includes the MSRP price of each item and separate Price & Program Guides for both retailers and contractors with wholesale pricing, replacement parts guides and other information are available. To receive a printed copy of the 2013 Aquascape Catalog and appropriate price and program guide, contact customer care at 866-877-6637. In other news, Aquascape set the dates, Aug. 22-25, for Pondemonium 2013...About 285 distributor and manufacturer executives are attending the Pet Industry Distributors Association's Management Conference and Annual Meeting this week in Carlsbad, Calif. 

Better Retailers, Better PIES

The Pet Industry Executive Summit will take place the day before SuperZoo, which moves to July this year, begins.

Roz Applebaum, co-founder of Pet Industry Advisory and organizer of the Pet Industry Executive Summit (PIES), held annually as part of the Superzoo trade show, wants to find sharp pet retailers--and soon--for the third PIES, slated for July 22, 2013, in Las Vegas.

PIES, which developed as an offshoot of Applebaum’s Pet Industry Advisory conference series (currently inactive) and the World Pet Association’s efforts to add more programming to its SuperZoo trade show and educational conference, is one of the top educational events geared for pet industry executives. The other events include this week’s Pet Industry Distributors Association’s annual Management Conference, which kicks off Monday in Carlsbad, Calif., and the Pet Industry Joint Advisory Council’s Top2Top Conference, slated for April in Napa, Calif.

The PIES program tries to focus on business topics for executives in all areas of the pet industry, including retailers and service providers. By comparison, the PIDA event targets strictly upstream participants such as distributors and manufacturers and the Top2Top Conference focuses more on political threats to the overall industry.

The potential beauty of the PIES program is that it brings together manufacturers, distributors and retailers in an environment of idea sharing and information exchange on very pet business-oriented topics. More traditional educational offerings, such as SuperZoo’s SuperZoo University, are generally more instructional and geared for a single audience such as retailers or groomers.

Applebaum is looking for “accomplished” retailers who would like to share aspects of their success. If interested in participating as a speaker (individual or as a member of a panel discussion) at PIES, email her by February 1, 2013. She is also interested in ideas for presentations and topics for discussions.

For the event to be truly valuable, Roz will need to assemble a broad range of retailer speakers, representing small to large companies and emerging and traditional formats. The one unifying characteristic will be excellence, whether exhibited through innovation, execution or both.

As an alternative, you can also contact me and I’ll pass along your ideas. I helped Roz on the first two events as my former employer Pet Product News International was a sponsor of the event, and I’m happy to continue to help as possible.

A Civil War of Cats and a Bible Belt of Dogs

The American Veterinary Medical Association generated a flurry of activity this week by unveiling the top and bottom states (more on that later) for pet ownership, dog ownership and cat ownership, all based on a percentage of households owning pets. But a truly significant finding of the 2012 U.S. Pet Ownership and Demographics Sourcebook, released in the fall and available for purchase, was that the overall percentage of U.S. households owning pets at the end of 2011 was 56 percent, down 2.4 percent from 2006.

Significantly, the number of pets also declined. The AVMA estimated the U.S. dog population at the end of 2011 at about 70 million, down from 72 million in 2006; the cat population at 74.1 million for 2011, compared to 81.7 million in 2006; the pet bird population at about 8.3 million for 2011, compared to 11.2 million in 2006; and the number of pet horses at 4.9 million for 2011, down from 7.3 million in 2006.

While the AVMA doesn’t offer population estimates for specialty and exotic pets, including fish, ferrets, hamsters, guinea pigs, gerbils, turtles, snakes and lizards, it did report a 16.5 percent decline in the percentage of households reporting exotic pet ownership to 10.6 percent of U.S. households at the end of 2011 and a decline of 16.2 percent in the number of households owning fish at the end of 2011, to about 6.5 percent of U.S. households. (That last figure certainly belies the claim of certain researchers that fish-keeping was the second most popular hobby in the U.S. in a study examining the threat of invasive species introductions to California’s coastal waters via the pet trade.) 

This was the first time a decline had been recorded since the AVMA began conducting the 5-year surveys in 1986.

The American Pet Products Association, which releases bi-annual U.S. Pet Owner Surveys, had reported a flattening or slight decrease in percentage of U.S. households owning pets in 2011 to 62 percent in its 2011-2012 report, but the overall number of pets had still increased because the number of households had increased. The APPA is expected to unveil preliminary findings from its 2013-2014 report at Global Pet Expo in February.

The decline, which had been expected by many leaders in the pet and animal health industry, certainly suggests that the recession had an effect on new pet acquisition. That suggestion is reinforced when you consider Petsmart’s sales during 2008 and 2009, when it reported relative weakness in durable hard goods (bowls, crates, litter boxes, etc.,) associated with new pets, despite overall sales growth.

The pet industry continues to grow because pet owners are spending more on each pet. For example, the AVMA reported total veterinary expenditures for household pets increased 14.3 percent from 2006 to about $28 billion in 2011, despite the decline in pet ownership. But what troubles the veterinary organization is that the percentage of pet-owning households seeing a veterinarian declined even though the overall number of veterinary visits increased. Put another way, the percentage of households that made no trips at all to the veterinarian increased by 8 percent for dog owners and 24 percent for cat owners, according to the AVMA.

The percentage of cat-owning households that visited a veterinarian at least once during 2011 was 55.1 percent, down 13.5 percent since 2006. There were also 4.4 percent fewer cat veterinary visits since 2006, but, of course, there were also 7 million fewer cats. The percentage of dog-owning households visiting a veterinarian in 2011 was 81.3 percent, down 1.7 percent from 2006. The percentage of bird-owning households visiting a veterinarian in 2011 was 12.3 percent in 2011, down 11.5 percent from 2006. The percentage of horse-owning households using a veterinarian at least once was 53.8 percent in 2011, a decrease of 11.9 percent since 2006. Overall equine veterinary visits declines about 2.3 percent from 2006 to about 4.2 million visits, but the number of horses declined 2.4 million.

“This report reveals a tremendous amount of information about pets and their owners across the country; what’s constant and what has changed,” says Dr. Douglas Aspros, president of the AVMA. “One of the most important parameters that we look at is how well are pet owners are doing at keeping their pets healthy. Unfortunately, the report reveals that fewer dogs and cats are seeing the veterinarian regularly, and that’s something that the AVMA and every companion animal veterinarian are concerned about. Pet owners across the country need to remember to bring their pets into the veterinarian – at least once a year – to maintain optimal health.”

One interesting finding regarding pet ownership is the dramatic difference between states. The top overall pet owning state was Vermont, where 70.8 percent of households reported owning at least one pet. The lowest state was New England neighbor Massachusetts, at 50.4 percent. Washington, D.C., isn’t even worth considering, at 21.9 percent of households reporting pets. In all fairness to D.C., the survey was not conducted during an election year … no doubt 2012 figures among politicians would have been up significantly. Seriously, the low figure for Washington, D.C., is probably more reflective of socio-economic issues, with that city having the third highest poverty rate (19.9 percent) in the U.S.

Comparing the top 10 pet-owning states with the bottom 10 suggests that companionship is a driving factor for pet ownership. The states with the highest percentage of households were generally less populated than those with the lowest percentage. Of course, these numbers represent the percentage of households, and not overall households. So California still has a significant number of cats and dogs, with more potential upside. Conversely, South Dakota already has a strong penetration as far as number of households owning pets but is not expected to see much growth in number of households, if any, so its overall pet population may have limited growth prospects.

Vermont captured the top spot based on its cat ownership. Nearly half (48) of Vermont households reported owning at least one cat. Vermont does not rank in the top 10 as far as dog ownership. Similarly, Arkansas ranked No. 1 in dog ownership (47.9 percent) and No. 7 overall, despite not cracking the top 10 for cat ownership. The maps certainly show a North-South bias with regard to cat popularity and a belt of dog ownership.

The top 10 states by percentage of pet-owning households are:

Vermont                                70.8%

New Mexico                          67.6%

South Dakota                       65.6%

Oregon                                  63.6%

Maine                                     62.9%

Washington                          62.7%

Arkansas                               62.4%

West Virginia                        62.1%

Idaho                                      62.0%

Wyoming                               61.8%

The bottom 10 states by percentage of pet-owning households are:

Massachusetts                       50.4%

New York                                  50.6%

New Jersey                              50.7%

Utah                                           51.2%

Nebraska                                  51.3%

Illinois                                        51.8%

Maryland                                   52.3%

California                                  52.9%

Minnesota                                53.0%

Rhode Island                           53.0%

The top 10 dog-owning states by percentage of households owning dogs are:

Arkansas                                    47.9%

New Mexico                                46.0%

Kentucky                                     45.9%

Missouri                                      45.9%

West Virginia                              45.8%

Mississippi                                 45.2%

 Alabama                                     44.1%

Tennessee                                 44.1%

Texas                                           44.0 %

Oklahoma                                   43.2%

The bottom 10 dog-owning states in 2011 by percentage of households owning dogs are:

Massachusetts                           23.6%

Connecticut                                 28.3%

New York                                      29.0%

Rhode Island                               29.3%

Utah                                               29.4%

New Hampshire                         30.3%

Maryland                                       30.8%

Minnesota                                     31.9%

New Jersey                                   32.4%

Illinois                                            32.4%

The top 10 cat-owning states in 2011 based by percentage of households owning cats are:

Vermont                                          49.5%

Maine                                               46.4%

Oregon                                            40.2%

South Dakota                                 39.1%

Washington                                    39.0%

West Virginia                                  38.1%

Kentucky                                         36.8%

Idaho                                                34.6%

Indiana                                            34.4%

New Hampshire                            34.2%

The bottom 10 cat-owning states in 2011 based by percentage of households owning cats are:

Utah                                                  24.6%

New Jersey                                     25.3%

Louisiana                                        25.9%

Illinois                                              26.3%

Georgia                                           27.3%

Florida                                             27.3%

Alabama                                         27.4%

Rhode Island                                 27.6%

South Carolina                               27.8%

California                                         28.3%

Central, Halas Ink $3 Million Consulting Package

Under a consulting services agreement signed yesterday, Gus Halas, president and CEO of Central Operating Companies, will receive nearly $3 million to consult and advise for Central Garden & Pet Co. for 57 months, unless terminated earlier. The agreement kicks in at a date to be specified by Central Garden & Pet, but will be within the next six months as director John Ranelli, who becomes Central Garden & Pet’s president and CEO on Feb. 11, 2013, settles into his new role.

Gus Halas

Under the consulting deal, Halas, whose loss to the company Central said “could have an adverse material effect upon us” as recently as last December in its 2012 annual report, would receive $95,881 per month (working an average of three days per week) for the first two years of the agreement, then $19,995 per month (working an average of “up to 10 hours” per month) for the next 33 months. Total over nearly five years: $2,946,855.

This compares to his 2012 salary of $691,808, plus benefits (including $10,500 monthly housing allowance), bonuses, and stock grants. Ranelli will receive an annual salary of $673,000 and be eligible for a performance bonus of up to 75 percent of his base pay. He also receives stock options worth $1 million, vesting over five years.

Halas’s total compensation was $2,168,279 in 2012 and $3,318,729 in 2011 (He was hired in April 2011, with a focus on “transforming” the company into an integrated company with shared resources from a portfolio company of brands).

During his tenure, Central’s net income has slipped as the company has invested in efforts related to this transformation. Net income for Central’s fiscal 2012 (year ended Sept. 29, 2012) was $21.2 million, compared to $28.3 million in 2011 and $45.8 million in fiscal 2010. Revenues have grown modestly during this time, to $1.7 billion for its fiscal 2012.

Under his original employment agreement, Central could have terminated his employment without cause by giving him 24 months written notice (he would have received nine months of base pay and health benefits). Without 24 months written notice, Central could have terminated him without cause by paying an additional 24 months base pay and health benefits (33 months total).

All that said, I must disclose that I am available for consulting work.