Get more info on this report! Pet Food in the U.S.: Health, Humanization and High Quality Ingredients in an Increasingly Value-Driven Global Market, 8th Edition

January 1, 2009

The U.S. pet food market has not just survived the spring 2007 recalls but proven its resiliency, with 2007 sales up over previous years and healthy growth continuing through 2008. Yet heightened safety concerns on the part of pet food makers and consumers continue to shape product development and marketing, as well as the choices of pet owners looking for the safest and healthiest products possible. At the top of the list are kibble, canned and raw/frozen foods made with ingredients that are natural, organic, grain-free/non-allergenic and pure, as well as made in the U.S.A., locally grown, “whole” (fruits, vegetables, grains, etc.) and human-grade. Foods making functional appeals also continue to proliferate, especially those targeting age- and weight-related conditions via the inclusion of novel ingredients like glucosamine, omega fatty acids, antioxidants and probiotics. In other words, premium pet foods remain the primary value growth driver in the U.S. market, with ever higher quality ingredients fueling the premium wave.

At the same time, one thing marketers and retailers at all levels of the market cannot afford given the faltering U.S. and global economies is complacency. More than ever before the ability to convert pet owners to higher priced products—or keep them buying them—will depend on marketers’ success in communicating product benefits and tapping into the ever-potent human/animal bond. Helping to make the case are new celebrity spokespersons like Cesar Millan with his new Dog Whisperer line, and Ellen DeGeneres with her co-ownership in Halo Purely for Pets, with other positive trends including rapid growth in the natural supermarket channel and an increasingly globalized market in which ingredients suppliers like Cargill are looking to stake a deeper claim in pet food (in Cargill’s case by specifically targeting the U.S. agricultural retail channel as well as global markets). At the same time, new products continue to flood the market, which saw more entries in 2008 than in any previous year.

Pegging 2008 U.S. sales at $17 billion and global sales at $49 billion—and projecting steady growth through 2013—the report provides market size estimates for the overall retail universe, while quantifying mass-market sales to the marketer/brand share level using data from Information Resources, Inc., and also providing market size and

marketer share figures for the natural supermarket channel. The report thoroughly documents competitive, new product and retail trends, as well as trends in pet food purchaser demographics and lifestyle pursuits (media and marketing psychographics, Internet usage, “green” involvement, etc.), based on data from Simmons Market Research Bureau, BIGresearch, the American Pet Products Association and other sources.

Bringing to bear more than 20 years of experience in analyzing this market and drawing on Packaged Facts’ broad cross-category expertise, Pet Food in the U.S. pinpoints strategic directions for current and prospective marketers, with a forward-looking focus on high-growth product segments and market-driving trends. Covering products for all type of companion animals, the report devotes separate chapters to Dog Food, Cat Food, and Other Pet Food (birds, small animal, fish, and reptiles), while also providing a comprehensive Market Overview covering cross-market trends. New features of our 2009 edition include focus sections on:

• The global pet food market (sales overall and by world region, marketer shares, new product trends, U.S. export trends, and more);

• Recall-related product safety initiatives; • Cross-channel private-label activity and prospects; • Levels of in-store merchandising and price promotions; • Pet food purchasers as coupon users.

Also included are dozens of images of pet products and consumer and trade ads.

Table of Contents

Chapter 1: Executive Summary Scope of Report Report Methodology Global Market Perspective Value of Pet Food Retail Sales Figure 1-1: Global Retail Sales of Pet Food: 2004, 2008 and 2013 (in billions of dollars) Trends by World Region Marketer Shares and Shifts Market Size and Growth U.S. Pet Food Sales Near $17.0 Billion in 2008 2008 Mass-Market Dollar Sales of Pet Food Up, But Volume Sales Down Dog Food Three-Fifths of the Market Market Share by Retail Channel Market to Approach $19 Billion by 2013 Looking Ahead Competitive Overview

Top Five Players Control Four-Fifths of the Market Figure 1-2: Top Five U.S. Marketers of Pet Food: 2006 vs. 2008 (percent) Four Companies Dominate Mass-Market Sales Pet Specialty Channel More Fragmented Mega Marketers Tap In to Natural Segment Multinational Powerhouse Cargill Taps Into Feed/Seed Channel Private Label Pet Food Has Room to Grow in the U.S. Pet Food Producers Position on Safety Marketing and New Product Trends Pet Market Advertising at $520 Million in 2007 Marketers Embracing Non-Traditional Media Advertising Positioned on a Few Major Themes Celebrities Kick In 2008 a Record Year for New Pet Food Products Product Premiumization: Natural, Upscale and Functional Appeals Retail and Consumer Trends Economic Concerns and Increased Competition Over 60 Million Households Own Pets Dog/Cat Ownership Rates Edge Up Minorities Over-Index for Semi-Moist and Canned Products Canned Food Is Stronger in Cat Arena

Chapter 2: Market Overview Introduction Scope of Report: Three Main Categories Terminology Exclusions Other Marketing Classifications Global Pet Food Market Perspective Value of Pet Food Retail Sales Figure 2-1: Global Retail Sales of Pet Food: 2004, 2008 and 2013 (in billions of dollars) Market Share and Trends by Region Figure 2-2: Share of Global Pet Food Sales by Region: 2008 (percent) Marketer Shares and Shifts Figure 2-3: Pet Food Global Market Leaders: 2008 (percent) Trends in New Product Introductions Figure 2-4: Number of Global Pet Food New Product Launches: Reports and SKUs, 2002-2008 Figure 2-5: Share of Global Pet Food New Product Launches by Region: 2000, 2004 and 2008 (percent) Top Marketing Claims Involve Natural, Functional Appeals Figure 2-6: Top 20 Package Tags/Marketing Claims: By Number of Global Pet Food New Product Launches, 2008 Global Market Outlook Table 2-1: Top Global Pet Food Industry Forecast Factors: 2007 (percent) Table 2-2: Top Global Pet Food Industry Forecast Trends: 2007 (percent)

U.S. Pet Food Exports Up 15% Canada, Japan Are Top Export Markets for U.S. Pet Foods Table 2-3: U.S. Exports of Dog & Cat Foods by Leading Country Markets: 2003-2007 (in thousands of dollars) Table 2-4: U.S. Exports of Dog & Cat Foods by Leading Country Markets: January-September 2007 vs. January-September 2008 (in thousands of dollars) Figure 2-7: Top National Destinations for U.S. Exports of Dog & Cat Foods: January-September 2008 (percent) Table 2-5: U.S. Exports of Dog & Cat Foods by Regional Markets: 2003-2007 (in thousands of dollars) Table 2-6: U.S. Exports of Dog & Cat Foods by Regional Markets: January-September 2007 vs. January-September 2008 (in thousands of dollars) Table 2-7: Export Concentration Ratios for U.S. Exports of Dog & Cat Foods by Top, Top 4 and Top 8 Markets: 2003-September 2008 (% of total dollar value) European Union Down as Export Destination Figure 2-8: Share of Total U.S. Exports of Dog & Cat Foods by Top Destination Markets: Canada, Japan and the European Union, 1996 vs. 2008 (% of total dollar value) Mars Targets Export Growth Markets in Africa Figure 2-9: Percent of Survey Respondents Ranking Import/Export Trends as “Very Important” to Development of Pet Food Industry: By Global Region Rising Costs, Down Economy Shape Market Environment Market Size and Growth Pet Food Sales Near $17.0 Billion in 2008 Table 2-8: U.S. Retail Sales of Pet Food: 2004-2008 (in millions of dollars) 2008 Mass-Market Dollar Sales of Pet Food Up, But Volume Sales Down Table 2-9: IRI-Tracked Dollar, Pound and Unit Sales of Pet Food: 2008 vs. 2007 (in millions of dollars, pound and unit sales) A Gradual Improvement from 2003 to 2007 Figure 2-10: IRI-Tracked Sales of Pet Food: 2003-2008 (in millions of dollars) Dog Food Delivers the Most Dollar Growth Table 2-10: IRI-Tracked Sales of Pet Food: By Category, 2003- 2008 (in millions of dollars) Table 2-11: Annual Growth/Decline in IRI-Tracked Sales of Pet Food: By Category, 2004-2008 (percent) Table 2-12: Total Growth/Decline in IRI-Tracked Sales of Pet Food: By Category, 2003-2007 (in millions of dollars) Table 2-13: Total Growth/Decline in IRI-Tracked Sales of Pet Food: By Segment, 2003-2007 (in millions of dollars) Market Composition Dog Food Three-Fifths of the Market Figure 2-11: Share of IRI-Tracked Sales of Pet Food by Category: 2001, 2003, 2005, 2007 and 2008 (percent) Figure 2-12: Share of Pet Food Sales in Natural Supermarkets: By Type, 2008 (percent) Dry Food Increasing in Market Share

Figure 2-13: Share of IRI-Tracked Sales of Dog and Cat Food by Form: 2003, 2005, 2007 and 2008 (percent) Table 2-14: Share of IRI-Tracked Sales of Pet Food by Form: 2003, 2005 and 2007 (percent) Alternative Pet Food Share of Sales Independent Pet Stores: Share of Sales by Animal Type Table 2-15: Alternative Pet Food Segment Performance Relative to Total U.S. Pet Food Market: 2003-2007 (percent, growth rate) Table 2-16: Share of Independent Pet Store Pet Supply Sales by Animal Type: 2005-2007 (percent) Table 2-17: Pet Food and Treats Share of Category Sales by Animal Type in Independent Pet Stores: 2006 vs. 2007 (percent) Dog Food Is Top Category in Pet Specialty Stores Table 2-18: Share of Pet Specialty Retailer Sales by Category: 2006 vs. 2007 (percent) Market Share by Retail Channel Figure 2-14: Share of U.S. Pet Food Sales by Retail Outlet Type: 2008 (percent) Household Purchasing of Pet Supplies by Retail Outlet Type Table 2-19: Household Purchasing of Pet Products by Retail Channel: Total Purchasers and Sole Purchasers, 2006 vs. 2008 (percent of U.S. households with pets) Figure 2-15: Degree of Channel Loyalty Among Purchasers of Pet Supplies by Outlet Type: 2008 (percent of U.S. households with pets) Chain Merchandising Trends in the Mass Market Dry Dog Food the Most Heavily Merchandised Ephemeral vs. Incremental Merchandising Gains Price Discounting in Chains Is Steepest for Cat Food Table 2-20: IRI-Tracked Retailer Merchandising Trends for Pet Food: By Category and Segment 4th Quarter 2006 through 3rd Quarter 2008 (percent of sales volume) Table 2-21: IRI-Tracked Promotion of Dog, Cat and Other Pet Food: Ratio of Average Promoted Price to Average Overall Price, 2003 - Third Quarter 2008 (percent) Market Outlook All Eyes on the Economy Figure 2-16: U.S. Grocery Industry Sales Growth: 2001-2007 (percent) Table 2-22: Percentage of Adults with Little or No Confidence in Short-Term Prospects for the Economy: April 2003-April 2008 (U.S. adults) Table 2-23: Percentage of Adults Who Are More Practical or Realistic in Their Purchases, Month Over Month: October 2007-April 2008 (U.S. adults) Pet Market Impact Pet Food Prices, Costs at Record Highs Figure 2-17: Consumer Price Index for Pet Food: 1998-2008 Figure 2-18: Producer Price Index for Pet Food: 1998-2008 Impact of Spring 2007 Pet Food Recalls

Figure 2-19: Effect of Pet Food Recall on Pet Food Sales in Pet Specialty Stores: May 2007 (percent) Figure 2-20: Effect of Pet Food Recall on Pet Specialty Retailer Pet Food Selection: January 2008 (percent) Figure 2-21: Seasonal Pattern of Pet Food Sales in the Natural Supermarket Channel: January 2005-December 2007 Product Premiumization and Premium Demographics Table 2-24: IRI-Tracked Volume Sales of Pet Food by Category and Segment: 2003 - Third Quarter 2008 (in millions of volume units) Table 2-25: Average U.S. Household Expenditures on Pet Food: 1997-2007 (in dollars) Figure 2-22: Share of Total U.S. Pet Market Expenditures: $70K+ vs. Under $70K Income Brackets, 1997-2007 (percent) Figure 2-23: Number of New Pet Food Product Introductions: 2001, 2004 and 2008 Natural/Organic Pet Food Going Strong Figure 2-24: U.S. Retail Sales of Natural Pet Food: 2003, 2007 and 2012 (in millions of dollars) Pet Humanization a Potent Force Table 2-26: Mean Number of Veterinary Visits by Human-Animal Bond Among Dog and Cat Households: 2006 Table 2-27: Mean Veterinary Expenditures by Human-Animal Bond Among Dog and Cat Households: 2006 (in dollars) Enhancing Pet Health Aging Pet Population Underpins Healthcare Boom Figure 2-25: Percentage of Dogs and Cats Age 6 and Over: 1996 vs. 2006 (percent) Number of Dog and Cat Households on the Ups Figure 2-26: Household Penetration Rates for Selected Dog- or Cat-Owning Classifications: 2003 vs. 2008 (percent of U.S. dogor cat-owning households) The Boomer Factor Table 2-28: Dog and Cat Ownership by Adult Age Bracket: 2008 (number, percent and index of U.S. households) Figure 2-27: Dog or Cat Ownership Rates by Age Bracket: 2003 vs. 2008 (percent of U.S. households) Figure 2-28: Share of Total U.S. Population Growth for Selected Age Brackets: 2007-2015 (percent) Dual-Adult/No-Kid Clout Figure 2-29: Two-Adult Households/No Kids as Pet Owners: 2003 vs. 2008 (percent) Celebrities Back Up and Coming Pet Food Lines Looking Ahead The New Value Equation Figure 2-30: Share of Total U.S. Pet Market Expenditures: $70K+ vs. Under $70K Income Brackets: 1997-2007 (percent) Market to Approach $19 Billion by 2013

Table 2-29: Projected U.S. Retail Sales of Pet Food: 2008-2013 (in millions of dollars) Additional Market Consolidation Product Innovation Competitive Overview Acquisitions Intensify Market Consolidation Table 2-30: Timeline of U.S. Pet Food Market Acquisitions: 2002- 2008 Mars Plus Nutro Castor & Pollux, Halo Backed by Private Equity Firms Top Five Players Control Four-Fifths of the Market Figure 2-31: Top Five U.S. Marketers of Pet Food: 2006 vs. 2008 (percent) Four Companies Dominate Mass-Market Sales Figure 2-32: Top Marketers of Pet Food by Share of IRI-Tracked Sales: 2007 vs. 2008 (percent) Table 2-31: Leading Marketers of Pet Food by Share of IRITracked Sales: 1999-2007 (percent) Table 2-32: Leading Marketers of Pet Food: Share of IRI-Tracked Sales by Product Segment: 2007 vs. 2008 (percent) Pet Specialty Channel More Fragmented Figure 2-33: No. 1 Brand Leaders in Pet Specialty Stores: 2007 (percent) Professional Channel Marketers Value and Superpremium Positioned Marketers Snacks and Treats Specialists, “Springboarding” Natural/Organic Specialists Exclusive to Specialty, Natural Channels Brand Leaders in the Natural Supermarket Channel Figure 2-34: Share of Sales of Pet Products in Natural Supermarkets by Marketer/Brand: 2008 (percent) Mega Marketers Tap In to Natural Segment Raw/Frozen and Homemade Pet Food Specialists Nature’s Variety a Leader in Raw/Frozen Foods Freshpet Makes Refrigerated Pet Food Splash Figure 2-35: IRI-Tracked U.S. Sales of Freshpet Refrigerated Pet Food: 2006-2008 (in millions of dollars) Channel-Specific Marketing Multinational Powerhouse Cargill Taps Into Feed/Seed Channel Crossing Pet Market Lines Table 2-33: The U.S. Pet Food Market: Selected Leading Marketers and Brands, 2008 Focus on Private Label Room to Grow Table 2-34: Number of U.S. Private-Label Pet Food Product Introductions and SKUs: By Category, 2000-2008 Evanger’s and Eagle Pack Report Recall-Related Gains Store-Brand Share Stabilizes at Mass-Market Level Following Steady Declines Table 2-35: Private-Label Share of IRI-Tracked Sales of Pet Food: By Product Category and Segment, 1999-2007 (percent)

Mars Plus Doane Whole Foods and Traders Joe’s Big on Private Label PetSmart and Petco Heavily Invested in Store Brands Figure 2-36: National Consumer Advertising Spending for PetSmart and Petco: 2006 and 2007 (in millions of dollars) Table 2-36: PetSmart and Petco Pet Food and Treat Private-Label Brands: By Trademark Name, Usage and Filing Date Independent Pet Stores Also Making a Bid Table 2-37: Purchasing Patterns for Selected Types of Store- Brand Dog and Cat Food: By Retail Channel Shopped, 2008 (percent) The Global Private-Label Pet Food Picture The Future of Private Label Focus on Pet Food Recalls and Product Safety Competitive Impact of Spring 2007 Pet Food Recalls Menu Foods Blindsided But on the Mend Lawsuits Consolidated, Settled Procter & Gamble’s Iams Unit Loses Sales and Share Mars Fares Well, Snaps up Nutro and Menu Foods Plant Pet Food Commission Releases Safety Recommendations Congress Passes Food and Drug Administration Amendments Act of 2007 New Regulations Also Possible at the State Level New Requirements for Chinese Imports Pet Food Producers Position on Safety The New Food Safety Buzzword: Traceability Product Safety Still Under Consumer, Government Spotlight Consumer Website Accuses Nutro of Fielding Unsafe Foods FDA Targets Evanger’s Plant Petco Distribution Center Raided by FDA Mars Recalls Reveal Human-Pet Disease Link Marketing and New Product Trends Pet Market Advertising at $520 Million in 2007 Figure 2-37: Media Breakout of National Consumer Advertising for Pet Food and Pet Care Products: 2007 (percent) Marketers Embracing Non-Traditional Media Online Marketing and Blogs Pet Food “SuperBrands” Advertising Positioned on a Few Major Themes Celebrities Kick In Ellen Buys into Halo Cesar Millan Shakes Hands with Castor & Pollux, Petco Rachael Ray Teams Up with Dad’s Pet Care Freshpet Launches Loved Dog Treats Cause-Related Marketing, Public Relations Going Green 2008 a Record Year for New Pet Food Products Table 2-38: Number of New Pet Food Product Introductions: 2001-2008

Product Premiumization: Natural, Upscale and Functional Appeals Natural Products Go Mainstream Manufacturers Focusing on Fresh Ingredients New Goodlife Packaging Is Ingredient-Focused Safety Theme Apparent in Ingredient-Related Product Appeals Human-Grade Ingredients 100% US-Sourced Ingredients and “China-Free” Locally Sourced Ingredients Raw/Frozen Foods Homemade Pet Food “Holistic Labeling” Functional/Fortified Foods Cover All Bases Special Diet Formulas Table 2-39: Household Purchasing of Light/Weight Management and Senior Dry and Canned Dog and Cat Food: 2004 vs. 2008 (U.S. households with dogs or cats) Nutraceutical Treats Convenience Another Key Premium Appeal One Route to Cost Cutting: Smaller Package Sizes Table 2-40: Pet Food Product Selling Points by Package Tags: 2004-2008 Examples of Advertising Retail Trends Economic Concerns and Increased Competition The PetSmart/Petco Dynamic Duo Table 2-41: PetSmart and Petco Combined Sales: 2000-2007 (in millions of dollars) Company Profile: PetSmart, Inc. Table 2-42: PetSmart Sales: 2000-2007 (in millions of dollars) Slower Expansion an “Economic Precaution” Services, Expertise Key to Success Company Profile: Petco Table 2-43: Petco Annual Sales: 2000-2007 (in millions of dollars) Changes and Challenges Promoting Pet Relationships Cesar Millan and Ellen DeGeneres P.A.L.S., Petco.com and Petco Park Zootoo.com and Pet Welfare Other Top-Ranked Pet Specialty Chains Independent Pet Stores: Bad News and Good News Table 2-44: Top Challenges Pet Specialty Retailers Face in Next Two Years: 2006 vs. 2007 (percent) Table 2-45: Pet Food Share of Category Sales by Animal Type in Independent Pet Stores: 2006 vs. 2007 (percent) Walmart Bullish on Pet Supplies Target Also Coming on Strong Supermarkets Hanging on After 2007 Recalls

Wholesale Clubs and Dollar Stores Natural Supermarkets Going Strong The Internet Effect Leading E-tailers of Pet Food and Supplies Pet Ownership Trends and Demographics The Simmons Survey System Over 60 Million Households Own Pets Table 2-46: Pet Ownership in the United States: 2008 (percent and number of U.S. households) Dog/Cat Ownership Rates Edge Up Table 2-47: Dog and Cat Ownership in the United States: 2004, 2006 and 2008 (percent and number of U.S. households) 38% of Pet Households Keep Multiple Types Figure 2-38: Ownership of Multiple Types of Pets: 2008 (percent of pet-owning U.S. households) 63% of Pet Households Keep More Than One Pet Table 2-48: Ownership of Multiple Pets of a Single Type: 2008 (percent of U.S. households who keep pets of a given type) Pet Household Demographics Pet Ownership Holds Up Across Age Brackets Figure 2-39: Dog or Cat Ownership Rates by Age Bracket: 2003 vs. 2008 (percent of U.S. households) Demographic Variations by Type of Pets Table 2-49: Demographics for Keeping Pets, 2008 (percent, number and index among U.S. consumers) Table 2-50: Demographic Overview for Selected Pet Classifications, 2008 (percent of U.S. households) Pet Owners as Consumers Household Purchasing of Pet Supplies by Retail Outlet Type Table 2-51: Household Purchasing of Pet Products by Retail Channel: Total Purchasers and Sole Purchasers, 2006 vs. 2008 (U.S. households with pets) Table 2-52: Demographic Overview for Selected Pet Product Retail Channels, 2008 ( U.S. pet-owning households) Channel Choices in Organic Pet Food Purchasing Table 2-53: Where Groceries Are Most Often Purchased by Selected Retailer Type: Shoppers Overall vs. Organic Pet Food Purchasers, August 2008 (percentage of U.S. adults) Table 2-54: Where Groceries Are Most Often Purchased by Selected Retail Chain: Shoppers Overall vs. Organic Pet Food Purchasers, August 2008 (percentage of U.S. adults) Pet Food Purchasing Overview for Dog or Cat Owners Table 2-55: Household Purchasing of Packaged Dog and Cat Food by Type, 2008 (U.S. households with dogs or cats) Pet Owners Are Internet-Prone Figure 2-40: Use/Influence of the Internet: Adults Overall vs. Dog or Cat Owners, 2008 (percent of U.S. adults overall vs. dog or cat owners)

Figure 2-41: Use/Influence of the Internet: Adults Overall vs. Dog or Cat Owners, 2008 (index for U.S. dog or cat owners) Figure 2-42: Dog or Cat Owners as Consumers: Selected Media & Marketing Psychographics, 2008 (percent and index for U.S. dog or cat owners) Not So “Green” Figure 2-43: Dog or Cat Owners as Consumers: Selected “Green” Psychographics, 2008 (percent and index for U.S. dog or cat owners) The Pet Food Coupon Clipper Table 2-56: Indicators for Use of Pet Food Coupons: 2008 (index among dog- or cat-owning households) Bulk of Redemption through Grocery Stores Table 2-57: Coupon Redemption Rates by Selected Retailer Type: 2004-2008 (percent) Figure 2-44: Coupon Redemption Rates Among Pet Food Coupon Users: By Selected Retailer Type, 2008 (percent) Grocery vs. Pet Food Coupon Usage Rates Table 2-58: Coupon Usage Rates by Product Type: 2004-2008 (percent) On-Shelf Coupons Generate Highest Usage Table 2-59: Coupon Usage Rates by Product Type: 2004-2008 (percent)

Chapter 3: Dog Food Introduction Category Scope: Five Product Segments Market Size and Growth Total Dog Food Sales at $10.4 Billion in 2008 Figure 3-1: U.S. Retail Sales of Dog Food: 2005, 2008 and 2013 (in millions of dollars) 2008 IRI-Tracked Dollar Sales of Dog Food Up, But Volume Sales Down Table 3-1: IRI-Tracked Dollar, Pound and Unit Sales of Dog Food: 2008 vs. 2007 (in millions of dollars, pounds and units) Gradual Dollar Gains from 2003 to 2007 Figure 3-2: IRI-Tracked Sales of Dog Food: 2003-2007 (in millions of dollars) Frozen Dog Food Out Front in Market Growth Table 3-2: IRI-Tracked Sales of Dog Food: By Segment, 2003- 2007 (in millions of dollars) Table 3-3: Annual Growth/Decline in IRI-Tracked Sales of Dog Food: By Segment, 2004-2007 (percent) Table 3-4: Total Growth/Decline in IRI-Tracked Sales of Dog Food: By Segment, 2003-2007 (in millions of dollars) Wet Dog Food Declining in Market Share Table 3-5: Share of IRI-Tracked Sales of Dog Food by Segment: 2003, 2005 and 2007 (percent) Premium and Fortified Dog Foods Are Most Commonly Purchased Kinds Table 3-6: Kind of Dog Food Purchased in the Past 12 Months: 2002 vs. 2006 (percent) Table 3-7: Use of Specially Formulated Dog Food: 2004 vs. 2006 (percent) Household Purchasing of Pet Supplies by Retail Outlet Type

Channel Loyalty Increasing Among Online Shoppers Figure 3-3: Dog Owner Shopping for Pet Products by Retail Channel: 2008 (percent of U.S. dog-owning households) Figure 3-4: Sole Purchaser Share of Total Purchasers of Pet Supplies by Outlet Type: 2006 vs. 2008 (U.S. households with dogs) Dog Food Chain Merchandising Trends Table 3-8: IRI-Tracked Retailer Merchandising Trends for Dog Food: Overall and by Segment, 4th Quarter 2006 through 3rd Quarter 2008 (percent of sales volume) Price Promotion Patterns Vary by Segment Table 3-9: IRI-Tracked Promotion of Dog Food by Category and Segment: Ratio of Average Promoted Price to Average Overall Price, 2003 - Third Quarter 2008 (percent) Marketer and Brand Shares Methodology Impact of Acquisitions Nestlé Purina Dominates Dog Food Category Figure 3-5: Top Dog Food Marketers by Share of IRI-Tracked Sales: 2008 (percent) Iams the Most Heavily Leveraged in Dry Dog Food Nestlé Purina the Top Dog in Dry Food Segment Figure 3-6: Leading Marketers of Dry Dog Food by Share of IRITracked Sales: 2003 vs. 2008 (percent) Acquisitions Boost Del Monte and Mars in Dog Biscuits/Treats Figure 3-7: Leading Marketers of Dog Biscuits/Treats by Share of IRI-Tracked Sales: 2003 vs. 2008 (percent) Mars Marching Forward in Wet Dog Food Figure 3-8: Leading Marketers of Wet Dog Food by Share of IRITracked Sales: 2003 vs. 2008 (percent) Nestlé Purina Controls Semi-Moist Segment Figure 3-9: Leading Marketers of Semi-Moist Dog Food by Share of IRI-Tracked Sales: 2003 vs. 2008 (percent) Nestlé Purina Also on Top in Frozen Dog Food Figure 3-10: Leading Marketers of Frozen Dog Food by Share of IRI-Tracked Sales: 2003 vs. 2008 (percent) Leading Pet Specialty Channel Brands Figure 3-11: Dog Food Brand Leaders in Pet Specialty Stores: 2005-2007 (percent) Table 3-10: Leading Dog Food Marketers by IRI-Tracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent) Table 3-11: Leading Dog Food Marketers by Share of IRI-Tracked Sales: 2004, 2006 and 2008 (percent) Table 3-12: Leading Dog Food Marketers: Share of IRI-Tracked Sales of Dog Food by Segment: 2007 vs. 2008 (percent) Table 3-13: Marketers and Brands of Dry Dog Food by IRITracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent)

Table 3-14: Brand Shares of IRI-Tracked Sales of Selected Leading Dry Dog Food Products: 2003-2007 (percent) Table 3-15: Marketers and Brands of Dog Biscuits/Treats by IRITracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent) Table 3-16: Brand Shares of IRI-Tracked Sales of Selected Leading Dog Biscuit/Treat Products: 2003-2007 (percent) Table 3-17: Marketers and Brands of Wet Dog Food by IRITracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent) Table 3-18: Brand Shares of IRI-Tracked Sales of Selected Leading Wet Dog Food Products: 2003-2007 (percent) Table 3-19: Marketers and Brands of Semi-Moist Dog Food by IRITracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent) Table 3-20: Marketers and Brands of Frozen Dog Food by IRITracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent) Table 3-21: Top Dog Food Products by Dollar Gain in IRI-Tracked Sales: 2007 vs. 2008 (in millions of dollars) Marketing & New Product Trends Dog Food Advertising “SuperBrands” Milk-Bone Celebrates 100th Birthday Mars Expands Pedigree Adoption Drive Nestlé Purina Expanding Event Marketing Capacity 2008 a Record Year for New Dog Food Products Figure 3-12: Number of New Dog Food Product Introductions: 2002-2008 Premium Thrust Still Going Strong: Natural, Functional and Special Diet Foods Figure 3-13: Top 10 Dog Food Package Claims: January- December 2008 Ingredients in the Spotlight “People Food” Gluten- and Wheat-Free Claims Highlight Safety Issue Natural Products Go Mainstream Honest Kitchen Makes an Honest Claim Out of “Human Grade” Natural Plus Gourmet Freshpet Scores Hit with Refrigerated Dog Food Ongoing Activity in Organic Niche Special Diet/Functional Foods Mars Launches WholeMeals Healthy Weight and Senior Foods Breed- and Size-Specific Products Grain-Free Products Picking Up Non-allergenic Products Probiotics and Healthy Digestion Raw/Frozen Foods “Real Meat” Products Taking a Swing at Raw Veterinary Appeal Taste, Variety Still Key Appeals Functional/Nutraceutical Treats

Figure 3-14: Share of U.S. Retail Sales of Dog Supplements and Nutraceutical Treats by Function: 2007 (percent) Trend Profile: Dogswell, LLC Oral Care Treats Fortified Dog Water Human-Style Baked, Gourmet and Holiday Treats Frozen Novelty Treats New Spins on Convenience Table 3-22: Dog Food Product Selling Points by Package Tags: 2006-2008 Examples of Dog Food Advertising Dog Ownership Trends and Demographics The Simmons Survey System 40 Million Households Keep Pet Dogs Dog/Cat Ownership Rates Edge Up Figure 3-15: Dog Ownership in the United States: 2008 (percent of U.S. households) Table 3-23: Dog and Cat Ownership in the United States: 2004, 2006 and 2008 (percent and number of U.S. households) Dog Household Demographics Promising Patterns by Age Bracket Figure 3-16: Dog Ownership Rates by Age Bracket: 2003 vs. 2008 (percent of U.S. households) Keepers of the Pack: Multiple-Dog Demographics Table 3-24: Demographics for Keeping Pet Dogs, 2008 (percent, number and index among U.S. households) Table 3-25: Demographic Overview for Selected Dog-Owning Classifications, 2008 (percent and index of U.S. households) Pet Retailer and Dog Food Preferences Pet Stores Edge Out Supermarkets in Overall Popularity Table 3-26: Dog Owner Shopping for Pet Products by Retail Channel: Total Purchasers and Sole Purchasers, 2006 vs. 2008 (percent of U.S. dog-owning households) 94% Buy Dry Dog Foods Figure 3-17: Dog Food Purchasing Rates by Type: 2008 (percent of U.S. dog-owing households) Table 3-27a: Demographic Overview: Pet Product Shopping Rates by Retail Channel, 2008 (percent of U.S. dog-owning households) Table 3-27b: Demographic Overview: Pet Product Shopping Indexes by Retail Channel, 2008 (indexes for U.S. dog-owning households) Minorities Over-Index for Semi-Moist and Canned Products Treat Purchasing Rates Are Steady at 83% Across Preferences by Dog Food Type Table 3-28a: Demographic Overview: Dog Food Purchasing Rates by Type, 2008 (percent of U.S. dog-owning households) Table 3-28b: Demographic Overview: Dog Food Purchasing Indexes by Type, 2008 (indexes for U.S. dog-owning households)

Table 3-29: Dog Food Cross-Purchasing Rates by Type: 2008 (percent of U.S. dog-owning households) Light, Senior and Puppy Formulations Gain in Usage Table 3-30: Dog Food Purchasing Patterns by Type: 2004 vs. 2008 (percent of U.S. dog-owing households) Table 3-31: Dog Food Purchasing Patterns by Type: Single vs. Multiple Dog Owners, 2008 (percent and index) Table 3-32: Dog Food Purchasing Rates by Type: By Retail Channels Shopped, 2008 (percent of U.S. dog-owning households) Milk-Bone Is Most Widely Used Brand Line Figure 3-18: Top Dog Food/Treat Brand Lines by Overall Usage Rates: 2008 (percent of U.S. dog-owing households) Value Brand Skew Among Multiple-Dog Owners Table 3-33: Purchasing Patterns for Leading Dog Food/Treat Brand Lines: Single vs. Multiple Dog Owners, 2008 (percent and index) Table 3-34: Purchasing Patterns for Leading Dog Food/Treat Brand Lines: By Retail Channel Shopped, 2008 (percent) Demographic Skews: Value Brands vs. Superpremiums Table 3-35: Selected High-Indexing Demographics by Brand Line for Dog Food and Treats: 2008 (U.S. dog-owning households)

Chapter 4: Cat Food Introduction Category Scope: Four Product Segments Market Size and Growth Total Cat Food Sales at $5.7 Billion in 2008 Figure 4-1: U.S. Retail Sales of Cat Food: 2005, 2008 and 2013 (in millions of dollars) 2008 IRI-Tracked Dollar Sales of Cat Food Up, But Volume Sales Down Table 4-1: IRI-Tracked Dollar, Pound and Unit Sales of Cat Food: 2008 vs. 2007 (in millions of dollars, pounds and units) Meager Dollar Gains from 2001 to 2007 Figure 4-2: IRI-Tracked Sales of Cat Food: 2003-2007 (in millions of dollars) Dry Food and Snacks Deliver Dollar Gains Table 4-2: IRI-Tracked Sales of Cat Food: By Segment, 2003- 2007 (in millions of dollars) Table 4-3: Annual Growth/Decline in IRI-Tracked Sales of Cat Food: By Segment, 2004-2007 (percent) Table 4-4: Total Growth/Decline in IRI-Tracked Sales of Cat Food: By Segment, 2003-2007 (in millions of dollars) Dry Food, Snacks Increase Category Share Table 4-5: Share of IRI-Tracked Sales of Cat Food by Segment: 2003, 2005 and 2007 (percent) Fortified, Premium and Hairball Formulas Are Most Commonly Purchased Types Table 4-6: Kind of Cat Food Purchased in Past 12 Months: 2002 vs. 2006 (percent) Table 4-7: Use of Specially Formulated Cat Food: 2004 vs. 2006 (percent)

Household Purchasing of Pet Supplies by Retail Outlet Type Supermarkets Jump in Channel Loyalty Figure 4-3: Cat Owner Shopping for Pet Products by Retail Channel: 2008 (percent of U.S. cat-owning households) Figure 4-4: Sole Purchaser Share of Total Purchasers of Pet Supplies by Outlet Type: 2006 vs. 2008 (U.S. households with cats) Cat Food Chain Merchandising Trends Table 4-8: IRI-Tracked Retailer Merchandising Trends for Cat Food: Overall and by Segment, 4th Quarter 2006 through 3rd Quarter 2008 (percent of sales volume) Chain Price Discounts Steepest for Wet Cat Food, Cat Snacks Table 4-9: IRI-Tracked Promotion of Cat Food by Category and Segment: Ratio of Average Promoted Price to Average Overall Price, 2003 - Third Quarter 2008 (percent) Marketer and Brand Shares Methodology Del Monte Jumps to No. 2 in Cat Food Market Figure 4-5: Top Cat Food Marketers by Share of IRI-Tracked Sales: 2008 (percent) Del Monte Plus Meow Mix Del Monte, Mars Recalibrate Wet/Dry/Snack Mix Del Monte Also Climbs to Second in Dry Cat Food Figure 4-6: Leading Marketers of Dry Cat Food by Share of IRITracked Sales: 2003 vs. 2008 (percent) Nestlé Purina Ups Ante in Wet Cat Food Figure 4-7: Leading Marketers of Wet Cat Food by Share of IRITracked Sales: 2003 vs. 2008 (percent) Mars Widens Leads in Cat Snacks Segment Figure 4-8: Leading Marketers of Cat Snacks by Share of IRITracked Sales: 2003 vs. 2008 (percent) Nestlé Purina Drops Out of Semi-Moist Segment Leading Pet Specialty Channel Brands Figure 4-9: Cat Food Brand Leaders in Pet Specialty Stores: 2005-2007 (percent) Table 4-10: Leading Cat Food Marketers by IRI-Tracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent) Table 4-11: Leading Cat Food Marketers by Share of IRI-Tracked Sales: 2004, 2006 and 2008 (percent) Table 4-12a: Leading Cat Food Marketers: Share of IRI-Tracked Sales of Cat Food by Segment: 2007 vs. 2008 (percent) Table 4-12b: Leading Cat Food Marketers: Share of IRI-Tracked Sales of Cat Food by Segment: 2005 vs. 2006 (percent) Table 4-13: Marketers and Brands of Dry Cat Food by IRI-Tracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent) Table 4-14: Brand Shares of IRI-Tracked Sales of Dry Cat Food: 2003-2007 (percent)

Table 4-15: Marketers and Brands of Wet Cat Food by IRITracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent) Table 4-16: Brand Shares of IRI-Tracked Sales of Wet Cat Food: 2003-2007 (percent) Table 4-17: Marketers and Brands of Cat Snacks by IRI-Tracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent) Table 4-18: Brand Shares of IRI-Tracked Sales of Cat Snacks: 2003-2007 (percent) Table 4-19: Top Cat Food Products by Dollar Gain in IRI-Tracked Sales: 2007 vs. 2008 (in millions of dollars) Marketing & New Product Trends Cat Food Advertising SuperBrands Meow Mix Investing in Branded Content, Event Marketing Product Introductions Rebound in 2008 Figure 4-10: Number of New Cat Food Product Introductions: 2002-2008 Top Product Themes: Upscale, Functional and Natural Figure 4-11: Top 10 Cat Food Package Claims: January- December 2008 Healthfulness to the Fore Natural and Organic Expand Their Reach Special Diet and Functional Products Figure 4-12: Share of U.S. Retail Sales of Cat Supplements and Nutraceutical Treats by Function: 2007 (percent) Healthy Skin/Coat Senior/Joint Digestive/Immune System Grain-Free Indoor/Hairball Formula Healthy Weight Kitten Formulas Gourmet-Style, Variety Still Key Appeals Cat Treats Take Health, Indulgence to the Bank Premium and Convenience Packaging Table 4-20: Cat Food Product Selling Points by Package Tags: 2006-2008 Examples of Cat Food Advertising Cat Ownership Trends and Demographics The Simmons Survey System 29 Million Households Keep Pet Cats Dog/Cat Ownership Rates Edge Up Figure 4-13: Cat Ownership in the United States: 2008 (percent and number of U.S. households) Table 4-21: Dog and Cat Ownership in the United States: 2004, 2006 and 2008 (percent and number of U.S. households) Cat Household Demographics Cat vs. Dog Ownership Patterns Diverge by Age Bracket Figure 4-14: Cat Ownership Rates by Age Bracket: 2003 vs. 2008 (percent of U.S. households)

Patterns by Number of Cats Table 4-22: Demographics for Keeping Pet Cats, 2008 (percent, number and index among U.S. households) Table 4-23: Demographic Overview for Selected Cat-Owning Classifications, 2008 (percent and index of U.S. households) Pet Retailer and Cat Food Preferences 53% of Cat Owners Shop Supermarkets for Pet Products Table 4-24: Cat Owner Shopping for Pet Products by Retail Channel: Total Purchasers and Sole Purchasers, 2006 vs. 2008 (percent of U.S. cat-owning households) Demographic Patterns by Retail Channel Canned Food Is Stronger in Cat Arena Figure 4-15: Cat Food Purchasing Rates by Type: 2008 (percent of U.S. cat-owing households) Table 4-25a: Demographic Overview: Pet Product Shopping Rates by Retail Channel, 2008 (percent of U.S. cat-owning households) Table 4-25b: Demographic Overview: Pet Product Shopping Indexes by Retail Channel, 2008 (indexes for U.S. cat-owning households) Lower-Income and Hispanic Skews to Semi-Moist Cat Food Purchasing Rates for Treats Vary by Cat Food Preference Table 4-26a: Demographic Overview: Cat Food Purchasing Rates by Type, 2008 (percent of U.S. cat-owning households) Table 4-26b: Demographic Overview: Cat Food Purchasing Indexes by Type, 2008 (indexes for U.S. cat-owning households) Table 4-27: Cat Food Cross-Purchasing Rates by Type: 2008 (percent of U.S. cat-owning households) Use of Light/Weight Management Cat Food Jumps to 9% Table 4-28: Cat Food Purchasing Patterns by Type: 2004 vs. 2008 (percent of U.S. cat-owing households) Table 4-29: Cat Food Purchasing Patterns by Type: Single vs. Multiple Cat Owners, 2008 (percent and index) Table 4-30: Cat Food Purchasing Rates by Type: By Retail Channels Shopped, 2008 (percent of U.S. cat-owning households) Friskies Is Most Widely Used Brand Line Figure 4-16: Top Cat Food/Treat Brand Lines by Overall Usage Rates: 2008 (percent of U.S. cat-owing households) Highest Skews Are for Multiple-Cat Fanciers Table 4-31: Purchasing Patterns for Leading Cat Food/Treat Brand Lines: Single vs. Multiple Cat Owners, 2008 (percent and index) Table 4-32: Purchasing Patterns for Leading Cat Food/Treat Brand Lines: By Retail Channel Shopped, 2008 (percent) Demographic Skews: Cats and Crowded Households Table 4-33: Selected High-Indexing Demographics by Brand Line for Cat Food and Treats, 2008 (U.S. cat-owning households)

Chapter 5: Other Pet Food Market Size and Composition

Category Scope Total Other Pet Food Sales at $907 Million in 2008 Figure 5-1: U.S. Retail Sales of Other Pet Food: 2005, 2008 and 2013 (in millions of dollars) Figure 5-2: Share of Sales of Other Pet Food by Animal Type: 2008 (percent) 2008 IRI-Tracked Dollar Sales Up, Unit Sales Down Table 5-1: IRI-Tracked Dollar and Unit Sales of Other Pet Food: 2008 vs. 2007 (in millions of dollars and units) Sales Recover from Multi-Year Downturn Independent Pet Stores: Share of Sales by Animal Type Figure 5-3: IRI-Tracked Sales of Other Pet Food: 2003-2007 (in millions of dollars) Table 5-2: Share of Independent Pet Store Pet Supply Sales by Animal Type: 2005-2007 (percent) Fish Products: Share of Sales by Product Category Table 5-3: Share of Independent Pet Store Sales of Fish Products by Category: 2005-2007 (percent) Bird Products: Share of Sales by Product Category Table 5-4: Share of Independent Pet Store Sales of Bird Products by Category: 2005-2007 (percent) Herptile Products: Share of Sales by Product Category Table 5-5: Share of Independent Pet Store Sales of Herptile Products by Category: 2005-2007 (percent) Small Mammal Products: Share of Sales by Product Category Table 5-6: Share of Independent Pet Store Sales of Small Mammal Products by Category: 2005-2007 (percent) Share of Other Pet Food Sales by Retail Channel Figure 5-4: Share of U.S. Other Pet Food Sales by Retail Outlet Type: 2008 (percent) Mass-Market Merchandising Trends for Other Pet Foods Table 5-7: IRI-Tracked Retailer Merchandising Trends for Other Pet Foods: 4th Quarter 2006 through 3rd Quarter 2008 (percent of sales volume) Price Discounting in Chains Is Steepest for Cat Food Table 5-8: IRI-Tracked Promotion of Dog, Cat and Other Pet Food: Ratio of Average Promoted Price to Average Overall Price, 2003 - Third Quarter 2008 (percent) Competitive Trends Marketer Overview Leading Pet Specialty Channel Brands Central Garden & Pet on Top in Mass-Market Outlets Figure 5-5: Top Marketers of Other Pet Food by Share of IRITracked Sales: 2007 vs. 2008 (percent) Audubon Park Posts Biggest Dollar Gains Wardley and Tetra Control Fish/Reptile Segment Figure 5-6: Top Marketers of Fish/Reptile Food by Share of IRITracked Sales: 2007 vs. 2008 (percent)

Table 5-9: Other Pet Food Brand Leaders in Pet Specialty Stores: 2004, 2006 and 2007 (percent) Table 5-10: Leading Marketers of Other Pet Food by IRI-Tracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent) Table 5-11: Leading Marketers and Brand of Other Pet Food by Mass-Market Share: 2007 vs. 2008 (percent) Table 5-12: Marketers and Brands of Other Pet Food by IRITracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent) Table 5-13: Top Ten Other Pet Food Products by Dollar Gain in IRI-Tracked Sales: 2007 vs. 2008 (in millions of dollars) Table 5-14: Marketers and Brands of Fish/Herptile Food by IRITracked Sales and Market Share: 2007 vs. 2008 (in millions of dollars and percent) Company Profiles Central Garden & Pet: Corporate Overview A Leader in Innovation Success in Pet Specialty, Mass-Market Channels Hartz Mountain Corp. Corporate Overview Mass-Market Sales Slipping Figure 5-7: IRI-Tracked Sales and Market Share of Hartz Mountain Other Pet Food: 2003-2008 (in millions of dollars) Vitakraft/Sun Seed Co Corporate Overview Acquisitions Spur Global Growth A New Leader in the U.S. Pet Specialty Market Figure 5-8: Percentage of Retailers Citing Sun Seed Brand as No. 1 Brand in Pet Specialty Channel: 2006 vs. 2007 (percent) Marketing and New Product Trends Marketing Trends New Product Thrusts Trends in Bird Food Cook and Serve Foods Bird Treats Natural and Organic Single-Serving Sizes Fortified Foods Trends in Small Animal Food Species-Specific Foods Special Diets and Supplements Gourmet Foods Grass Hay “Growing” Foods Trends in Fish Food Fish Treats Expanded Food Choices Gourmet Diets

Clean and Clear Water Trends in Herptile Food Live Food Innovations Live vs. Frozen Species-Specific Prepared Foods Medicated Foods Table 5-15: Bird, Small Animal, Fish and Herptile Food: Selected New Product Introductions, 2007-2008 Examples of Other Pet Food Advertising Consumer Focus: Other Pet Food Purchasers Methodology Population Trends: Household Penetration Increasing for All Animal Types Table 5-16: Pet Ownership in the United States: 2008 (percent and number of U.S. Households) Fish Food Purchaser Trends and Demographics Figure 5-9: Type of Freshwater and Saltwater Fish Food Purchased: 1996 vs. 2006 (percent) Figure 5-10: Outlet Where Freshwater and Saltwater Fish Food Flakes Are Purchased: 2006 (percent) Demographics for Keeping Pet Fish Bird Food Purchaser Trends and Demographics Figure 5-11: Types of Bird Food and Packages Purchased in the Past 12 Months: 2002 vs. 2006 (percent) Small Animal Food Purchaser Trends and Demographics Figure 5-12: Type of Small Animal Food Purchased in the Past 12 Months: 2002 vs. 2006 (percent) Reptile Food Purchaser Trends and Demographics Figure 5-13: Type of Reptile Food Purchased in the Past 12 Months: 1996 vs. 2006 (percent) Table 5-17: Demographics for Keeping Pet Fish, 2008 (percent, number and index among U.S. consumers) Table 5-18: Demographics for Keeping Pet Birds, 2008 (percent, number and index among U.S. consumers) Table 5-19: Demographics for Keeping Pet Rabbits or Hamsters, 2008 (percent, number and index among U.S. consumers) Table 5-20: Demographics for Keeping Pet Reptiles, 2008 (percent, number and index among U.S. consumers)

Appendix: Addresses of Selected Marketers

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