No BRICs Allowed (Part Two): Premium Products Driving Growth in Moroccan Pet Care
This second of a four-part series highlighting some smaller, lesser known but nonetheless rapidly expanding emerging pet care markets focuses on Morocco, where a rising urban and an expanding and westernising middle-class is driving strong growth, in spite of the fact that few Moroccans own pets and most of those who do tend to feed them leftovers/table scraps, rather than prepared pet food.
Market expands by 40% over five years
Pet care sales in Morocco grew by 40.8% in constant value terms between 2007 and 2012, to reach US$52.8 million. It is the fourth largest market in the Middle East and Africa, behind South Africa (US$668 million), Israel (US$154 million) and the United Arab Emirates (US$98.4 million), as well as the second fastest growing market in the region (behind Saudi Arabia). Real per household consumer expenditure in Morocco expanded by 12.9% over the 2007-2012 period, to US$9,049, so the pet care category is significantly outperforming the wider consumer market.
Few own pets, with most feeding them scraps
Pet ownership is not widespread in Morocco – just 5% of households had a dog in 2012, while a mere 4% had a cat. However, the ownership statistics do not tell the full story. Morocco has a very large population of stray cats that are treated as “community” pets and fed leftovers by many locals. Indeed, this is how most pets in Morocco are fed – prepared food accounted for just 7.7% of the calories consumed by pet cats in 2012, up from 7.3% in 2007. For pet dogs, this figure increased from 2.2% to 3.2% over the same period. Most dogs in Morocco (77% in 2012) are medium-sized, ie weighing between 9-23 kg.
Premium products account for well over half of overall dog and cat food sales
The Moroccan pet care market predominantly caters for affluent owners purchasing premium dog and cat food. Real value sales of premium dog and cat food soared by 52.1% between 2007 and
2012, to US$27.6 million, accounting for 57.6% of total dog and cat food sales. In contrast, value sales of economy and mid-priced dog and cat food stood at just US$10.1 million and US$10 million, respectively, in 2012.
While sales of pet products remain quite limited, they are also expanding rapidly, increasing by 42.1% between 2007 and 2012, to US$4.4 million. Just over two-thirds of pet product value sales are accounted for by other pet products, such as pet clothing and toys, with cat litter and pet healthcare (mainly flea/tick treatments) accounting for the rest.
There is also a small market for bird food and fish food in Morocco, with sales of US$4.3 million in 2012. This represented real growth of just 6.5% between 2007 and 2012. What growth there has been in this category has come from fish food, with fish keeping growing in popularity among middle-class urban consumers.
Urbanisation and rising incomes among the factors engendering pet humanisation
Growing demand for premium pet food and pet products in Morocco is down to a number of social and economic factors. Firstly, and most importantly, the country’s middle-class is expanding
rapidly – the proportion of households with an annual disposable income of at least US$25,000 at purchasing power parity rose from 12.2% to 17.1% between 2007 and 2012. Secondly, the country is urbanising, with nearly 60% of Moroccans now living in cities. Thirdly, the country’s population, while still quite young (with a median age of 26.9 years in 2012), is gradually ageing as
life expectancy rises and the birth rate eases somewhat (children born per female stood at 2.3 in 2012). Finally, a significant number of Moroccans migrate to Western Europe (particularly France, Italy and Spain), and some bring a heightened sense of pet humanisation with them on their return.
All of these factors have been shown to correlate with increased demand for pet care in emerging markets across the world, and Morocco is no different. For a small, but growing, number of Moroccans, pets are considered to be family members. For others, they are a fashion accessory or a means of signalling that one is modern, sophisticated and westernised.
Hypermarkets and supermarkets dominate distribution
Grocery retailers (mainly hypermarkets and supermarkets) dominate distribution in the Moroccan pet care market, accounting for just over 75% of value sales in 2012. However, veterinary clinics are also important, particularly in the premium segment. This channel accounted for 11.9% of pet care value sales in 2012, with veterinarians opening more and more clinics across the country.
This neatly illustrates the type of consumer who buys pet food in Morocco. The grocery retail landscape is dominated by traditional grocery retailers, particularly independent small grocers, which offer proximity, provide access to credit and help those with limited incomes who are only able to buy in small quantities. On the other hand, typical hypermarket/supermarket shoppers tend to be much more affluent and often have their own means of transportation.
Mars rules the roost
Mars Inc is the dominant player in the Moroccan dog and cat food category, steadily increasing its value share from 55.2% to 57.8% between 2007 and 2012 with such brands as Pedigree, Whiskas, Kitekat, Royal Canin, Royal Chien, Canigou and Chappi. In a country where physical infrastructure is sometimes lacking, the fact that Mars has its own distribution network represents a major advantage over its rivals.
There are no domestic players capable of rivalling Mars in the Moroccan pet care market, and it also offers frequent price promotions, making it difficult for rivals to gain a foothold. So dominant is Mars that its much smaller rivals (such as Continentale Nutrition SA and Nestlé SA) have only been able to grow by squeezing out private label, rather than at the expense of Mars.
Strong growth set to continue
The Moroccan pet care market is predicted to expand by 39% between 2012 and 2017, to US$588 million – a rate of growth only marginally slower than that of the preceding five years. Further increases in disposable income and deepening urbanisation and westernisation will continue to be the main growth drivers in pet care, together with the proliferation of hypermarkets and supermarkets.
The premium dog and cat food segment will continue to expand rapidly, with therapeutic dog food (sales of which are currently negligible) likely to grow in popularity as distribution widens and owners become more concerned about the health and wellness of their pets. Products for bladder health, cardiac health, skin health and digestive health are likely to be particularly popular in this regard. Sales of pet treats and snacks are also likely to take off as distribution improves.