Premiumisation Versus Private Label in Cat Litter

Convenience and environmental-friendliness have been key drivers of sales growth in the global cat litter market in recent years. However, private label offerings are proliferating and their quality is improving, forcing manufacturers of branded products to innovate to maintain their margins.

Global Sales Growing by More than 3% a Year

Annual value sales in the global cat litter market are forecast to reach almost US$5 billion in 2013, up 17% in real terms since 2008 and equating to a compound annual growth rate (CAGR) of just over 3%. Growth has been particularly strong in North America, Australasia and Eastern Europe. Between them, the American and Russian markets accounted for 58% of absolute growth in cat litter value sales over the 2008-2013 period. Strong growth rates are also in evidence in such emerging markets as Brazil, China, Hungary and Ukraine, but these are from very low bases. Value sales have been much weaker in the Western European and Japanese markets, with CAGRs of less than 2% in both cases.

Manufacturers Fight Back with Innovation in Japan

Growing sales of private label products have put a significant damper on overall value sales growth in both Japan and Western Europe. In Japan, the share of value sales accounted for by private label grew from 7% to 9% between 2008 and 2012. This has prompted aggressive discounting from branded manufacturers like Lion Corp and Unicharm Corp. At the same time, they have developed more sophisticated value-added cat litter products with ingredients that neutralise bad odours or cause the litter to quickly congeal after soiling, as well as eco-friendly variants made from recycled paper, wood and bean-curd. The fact that cat ownership has fallen sharply in Japan in recent years has also slowed growth. Between 2008 and 2013, the proportion of households with a cat in Japan fell from 13% to 10%.

Private Label Products Now Account for Close to Half of Value Sales in Western Europe

In Western Europe, private label is tightening its already firm grip on the cat litter market, increasing its share from 44% to 47% between 2008 and 2012. Most of this growth has derived from those markets that have been hardest hit by the economic downturn. In Spain, the share of private label in cat litter soared from 54% to 62% between 2008 and 2012, while in the Netherlands it rose from 62% to 64%.

In Spain, the shift towards private label products in cat litter has gone hand-in-hand with a shift in distribution away from pet shops and towards grocery retailers by hard-pressed consumers as an elevated rate of unemployment and a sharp decline in household income have made many consumers much more price-sensitive. On the other hand, value-added products (particularly perfumed sand) from such brands as Wuapu AmiSand, Arqui Crystal and Sanicat have found favour among affluent consumers in Spain (even if there are now far fewer of them than previously).