Industry Insight

Industry Becoming Investors' Next Pet Project?

By Bob Vetere
Managing Director & COO, APPMA

Bob Vetere

I recently had the opportunity to make a presentation to retail investors on behalf of Bear Stearns for the third time in the past 12 months. It seems as though the pet industry continues to attract a great deal of attention from the investment community. As I keep telling everyone, we have just not done a very good job of keeping our collective success a secret!!

What has proven very interesting to me is the level of interest of these investors along with how that interest has evolved. When I first spoke about a year ago there were about 50 investors involved. Most of the questions centered around getting a feel for just how big this industry really is. Most were very surprised to learn that pets represent the seventh largest retail segment (according to US Census Bureau 2004 figures) and that we are larger than such segments as toys, candy and jewelry.

The second presentation this past February attracted more than 100 attendees at the Bear Stearns annual conference. While some of the attention still focused on the learning curve about the industry itself, many of the questioners had obviously been doing their homework and were looking for more information on retailers and their role in the growth of the pet industry. They were interested in the relative roles of the big boxes versus the small specialty boutiques versus the mass merchandisers and so on. Clearly these investors are taking our industry seriously enough to pay close attention.

My most recent presentation was a phone conference involving over 65 retail investment companies from around the world. We actually ran out of time for all of the questions and I have been getting one to two calls per day as follow-up ever since the conference. The vast majority of the questions from this group have centered on the role private label has been playing in the marketplace. How much do retailers look for their own store label to be on a product? What are the challenges for manufacturers to meet these demands? What are the pitfalls for major national brands looking to move into the mass merchandise arena? And on and on.

Ironically, many of these investors are looking for opportunities to invest in the pet industry but are not sure where to look for information. There are not many comprehensive databases out there giving the important sales and purchasing data needed. Even the US Census Bureau data does not have a specific pet segment. As we are growing into a serious retail segment, the need for this type of data has become increasingly important. APPMA, as you know, has been collecting industry data on a broad level since 1994. We are looking at doing a more detailed study to help fill the need for this information. Based on the results of my recent conference presentations the timing is right. I look forward to your cooperation as we move forward. If you have any ideas on how best to do this please let me know at bob@appma.org.