1. 1 11 1 IVPD Congress 04/05/2009

2. 2 22 2 Objective

3. 3 33 3 What % of Sales in your practise comes from Retail? Vet Med Retail Survey – Dec 2009 For 58% of vet clinics, retail constitutes more than 40% of their revenues

4. 4 44 4  7 million dogs  1.5 million cats The South African Pet food Market A – Pet Population B.... Important potential on nutritional market Total calories needs SPT 42000 T Total dry petfood 247, 000 T Health Nutritional dry : 17000T

5. 5 55 5 Calorie Conversion = Calories from Prepared Petfood as % of Total Calorie Requirement of Pet Population Dog and Cat Calorie Conversion W. Europe Comparison: S Africa 21 41  Catalyst

6. 6 66 6 Calorie Conversion correlates to Income per Head Calorie Conversion % Developed Markets Dog  Cat  Catalyst GDP/head (nominal) in $

7. 7 77 7 Only 18% of households own a Dog in SA and spend circa R110 per month Canada USA Argentina Brazil Chile Colombia Costa Rica Mexico Peru Venezuela Austria Belgium France Germany Greece Ireland Italy Netherlands Portugal Spain Switzerland United Kingdom Finland Estonia Latvia Lithuania Czech Republic Hungary Poland Slovakia Russia Ukraine Kazakhstan Australia New Zealand Japan China Hong Kong Indonesia Malaysia Philippines Singapore South Korea Taiwan Thailand Vietnam Romania Bulgaria Croatia Slovenia Egypt Morocco Turkey Lebanon India Saudi Arabia UAE Kuwait South Africa 0% 10% 20% 30% 40% 50% 60% 050001000015000200002500030000350004000045000 % Owners of dogs or cats (2005) GDP/head in $ (at PPP)

8. 8 88 8 Summary The South African Pet Food market is emerging Pet ownership should increase with GDP per capita Responsible pet ownership increases $ spent/pet Opportunity for the veterinary profession to accelerate the market potential

9. 9 99 9 A – Market by Channels B – Numerical Distribution The South African Pet food Market Specifics Vet Clinics: 700 Vet Shop: 150 Pet Shops: +/-250 Total dry Value market share (%) Total Value market share (%)

10. 10 What’s new in the South African Pet Food Business (1) For the 1 st time in 2008, Grocery grew faster vs Specialised Trade. +27% in Grocery vs +17% in SPT

11. 11 What’s new in the South African Pet Food Business (2) Premiumisation of the Grocery Channel (products) -8%

12. 12 Premiumisation of the Grocery Channel (Service) What’s new in the South African Pet Food Business (3)

13. 13 What’s new in the South African Pet Food Business (4) Retail Price increase in all channel +/- R 23.5/kg +/- R 27.5/kg +/- R 22.75/kg

14. 14 The Specialised Trade will need to change too! But their “premium” product market is at risk… Vets Petfood Retail relies for >50% on “Premium” products

15. 15 Analysis of the Value Chain differences: SPT vs Grocery RRP VAT excl: 150 ZAR RRP: 117 ZAR Vet average Markup: 35% WRP: 111 ZAR Retail Markup: 17% WRP: 100 ZAR Distribution Costs: 15% COGS: 97 ZAR Distribution Costs: 6% WRP: 94 ZAR The Solution?: SPT Grocery

16. 16 Key Success Factor: Differentiation Differentiation in Products: Health Nutrition The right precise nutritional answer for the specific nutritional requirements of each dogs and cats Differentiation in Service: Advice, Expertise, Merchandising…

17. 17 7 Differentiation according to the consumer expectations Low High Pre-sold products, Price, PURCHASE PROCESS Advice, service. expertise convenience Grocery PLACE OF PURCHASE Prescribers (Breeders + Vets) Specialized Distribution Wet food (canned) PRODUCT Dry, technical, nutritional food, precise Standard dry Market Size Europe : 6 b€ Europe : 2 b€ USA : 6.5 b€ USA : 3 b€ Growth Rate : -10% to +5% / yearGrowth Rate : +8 to +15% / year Royal Canin 03/93 : +28,4% / year Pedigree, Wiskas, Friskies, locals… Royal Canin, Eukanuba Hill’s CONSUMER Nutritional sensitivity Push Business Pull Business