Nestle Purina Petcare Company

Nestle Purina PetCare Company
Company Profile
Publication Date: 29 Sep 2010
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Nestle Purina PetCare Company Datamonitor
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TABLE OF CONTENTS
TABLE OF CONTENTS
Company Overview..............................................................................................4 Key Facts...............................................................................................................4 Business Description...........................................................................................5 History...................................................................................................................6 Key Employees.....................................................................................................8 Major Products and Services..............................................................................9 Revenue Analysis...............................................................................................10 SWOT Analysis...................................................................................................11 Top Competitors.................................................................................................15 Company View.....................................................................................................16 Locations and Subsidiaries...............................................................................17
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Company Overview
COMPANY OVERVIEW
Nestle Purina PetCare (NPP), a subsidiary of Nestl Holdings, Inc., is one of the leading companies in the pet products industry engaged in the manufacturing of pet food products. The company operates in North America, Asia Pacific, Europe, Central America, and South America. It is headquartered in St Louis, Missouri. The company recorded revenues of CHF12,938 million* ($11,949.8 million) during the financial year ended December 2009 (FY2009), an increase of 3.8% over 2008. *The revenue of Nestle Purina PerCare is taken from the latest annual report of Nestle S.A. (Pet care division).
KEY FACTS
Head Office Nestle Purina PetCare Company Checkerboard Square St. Louis Missouri 63164 USA 1 314 982 1000 1 314 982 2134 http://www.nestlepurina.com/
Phone Fax Web Address
Revenue / turnover 12,938.0 (CHF Mn) Financial Year End December
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Business Description
BUSINESS DESCRIPTION
Nestle Purina PetCare (NPP) is engaged in the manufacturing of pet food products. The company operates in the North America, Asia Pacific, Europe, Central America, and South America. The company manufactures primarily two types of products: dog foods and cat foods. NPP manufactures variety of dog foods for adult dogs, puppies, and senior dogs. It markets these products under Alpo, Beggin', Beneful, Busy, Chew-eez, Carvers, Chef Michael's, Dog Chow, Pro Plan, Puppy Chow, Purina ONE, T Bonz, and Mighty Dog brand names. Under the cat foods category, the company manufactures various products for adult cats, kittens, and senior cats. The company produces these products under the brand names Cat Chow, Deli Cat, Fancy Feast, Friskies, Kitten Chow, Kit 'N Kaboodle, Pro Plan, Purina ONE, and Purina Veterinary Diets. It manufactures cat litter under the Yesterday's News and Tidy Cats brand names. NPP also produces cat treats under the Friskies and Whisker Lickin's brand names.
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History
HISTORY
Nestle Purina PetCare was founded as Ralston Purina in 1893 by William H. Danforth, to sell animal feed. It was incorporated in 1894. Wheat Chex was introduced in 1937 followed by Rice Chex cereals, in 1950. In 1957, the company moved from the animal feed market to the domestic dog food market with the introduction of Purina Dog Chow. The company went public in 1962. In 1968, the company acquired Foodmaker, a company engaged in preparing and supplying food for a chain of fast-food restaurants. In 1977, the company acquired Missouri Arena and the St Louis Blues National Hockey League franchise. In 1978, it acquired Bremner Biscuit. During the 1980s, the company bought Continental Baking Company from ITT and also the Eveready and Energizer brands from Union Carbide. In 1986, it sold its domestic livestock feed business, Purina Mills, to a subsidiary of The British Petroleum. Later in 1989, it acquired Beech Nut Nutrition from Nestle. The company spun off its cereals and baby food businesses into a freestanding company Ralcorp, in 1994. In 1995, it acquired Golden Cat, a marketer of cat box filler. Also, the company sold its baking subsidiary, Continental Baking, to Interstate Bakeries during the same time. In 1997, it acquired Edward Baker Petfoods, manufacturer of extruded dry pet foods, from Harrison & Crosfield. In the same year, the company sold its Protein Technologies International subsidiary to DuPont. In 1998, the company spun off Agribrands International, a wholly owned subsidiary, engaged in the international agricultural products business. To focus on pet foods, the company spun off its Eveready battery business as Energizer Holdings, in 2000. The company was acquired by a subsidiary of Nestle, and as a result Nestle Purina PetCare (NPP) was established in 2001. In 2003, the company sold one of its seven Friskies plants to French food processing group Le Graet. In 2004, the company increased its focus on expansion in developing markets, such as India. In 2005, it expanded product line of Beneful brand, under which it offers dog foods, with BenefulB Healthy Radiance and BenefulB Healthy Growth for Puppies. Beneful brand launched Beneful Prepared Meals for dogs in 2006. In the same year, the company launched natural's line of cat food under Purina Cat Chow brand. This product line contains whole grains, real chicken, and salmon. In early 2007, the company recalled all sizes and varieties of its ALPO Prime Cuts in Gravy wet dog food with specific date codes. NPP took this action after it learnt that wheat gluten containing melamine, a substance not approved for use in food, was mixed in the products. During the same time, the company introduced a new design of Cat litter box. This litter box would be sold under the Tidy Cats brand. Further, during the same period, the company withdrew its products that were
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History
marketed under Mighty Dog brand. These products were produced by Menu Foods from 2006 through 2007. The company launched a new litter system called Breeze, which would be marketed under Tidy Cats brand, in 2008. In the same year, NPP introduced a new shredded blend Shredded Blend formula under the brand name Pro Plan. In July 2010, NPP announced its plan to construct a $15 million Learning and Training Center at its Checkerboard Square headquarters. In September 2010, the company acquired Waggin' Train dog snacks business in the US.
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Key Employees
KEY EMPLOYEES
Name
W. Patrick McGinnis Terry Block
Job Title
Chief Executive Officer
Board
Senior Management
President, Nestl Purina Pet Food-North America Senior Management
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Major Products and Services
MAJOR PRODUCTS AND SERVICES

Nestle Purina PetCare (NPP), a subsidiary of Nestl Holdings, Inc., is one of the leading companies in the pet products industry engaged in the manufacturing of pet food products.. The company's key products include the following:
Products: Dog food Cat food Cat litters Cat treats Brands: Alpo Beggin' Beneful Busy Cat Chow Chew-eez Carvers Chef Michael's Deli Cat Dog Chow Fancy Feast Friskies Kitten Chow Kit 'N Kaboodle Mighty Dog Pro Plan Puppy Chow Purina ONE Purina Veterinary Diets Tidy Cats T Bonz Whisker Lickin's Yesterday's News
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Revenue Analysis
REVENUE ANALYSIS
Nestle Purina PetCare recorded revenues of CHF12,938 million* ($11,949.8 million) during FY2009, an increase of 3.8% over FY2008. * Nestle Purina PerCare is a private company and has not released its annual reports. Therefore, revenue analysis is not available for this company.
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SWOT Analysis
SWOT ANALYSIS
Nestle Purina PetCare (NPP), a subsidiary of Nestl Holdings, Inc., is one of the leading companies in the pet products industry engaged in the manufacturing of pet food products. A portfolio of strong products and brands provides a competitive advantage in the market place besides resulting in steady revenues and profits. However, intensified competition could therefore lead to declining sales for the company. Strengths Extensive products and brands portfolio Strong parent support Opportunities Strategic acquisition of Waggin' Train dog snacks business Increasing ownership of pets Changing dynamics of the pet products industry Weaknesses Lack of scale as compared to peers
Threats Increasing competition Increasing demand for organic pet foods Cultural barriers
Strengths
Extensive products and brands portfolio NPP owns an extensive portfolio of products and brands. The company manufactures and markets wide range of dog and cat food products. It provides wide variety of dog foods for adult dogs, puppies, and senior dogs under the brand names Alpo, Beggin', Beneful, Busy, Chew-eez, Carvers, Chef Michael's, Dog Chow, Pro Plan, Puppy Chow, Purina ONE, T Bonz, and Mighty Dog. Further, in the cat foods category, the company manufactures various products for adult cats, kittens, and senior cats. NPP offers these products under the brand names including Cat Chow, Deli Cat, Fancy Feast, Friskies, Kitten Chow, Kit 'N Kaboodle, Pro Plan, Purina ONE, and Purina Veterinary Diets. It manufactures cat litter under the Yesterday's News and Tidy Cats brand names. The company also produces cat treats under the Friskies and Whisker Lickin's brand names. A portfolio of strong products and brands provides a competitive advantage in the market place besides resulting in steady revenues and profits. Strong parent support
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SWOT Analysis
The company draws many of its strengths from its parent company Nestle. Firstly, Nestle has strong brand equity. Many of Nestle brands are associated with quality and are global leaders in their respective markets. The Nestle brand figured at the 58th position in the top 100 global brands ranking of BusinessWeek and Interbrand, a branding consultancy, in 2009. BusinessWeek and Interbrand valued Nestle brand at $6,319 million in 2009. Apart from being a strong corporate brand, Nestle also has a large collection of product brands, which have good market shares across various geographies. Nestle uses the Purina brand name for all its brands which fall under its wholly owned subsidiary, NPP. NPP enjoys strong brand equity of because of its association with Nestle as a parent company. Nestle is also one of the largest food and beverage companies in terms of sales with a sales network operating across the world. NPP stands to benefit from the marketing and distribution network that it can leverage to market its products and enter new markets.
Weaknesses
Lack of scale as compared to peers NPP lacks scale when compared to its competitors in the market. Many of its competitors, such as The Procter & Gamble (P&G) and Mars are much larger in terms of revenues. In FY2009, P&G recorded revenues $79 billion, significantly higher than NPP. Similarly, Mars recorded revenues of $28 billion during the same period. NPP, in contrast, recorded revenues of CHF12.9 billion ($11.9 billion)* in FY2009. The company's small scale of operations may turn out to be a disadvantage in the fiercely competitive market. Lack of scale also reduces the bargaining power of NPP.
Opportunities
Strategic acquisition of Waggin' Train dog snacks business In September 2010, NPP acquired the Waggin' Train dog snacks business in the US. Waggin' Train is one of the leading marketers in the fast growing real-meat dog snacks segment. Within the pet care industry, the dog snacks category has enjoyed higher than average growth, and Waggin' Train has been the segment's fastest growing leading brand with annual growth rates of around 30% over the last three years. Waggin' Train therefore complements NPPs existing business, enabling it to enter the profitable real-meat dog snack segment. Hence, this acquisition would provide a new growth platform and bring new consumers to NPP business. Increasing ownership of pets
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SWOT Analysis
The US pet industry has been growing at a robust pace. The US pet food industry, considered to be one of the largest in the world. As per the 2009-10 National Pet Owners Survey conducted by the American Pet Products Association (APPA), the pet ownership is currently at its highest level, with 62% of all US households owning a pet which equates to more than 71.4 million households. Also in other countries like China, pet ownership is on the rise. China's fast-paced economy and increasing levels of disposable incomes are having a positive impact on the pet industry. Pet ownership in China substantially increased between 1999 and 2008. Driven by the increasing ownership of pets, demand for pet food products is expected to go up substantially in matured markets such as the US and fast developing markets as China. Therefore, the company can capitalize on the growing demand situation. Changing dynamics of the pet products industry The dynamics of the pet products industry is changing. Consumers have become more conscious towards pet care and are willing to go the extra mile for providing best possible care for their pets. Because consumers are now demanding the same luxuries for their pets, the pet products industry is booming. According to the APPA, total spending on all pet products in the US in 2009 topped $45,500 million, more than double the $21,000 million spent in 1996. In 2010, Americans spending on pets is projected to be $47,700 million. This changing dynamics of the pet products industry could provide an excellent opportunity for NPP to expand their businesses further.
Threats
Increasing competition NPP operates in a highly competitive market environment. The company faces stiff competition from companies like Del Monte Foods, Mars, and P&G. Mars has strong presence in the petcare industry with its Pedigree, Whiskas, Sheba, Cesar and Royal Canin brands. P&G's pet care brands like Iams and Eukanuba are serious threat to NPP. Besides, leading retailers are also launching private label products to improve their margins. These private label products are cheaper than branded products. Intensified competition could therefore lead to declining sales for the company. Increasing demand for organic pet foods The demand for organic pet food products has registered an upward trend in recent years. There has been increasing demand for organic pet foods, especially after instances of recall of conventional pet foods in the US. Recently, several companies have recalled their products due to salmonella contamination in their products. As per the US Food and Drug Administration, the recent salmonella contamination originated from a plant in Georgia that produces peanut products in mass production to sell in bulk to various distributors. As a result, more consumers are turning to organic pet products
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SWOT Analysis
which can be fully trusted for safety and health. Continuing trend could have a negative implication for conventional pet food manufacturers like NPP. Cultural barriers Although non-western markets are currently experiencing strong growth rates for pet care products, significant cultural barriers exist which may inhibit sales growth. These include owners believing that home meals are more nutritious and beneficial to their pets than commercially prepared pet food. Many consumers are unaware of the differing nutritional requirements of their pets, and are acutely aware of the price difference between home meals and commercial foods. This may prevent the company from fully exploiting emerging markets.
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Top Competitors
TOP COMPETITORS
The following companies are the major competitors of Nestle Purina PetCare Company
Mars, Inc. Procter & Gamble Company, The Del Monte Foods Company
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Company View
COMPANY VIEW
Nestle Purina PerCare is a private company and has not released its annual reports. Therefore, company view is not available for this company.
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Locations and Subsidiaries
LOCATIONS AND SUBSIDIARIES

Head Office
Nestle Purina PetCare Company Checkerboard Square St. Louis Missouri 63164 USA P:1 314 982 1000 F:1 314 982 2134 http://www.nestlepurina.com/
Other Locations and Subsidiaries

Nestle Purina PetCare Level 6 123 Epping Road North Ryde New South Wales 2113 AUS Nestle Philippines Inc. No. 31 Plaza Drive Rockwell Center Makati City 1200 PHL Nestle Purina PetCare Netherlands Customer Service Response Number 230 VB 3330 Zwijndrecht NLD Nestle Purina Pet Care Guatemala 14 Av. Zone 4 MIXCO 16-70 The Orange County Guatemala GTM Nestle Middle East FZE Jebel Ali, Free Zone, Dubai ARE
Nestle Purina Petcare Viale Giulio Richard 5 20143 Milano ITA Nestle Purina PetCare 1800 Vevey CHE
Nestle Purina PetCare Ltd Newmarket Auckland 1149 NZL
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