Petfood Industry Electronic Newsletter July 18, 2006

July 18, 2006
Volume 6, Number 14

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Here's what's been happening lately:

Industry news

Mars anticipates Romanian petfood market
Masterfoods Romania, an arm of Mars Incorporated, has reportedly expressed interest in opening a production facility in Romania once the petfood market has sufficiently developed to guarantee the profitability of the business. The Romanian petfood segment is expected to witness considerable growth over the following years.

“The petfood market in Romania is especially made up of imports for the very reason that it is under development,” said Ilinca Burlan. Data released by the National Statistics Institute point to a 700% increase in the petfood market during the 1999-2005 period in Romania.

The first plant manufacturing petfood in Romania is now under construction in Buftea by the Nordic group. Investments in this project are estimated at more than 5 million Euros, and the production facility will encompass approximately 1,600 square meters.

Petco agrees to US$1.8 billion buy-out deal
Petco Animal Supplies has agreed to be taken over by Leonard Green & Partners and Texas Pacific Group for US$1.8 billion in cash and assumed debt. The deal is the latest in a string of leveraged buy-outs of specialty retailers and marks the second time this private equity group has taken the pet supplies company private in the past six years.

Leonard Green and Texas Pacific agreed to buy the pet store chain for US$29 a share. The buyers will also assume about US$140 million in debt. The deal is expected to close by the fourth calendar quarter of 2006, subject to the approval of Petco shareholders and regulators. For 20 business days until August 10, Petco may solicit other bids under certain conditions.

Petco and its major pet store chain rival, PetSmart, flourished early this decade. CIBC analyst Vivian Ma said the price looked high, given what she sees as tough times for the pet supplies specialists. “I think there's been struggling with customer traffic with competition intensifying,” Ma said. She said discounters like Wal-Mart Stores, and particularly Target, were “doing very well, encroaching on the market.”

The last time Leonard Green and Texas Pacific led a buy-out of Petco in 2000, the deal was worth about US$624 million. The return on investment was substantial, as they raised US$275 million when Petco went public.

Lamb joins AFIA as director, membership & services
The American Feed Industry Association (AFIA) recently announced that Kathy Lamb has joined the staff as director, membership & services. Lamb has seven years of leadership experience in membership, marketing and event management with several associations. Most recently, she served as director, membership and marketing for the Coalition of Government Procurement, and previously worked for CompTel as well as several packaging associations. In addition to her membership promotion and retention duties for AFIA, she will be heading the co-located Feed Expo, as well as sponsorship and advertising efforts for publications and major events.

BSE confirmed in Manitoba cow
Final test results have confirmed bovine spongiform encephalopathy (BSE) in a mature cross-bred beef cow from Manitoba, Canada. The Canadian Food Inspection Agency (CFIA) conducted a comprehensive investigation. Officials confirmed the animal was purchased by the owner as part of an assembled group of cattle in 1992. This means that the animal was at least 15 years of age and would have been born well before the 1997 introduction of Canada's feed ban.

Sergeant's announces Stichler promoted to VP
Sergeant's Pet Care Products has announced the promotion of Caryn Stichler to vice president of marketing. Stichler previously served as director of marketing. In her new position, Stichler is responsible for product management and marketing services. Stichler has been with Sergeant's since 1997.

Kemin receives Superior rating for food safety practices
The American Institute of Baking (AIB International) recently awarded Kemin Industries, Inc. a Superior rating during a recent audit. This rating, AIB International's highest, assures that Kemin products meet or exceed stringent industry standards for food safety. Efforts by every member of the manufacturing, maintenance, shipping and quality groups allowed Kemin to score 920 points out of a possible 1,000.

CPM acquires Wolverine Proctor & Schwartz
CPM, a leading equipment provider for particle size reduction and pelleting, had announced the acquisition of the assets of Wolverine Proctor & Schwartz LLC. Wolverine Proctor is a global leader in the design and manufacture of thermal processing equipment and systems in food, chemical, tobacco and textile processing industries. The new company, to be called Wolverine Proctor, expands the CPM equipment and technology portfolio. The new products complement many CPM application areas such as extrusion.

UK-based Wolverine Proctor & Schwartz Ltd. was not part of the acquisition. It is a separate legal entity, neither a subsidiary nor a parent of the new Wolverine Proctor, and remains under the ownership of the previous owners of the defunct US-based company. CPM’s holdings include California Pellet Mill, Roskamp Champion, Beta Raven and Century Extrusion. CPM has more than 450 employees and production facilities in the Americas, Europe and Asia.

Skyberg elected to SANA Board
Aaron Skyberg of SK Food International has recently been elected to the Soyfoods Association of North America (SANA) Board of Directors. The Board of Directors is made up of 11 SANA members. Skyberg has been with SK Food International for five years. He is responsible for providing sales and marketing support in all areas relating to Certified Organic and Conventional Non-GMO agricultural commodities. Skyberg has played an active role in the soybean industry in many areas including the purchasing and marketing of soybeans.

Süd Chemie AG purchases H. von Gimborn GmbH
H. von Gimborn GmbH was recently sold to the German private equity firm, capiton AG. The transaction, valued at 28 million Euros, closed on June 20, 2006. H. von Gimborn GmbH, based in Emmerich, Germany, is a provider of premium pet care and petfood products in Western Europe. Gimborn manufactures and distributes over 400 different branded cat, dog and small animal products throughout Europe. Some of its brands include ShinyCat and Gimpet Super Premium (cat food), Shiny Dog (dog food), Biokat's and Eurokat's (cat litter), Käse Rollis (cat snacks) and PetCenter (retail outlets in Prague).

capiton AG is a Berlin-based private equity group that invests in middle-market companies in Austria, Germany and Switzerland with an emphasis on the consumer goods, capital goods, services and health care sectors. Süd-Chemie is a leading chemicals producer focused on catalysts, adsorbents and additives. The divestiture of Gimborn is a result of Süd-Chemie's announced decision to concentrate on core activities including catalysts, food and feed additives, foundry products and performance packaging, as well as energy and environmental technology.

Baker wins Animal Nutrition Award
David H. Baker, professor emeritus of Nutrition and University Scholar, Department of Animal Sciences, University of Illinois, was named the third annual winner of the FASS-AFIA New Frontiers in Animal Nutrition Award. The award, jointly presented by the Federation of Animal Science Societies (FASS) and the American Feed Industry Association (AFIA), was designed to stimulate, acknowledge and reward pioneering and innovative research relevant to the nutrition of animals that benefits mankind and the nutritional value of foods from animals.

Market data

Each month the Petfood Industry E-newsletter will bring you the latest market data available from several different sources including Euromonitor, Information Resources, Inc. (IRI) and ACNielsen.

Today's market research data chart comes to you from: Information Resources, Inc.

Total US food, drug, mass merchandiser dry cat food sales for the latest 52 weeks ending March 19, 2006.

Source: Information Resources, Inc.

Vendor	US$ sales	% chg vs. 2005	Unit sales	% chg vs. 2005
The Iams Company	$126 million	-10.1%	13.2 million	-12.8%
Meow Mix	$101 million	15.7%	19.1 million	15.3%
Private label	$80 million	0.0%	20.9 million	-1.4%
Nestlé Purina Cat Chow	$75 million	-7.2%	12.9 million	-8.5%
Friskies	$58 million	-14.4%	15 million	-17.9%
Total dry cat food	$975 million	-1.0%	209 million	-5.0%

Treats show strong annual growth
According to a new report from Euromonitor International, Pet Food and Pet Care Products in the USA, dog treats are showing strong performance in the US market, with the treats and mixers sector showing average annual growth of 5.8% from 2000 to 2005.

The trend toward functional treats became increasingly popular during the last five years, as dog owners feel good about rewarding their dogs with a treat that also benefits their health. While some dog owners might not believe in giving their dogs vitamin supplements, they do see the benefit of giving their dog a functional treat. Pet owners are also becoming more aware of the importance of preventative healthcare, especially for common issues such as tartar build-up, which makes them more likely to choose functional treats.

According to Euromonitor International, the dog treats sector is driven by impulse sales, and by many non-pet store outlets like hardware stores, convenience stores and garden centers, which are taking advantage of this pet owner reaction by positioning dog treats near their check-out counters.

For more information about Euromonitor International's petfood research, or to purchase reports online, click here.

Product news

Overhead product orienter
A-B-C Packaging has introduced a high-speed overhead orienter that accepts product for palletizing and turns it 90°, 180° or 270° to automatically form the optimal pallet configuration for each product. The orienter can turn bags to form pallets with “butts-out” bag orientation, and rotate cases and trays for pallets requiring specific panel orientation. Servo-powered for smooth handling and reliable operation, the mechanism quickly and gently grips and rotates the product to the proper position during high-speed product accumulation.

Inventory management system
Bindicator's new Mark-4 Yo-Yo® Inventory Management System is rated for use in hazardous environments. The Mark-4 sensor has a 4-20mA output with adjustable span, RS-485 MODBUS communication, and optional i-LEVEL™ vendor management software. The web-based i-LEVEL software can be set up to operate in an Intranet and/or Internet environment, making inventory levels available worldwide. Silos up to 100 feet can be measured with a resolution of 1 cm (0.39 in). With the remote display, up to 99 Mark-4 sensors can be remotely set up and configured and measurement can be requested and displayed.

Research notes

Evaluation of cats fed vegetarian diets and owner attitudes
This cross-sectional study was conducted in order to determine motivation and feeding practices of people who feed their cats vegetarian diets, as well as taurine and cobalamin status of cats consuming vegetarian diets. Thirty-four cats that had been exclusively fed a commercial or homemade vegetarian diet and 52 cats that had been fed a conventional diet for > 1 year were used in the study.

Participants were recruited through a website and from attendees of a national animal welfare conference. Caregivers of cats in both groups answered a telephone questionnaire regarding feeding practices for their cats. Blood was obtained from a subset of cats that had been fed vegetarian diets. Blood and plasma taurine and serum cobalamin concentrations were measured.

People who fed vegetarian diets to their cats did so largely for ethical considerations and were more likely than people who fed conventional diets to believe that there are health benefits associated with a vegetarian diet and that conventional commercial cat foods are unwholesome. Both groups were aware of the potential health problems that could arise from improperly-formulated vegetarian diets. All cats evaluated had serum cobalamin concentrations within reference range, and 14 of 17 had blood taurine concentrations within reference range. Results of this study should aid veterinarians in communicating with and providing advice to such clients.

Source: Wakefield, L.A., Shofer, F.S. and Michel, K.E., 2006. Evaluation of cats fed vegetarian diets and attitudes of their caregivers. J Am Vet Med Assoc 229:70-73.

The evolutionary basis for the feeding behavior of domestic dogs and cats
The definition, sense of taste and meal patterning of domestic dogs and cats can be interpreted in terms of their descent from members of the order Carnivora. The dog is typical of its genus—Canis—in its relatively unspecialized dentition, and a taste system that is rather insensitive to salt. The preference of many dogs for large infrequent meals reflects the competitive feeding behavior of its pack-hunting ancestor, the wolf Canis lupus. However, its long history of domestication, possibly 100,000 years, has resulted in great intraspecific diversity of conformation and behavior, including feeding.

Morphologically and physiologically, domestic cats are highly specialized carnivores, as indicated by their dentition, nutritional requirements and sense of taste—which is insensitive to both salt and sugars. Their preference for several small meals each day reflects a daily pattern of multiple kills of small prey items in their ancestor, the solitary territorial predator Felis silvestris. Although in the wild, much of their food selection behavior must focus on what to hunt, rather than what to eat, cats do modify their food preferences based on experience. Food preferences in kittens during weaning are strongly influenced by those of their mother, but can change considerably during at least the first year of life.

Source: Bradshaw, J.W.S, 2006. The evolutionary basis for the feeding behavior of domestic dogs (Canis familiaris) and cats (Felis catus). J Nutr 136:1927S-1931S.

Positions available

Our help wanted listings aim to inform petfood industry professionals about employment opportunities worldwide. Contact our sales staff at henson@wattmm.com or stadel@wattmm.com for more information on placing a listing in upcoming issues.

Sales position with Trouw Nutrition International--A Nutreco company
Due to our continued growth and focus in the companion animal industry, we are looking to fill a new sales position in the California/west coast USA area. The ideal candidate will have a BS degree in Animal Science, with a minor in marketing or related fields, or have extensive experience in the companion animal industry. The position will be predominately working with manufacturers of dog and cat food, with some responsibility working with the equine industry. Trouw Nutrition International's Pet Food Division is the leader in supplying value-added blended premixes and base mixes and specialty products to the petfood industry. We have our own basic branded products, as well as an extensive database of unique and difficult-to-source ingredients, along with one of the only AIB-certified plants to blend them for this industry. Naturally, extensive travel will be required for a job of this nature. We offer a competitive salary and benefit package, along with 401K savings and a performance-based bonus program. The rapid growth of our company continues to open up opportunities for career advancement. If you are interested in joining an aggressive, results-oriented team that believes in having fun while we work, please contact Chuck Hayden at +1.573.756.7799, or +1.314.422.2173, E-mail: chuck.hayden@nutreco.com.

Technical services manager
A petfood manufacturer is looking for a person with the following qualifications:

Prior experience in the petfood industry;
Food Science or Animal Science degree; and
Experience in quality and food safety management.

Position will be responsible for all aspects of quality control. Will oversee four quality control technicians; and implement, oversee and update all quality procedures and manuals. Will coordinate testing of all raw materials and finished products to assure they meet quality standards. Must be self-motivated and organized. Computer skills a must. EOE. Send resume, including salary requirements, to: Hagen Pet Foods, Inc., PO Box 29, Waverly, NY 14892 USA. E-mail: human.resources-hpf@rchagen.com.

References

Watt Books – Weekly Specials
Every week or two a new special will be listed. This may be a new book or an opportunity to purchase a book at a reduced price.

Contact information

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