Growl From Ipanema Lures Purina to Largest Dog Population
Brazilian dogs are different from canines in Britain or the U.S., Purina (NESN) says, and it’s spent the past two years designing kibble to prove it.
About half of Brazilian households have a dog, more than any other country, according to data tracker Euromonitor, and pet food sales there rose 10 percent to $5.6 billion last year, trailing only the U.S. and U.K. in the $71 billion worldwide market. There’s more growth to grab, as just half the calories Brazilian dogs consume comes from store-bought chow, compared with more than 80 percent in the U.S. and Europe.
To counter slowing growth in divisions like frozen meals and close the gap with market leader Mars Inc. in the faster-growing premium end of the pet-food aisle, Nestle SA’s Purina in April introduced Revena, a multi-million dollar investment and its first pet food designed specifically for a developing country. With local fruits like antioxidant-rich jabuticaba, Revena is “truly Brazilian,” said Purina’s Latin American president Fernando Merce.
“Consumers told us that they wanted something that expressed a sort of Brazilian-ness -- the spirit of being Brazilian,” said Merce, who has two dogs at home, a Labrador (Cricket) and a Coton de Tulear (Ollie.) “There wasn’t a brand that captured that.”
Brazilians love their dogs. In 2012, a hotel opened in the posh southeastern city of Belo Horizonte that is designed for doggie trysts, with heart-shaped mirrors and dim lighting, according to the New York Times. Rio de Janeiro hosts a canine Carnival where dogs are dressed in wild costumes -- Snow White is a popular choice -- and prance down the streets of the city’s Copacabana neighborhood. During the upcoming World Cup soccer tournament, owners will outfit their dogs in the yellow uniform of the national team.
All this pooch pampering is fueled by Brazil’s expanding middle class, which now encompasses 81 percent of households, up from 49 percent in 1989, according to McKinsey & Co. Many live in cities, where declining fertility rates and increasing life expectancy have made pets more valued companions, Euromonitor analyst Paula Flores says. While soaring inflation and reduced disposable income have recently hurt demand for products like Coca-Cola Co. (KO)’s beverages, growth in the pet-care market hasn’t subsided.
Nestle could use a hit with Revena, as the world’s biggest food company is leaning more on its $12.6 billion petcare unit now that growth in other divisions has slowed. Petcare sales excluding the impact of currency swings and acquisitions rose 6.8 percent last year, and increased more than 10 percent in emerging markets. Still, Purina trails closely held Mars, which in April bought three Procter & Gamble Co. (PG) pet-food brands for $2.9 billion to cement its worldwide lead.
Nestle rose 0.6 percent to 69.95 Swiss francs in Zurich yesterday. The market is closed today for a holiday.
Purina and McLean, Virginia-based Mars each hold more than 20 percent of the Brazilian dog-food market, yet on the premium end, which is growing at double the clip of mainstream chow, Purina’s Pro Plan brand trails both Mars’s Royal Canin and Hill’s Science Diet, made by Colgate-Palmolive Co. (CL)
“Nestle really has to fight,” said Flores, of Euromonitor. “Mars has the upper hand here with Royal Canin so Purina has to bring something totally new to the market.”
To create Revena, Purina asked Brazilians what qualities mattered to them in a dog food, gathering a list of 50 potential ingredients. Most were scuttled -- guarana, for one, has too much caffeine. Purina settled on the acerola and jabuticaba fruits, which are native to the region, along with brown rice and animal proteins. Then came several months of feeding tests, which measured everything from stool odor and volume to subtle changes in a dog’s coat.
The result is six varieties of dog food that Purina’s Merce says “captures the essence” of Brazil. In case any dog owners fail to grasp that, Merce has hired as many as 2,000 sales reps, dubbed “shelf experts,” to talk up the brand at pet stores and vet clinics around the country. A 15-kilogram bag costs about 129 reais ($58), and Purina, for the first time, is offering a money-back guarantee.
That’s meant to entice consumers like Simone Gonzaga, who currently can choose among 500 dog-food brands in Brazil. A secretary who lives in Guarulhos, near Sao Paulo, Gonzaga spends about $125 a month on food for her 7-year-old husky Barto, who prefers Premier, a Brazil-based upscale brand. Locally-sourced ingredients like jabuticaba “are not important to me,” she said.
They are for Elizabeth Zago Spanjer, a financial manager in Sao Paulo who owns eight dogs. She hasn’t heard about Revena, but said she would try it. Marcia Jerico, who owns a Sao Paulo veterinary clinic, said the tropical fruits are a good way to add fiber to dog food without resorting to artificial supplements.
Mars has no plans to develop a Brazil-specific brand, says Carlos Dieppa, general manager of its Brazilian petcare business. Royal Canin offers more than 100 varieties based on the breed, size, age, and nutritional needs of the pet, and last year introduced a blend just for tiny toy dogs, which are popular in Brazil. The company, which derives 6 percent of its $33 billion in sales from Latin America, has three pet-food factories in Brazil and will open one more by early 2016.
“The dog is the same dog in the U.K. and in the U.S. and in Latin America,” Dieppa said by phone. “It’s not about a local ingredient. We stick to what’s best for the dog, even though our marketers don’t like that careful approach.”
Merce, of Purina, sees it differently. To lump pooches of all nations together is “a boring view of the world.”
To contact the reporter on this story: Matthew Boyle in London at firstname.lastname@example.org