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The Australian pet industry is large by population standards, being conservatively valued at approximately US$3.8bn/annum (around A$4.62bn annually). In aggregated terms, the pet care industry is among the largest in Australia, both in terms of turnover and employment. By way of comparison, sales of other major Australian industries are approximately as follows (Australian Bureau of Statistics - ABS - 2003): Meat for human consumption US$4bn (A$4.86bn) Poultry and poultry products US$2.63bn(A$3.20bn) Cheese and curd US$1.59bn(A$1.93bn) Bread US$1.37bn(A$1.66bn) Chocolate confectionary US$1.28bn(A$1.55bn) Expenditure on pet food alone has been estimated as US$1.55bn (A$1.88bn) annually. Of this total annual expenditure, it is estimated that 59% is spent on dogs and 26% on cats, but this may be an underestimate, given that ‘specialty’ expenditure on smaller groups of pets is not formally recorded in ABS or (economics company) BIS statistics. However, it is safe to say that Australia has been predominantly a ‘dog and cat’ market. Pet ownership in Australia has been changing over the last decade, but there is considerable difficulty in achieving accurate statistics as, outside of council registration systems, sampling is the only real method to ascertain ownership levels. Dog and cat ownership has been slowly declining, cats since 1999 and, at least, partly as a result of bad press in relation to environmental damage allegedly caused by domestic cats kept outside the home. Dog ownership has declined much more slowly since around 2003. On the other hand, fish ownership and fish varieties kept has increased, bird ownership is static to increasing, and reptile ownership is rising very quickly off a small base. There is little real information on guinea pigs, rabbits, ferrets, rats and mice. Note that hamsters/gerbils are not allowable imports into Australia and are not kept as pets for this reason. Pet ownership in Australia also includes native species, particularly birds (budgerigar, cockatoo, galah, lorikeet) and reptiles (native species). There are many clubs and events that owners can take their pets to, including shows, swap meets, charity walks. Pet ownership really is ‘part of life’ in Australia.   Pet Demographics ABS suggests that pet ownership is weighted towards female, buyer, head of family and more often employed. Thus, families with children, ‘empty nesters’ (couples or singles whose children have grown up and left home), homosexuals, tradespersons and collectors are relatively over-represented in pet ownership demographics. Those who live in apartments and young singles are under-represented as pet owners, most likely because, until recently, most apartments banned pets, and many young singles are also tenants and not property owners (and many landlords do not allow pets). Australian pet owners are happy to spend money on their pets and treat them increasingly as family members. Up to 80% of pet dogs and 93% of pet cats are desexed, and more then 85% are identified by tag or microchip. More than 95% of pets are regularly wormed with vaccination levels a little lower, and most pet owners are responsible, training their pet to obey, picking up their droppings and exercising them regularly. Table 1: Claimed Pet Ownership in Australia (BIS Schrapnel report, 2007) Total ownership     Cats 2.43m Does not include semi-owned or un-owned cats Dogs 3.75m Only includes dogs registered with local councils Fish 20m Thought to be a significant underestimate, given that annual trade is in the order of 19m fish. Birds 9m These pets are not subject to survey statistics, so this may not be a true figure. Other, i.e. rats, rabbits, reptiles, guinea pigs, horses 3m May not be a valid figure as these pets are not registered or recorded.

General view of the PIAA’s Expo 2008. (Picture: Courtesy of the Pet Industry Association of Australia.) Dog grooming competition under way at Australia’s Expo 2008. (Picture: Courtesy of the Pet Industry Association of Australia) It is believed that over 20 million fish are kept by Australian aquarists, but this could be a “significant underestimate”. (Picture: AQM/PT Photo Library.) At probably 9 million, bird ownership is pretty static or slightly increasing. (Picture: AQM/PT Photo Library.) There is little information regarding the number of small mammals, such as rabbits, currently being kept by Australian hobbyists. (Picture: AQM/PT Photo Library.) Reptile ownership is rising quickly…from a small base. (Picture: AQM/PT Photo Library.)

Australian Culture and Attitudes

Australians are generally known as friendly and relatively outgoing and sometimes blunt in speech. Less well known is the hard working nature of Australians (up to 75% of Australian workers work more than 40 hours per week) and their ability to ‘pull together’ in times of crisis (for example, the Victorian bushfires).

Australians are known as larrikins, a little less respecting of authority, who like a good debate and have a lower need for consensus than many cultures. Australians also have a different ‘culture of negotiation’ to some countries, with a little less bargaining and a tendency to ‘get to the bottom line’ relatively quickly.

These traits make doing business in Australia quite different from other English-speaking countries and other countries generally, and this can be confusing to some first time players in the Australian industry.

Pet Industry Businesses

The industry has well developed sectors, including: - Pet boarding (dog/cat and, increasingly, other pets as well) - Dog grooming. There is very limited cat grooming at present - Suppliers - import/export, livestock, equipment, manufacturing, etc. - Retail - pet shops, including web-based operators - Services - veterinarians, breeders, ‘doggy day care’, funeral services, holidays with pets, trainers, aquarium service persons, etc.

Each sector has a distinct and identifiable culture and operating norms. The industry is dominated by family businesses and a wide variety of business operations ranging from sole traders to US$57.6m (A$70m) businesses, and including multinational players.

In grooming and services in particular, these are dominated by sole traders, while boarding is mainly a family operation with support casual staff.

Retail is undergoing rapid change, with family stores which are not changing into specialty operations rapidly being overtaken by chain groups. Specialist aquarium retail has not done as well as expected to date, however.

Business Opportunities in Australia

As single-person dwellings outnumber group dwellings for the first time (2008), and with increased working hours, people are time-poor, relationship-poor and, increasingly, single. There is, therefore, a change in both pet ownership and pet ownership potential. Recent trends showing higher resale prices for apartments that allow pets is resulting in a slow change to allowing pets in apartments, and this is a significant opportunity for the pet industry.

Cat ownership has the potential to overcome ‘bad media’ effects, with recent animal welfare studies showing that indoor cats suffer no welfare detriment and develop as ‘indoor pets’. Not surprisingly, the industry is already working to develop suitable and innovative ‘indoor cat’ products.

The aquarium sector has significant potential in the packaging of goods and services to achieve low maintenance upgrading of the ‘two goldfish in a tank’ to quality aquarium environments. This is an important opportunity for Gen X, Gen Y and Gen I’s who are used to a services culture, prefer less manual work and are time-poor.

The potential to increase net sales using goods/services packaging as a model has already been successful for computers and home entertainment and is working well for the few specialty pet stores who have trialled it. There is also some evidence from other pet sectors, especially retail, who are running integrated veterinary and grooming services and appear to be increasing foot traffic in store.

Reptiles and amphibians as pets are growing rapidly off a small base, with significant involvement by young boys and men. Again, packaging of goods and services can introduce this new passion more effectively into the market.

Rabbits and guinea pigs have traditionally been kept ‘in the hutch in the back garden’ with little spent on them, but, with the rise of elegant new furniture style housing, there is a small but significant opportunity to ‘bring these pets indoors’. This will result in better care and socialisation for the pet, accompanied by better care and increased spend on these pets.

There is also significant interest in animal behaviour, with seminars, TV shows and other consumer education widely supported. With this has come interest in behaviour products, for dogs in particular.

Traditional and naturopathic medicines, nutritional supplements and even homeopathic medicines are widely accepted in Australian society and widely used in human treatment, so there is an opportunity for high quality similar products for pet use (subject to proposed changes at the Australian regulatory authority).

There is widespread belief that pets are good for individual health, but there is less widespread belief that pets are good for society, possibly as a result of bad press in relation to ‘pet negatives’ (e.g. dog bites) and activists campaigning for reduction in pet ownership. Changing this understanding is a significant opportunity, e.g. through pets at work, pets on public transport, changes to strata laws, etc.

In the UK and after considerable work, the rate of dog ownership is beginning to rise again, so there is evidence the sustained cultural change can occur with good education and good coordination.

Business Threats

Like all countries, there are threats to the pet business in Australia that are partly cultural. The most significant threat is a reduction in net pet ownership and, particularly, dog and cat ownership, without a compensating increase in ownership of other pets in the same demographic. This can be cultural and caused by increasing single person households, increasing the percentage of the population living in apartments, etc. However, it can also be the result of direct action by groups who are either actively seeking to ban pet ownership or are simply making rules restricting responsible pet ownership as ‘the easy way out’.

Groups such as Animal Liberation and PETA have active and absolute policies that people should not own companion animals at all. Their activism is subtle, though - policies trying to ban pets from pet shops, trying to ban the breeding of ‘hybrid’ dogs, trying to put restrictive standards on the breeding of dogs and cats - attacking the issue from multiple angles. For a Trade Association, this is a real challenge.

The media play an active (if unwitting) part in this - bad news and conflict will always get media inches, while good news stories about pets have a harder time. Add this to the cultural problem of ‘government by minority’ (also known as government policy developed by the noisiest advocate) and there is an ongoing problem of bureaucrats who will implement bad policy simply to stop the activists from annoying them.

Finally, there are the demographic and cultural issues in the workforce. Increasing productivity and increasing hours of work in a culture that already works hard, means less time to spend on pets and less desirability of the workload associated with pets.

Other Business Issues

Australia is an island with an enviable biosecurity record: it has no rabies, no BSE (mad cow disease), no virulent bluetongue, no avian influenza in poultry or humans, and so on.

This also means a very rigid approach to importation with a strict authority (Biosecurity Australia), very strict border controls (through customs and the Australian Quarantine and Inspection Service). Pet foods are highly regulated (AQIS), as are veterinary products (through the Australian Pesticides and Veterinary Medicines Authority) and negotiating your way though this regulatory minefield without consultants can be difficult.

The other issue worth noting is that, at the present time, business in Australia is almost mono-lingual. Virtually all labeling and business interaction is in English, even though more than 250 languages are spoken by ethnic groups within the country.

Industry Entry Points

The industry is well represented by the peak body, the Pet Industry Association of Australia, which represents all industry businesses - retail, boarding, grooming, supplies (including livestock) and services (e.g. veterinarians, breeders, home care, etc).

The Association owns and operates two trade shows:
- Pet Expo (Oct. 2009 Gold Coast, Qld; Sept. 2010 Melbourne, Vic)
- Regional Expos in South Australia in March 2010

It also operates the two major industry conferences:
- AusBoard (Aug. 2009, Auckland NZ) and
- AusGroom (June 2010, Sydney)
  (see also www.piaa.net.au for more information)

The Association can also provide introductions to members, for businesses wishing to do business in Australia, as well as advice on the regulation of food and animal medicines. It also has its own ‘members only’ trade magazine.

The sector is also well served by independent media, including the trade magazine Pet Industry News (which is the best known of the trade media and includes weekly e-mail communications), Pet Directory and specialist reptile and bird magazines. Advertising is available in these publications as well. There are also a number of consumer magazines, including Dog’s Life, Paws and Claws and Your Pet (all members of the Association).

Conclusion

The Australian pet market is relatively well developed, but still includes a number of business opportunities and cultural changes in the nature of the relationship between people and their pets.

Entry into this fragmented market is still possible for new and innovative products, and there are opportunities to develop some of the pet markets further. The Pet Industry Association is happy to assist businesses in this goal.