elvisIt’s hot in Las Vegas in July.  I mean, uncomfortably hot if you ask me.  Maybe 10 years of living in the Pacific Northwest has made me a warm weather wimp, but facts don’t lie — Las Vegas averages over 100 degrees in July.   So when the SuperZoo tradeshow date was moved for 2013, the only thing I could think of was the possibility I would melt while wearing my show badge.  In reality, repositioning the show time to mid-summer makes a lot of sense, but still Las Vegas in July?

When the numbers of are tallied for this years show, I’m sure it will be a record, both in terms of number of attendees and exhibitors.  It felt like the number of companies renting booth space doubled either as a result of industry growth or the repositioning of the shows timing.  I had the opportunity to spend a few days both on and off the floor and below is a summary of my observations:

  • Performance is Solid, Expect Consolidation.  Overall, industry sentiment remains strong.  Existing companies are reporting solid growth driven by consistent consumer demand and new companies reported strong interest from both domestic and foreign retailers. Both operators and large strategic players I spoke with predicted the pace of consolidation would accelerate. Consolidators are looking for brands they can convert to mass as well as opportunities to develop relationships at independent pet specialty.  The later strategy is no longer lip service, as the dedicated pet channel continues to take share from mass.
  • Large Players are Trying to Peg the Customer. Grain-free, limited ingredient, organic, natural, regional formulations, raw/freeze dried/frozen, made in U.S. There are so many concepts that are currently in play in the pet industry.  However, there is lack of fundamental research as it relates to what is actually motivating consumers to transact.  As major pet food companies contemplate their next deal, the proof points inherent in any strategy need to be as developed as possible in order to motivate an acquisition.
  • Small Companies are Innovating We met with a number of small companies who were engaged in dialog at the show by the major pet specialty retailers.  This is a sign that retailers perceive that their offerings are innovative enough to draw traffic and do meaningful turns.  While I don’t think companies with limited SKUs are going to be able to compete with large product providers long term, we do see moment in time opportunities and for some that time is now.
  • Competition for Petco and PetSmart Continues to Mount. When we look at the growth in independent chains such as Petsense and Pet Food Express, it is clear to us that these concepts are resonating with consumers in a meaningful way.  You simply don’t get that sort of box growth without consumer demand. These retailers had a more open presence at the show and a number of product providers were discussing their positive experiences with them.  I continue to believe the proliferation of these concepts is good for the industry.

If you have been reading my blogs, you know I entered this year a skeptic, maybe even a pessimist, albeit a relative pessimist.  Based on the financial results we are seeing from core public companies, the economic data we are seeing related to the industry and the sentiment we experienced at the show, I am officially off the couch and on the bus with the bulls, maybe just in the back seat.

/bryan