The U.S. Equine Market: Feed, Health Care and Services for Horses

Table of Contents

Chapter 1: Executive Summary

• Scope of Report
• Report Methodology

Introduction

• History of the Horse
• A $100 Billion Impact in 2003
  • In 2008, the Perfect Storm began
• Growth Projection to 9.3 Million Horses in 2010
  • Where the Opportunities Lie
  • Sources of Information for Equine Owners
  • Figure 1-1: Information Sources

The Feed Marketers

• Figure 1-2: Company Shares of the Equine Grain and Concentrates Segment of the Feed Market, 2009
• Regional Mills: A Force to be Reckoned With
  • Figure 1-3: Locations of Regional Feed Companies in North America
• Where Hay Fits in
• Supplements Also Face Harsh Criticism
• Hay: The New Competition
  • Beyond 2009

Equine Health Marketers Face Similar Competitive Threats as Feed

• Table 1-1: Growth Rates, by Company, 2007-2008
• Colic and GI Issues Number One Concern Among Horse Owners
• De-Worming Products
  • Figure 1-4: Leading Equine Health and Nutrition Products Purchased at Retail, 2007
• Brakes put on Deworming Market Growth
  • Competition from "Natural" Worming Products
• The Ulcer Treatment Category also faces intense Competition from Natural Products as well as Alfalfa Hay
  • Antacids
  • Herbs Heal Ulcers
  • Generic Omeprazole
  • Alfalfa hay: Simple and Inexpensive Ulcer Protection
• The Health Care Competitive Landscape
  • Table 1-2: Post-Merger Sales, Based Upon 2008 Sales (in $ millions)
• The Middlemen: Veterinary Supply Companies Servicing Equine Veterinarians
  • Table 1-3: Veterinary Supply Companies, Ranked by Revenues, 2008-2009
  • Equine Services, a $13 Billion-Plus Market
  • Figure 1-5: Equine Services, Shown as Shares of Total Services Category, 2009
  • Over 40% of horse owners rely on their vet for health information
  • Farriers, and Other Hoof Care Professionals, are Often Overlooked by Marketers
  • Dental Care Becoming Routine
  • Table 1-4: Poll: "How often do you have your horse' s teeth floated?"
  • Horse Trainers: Key Influencers
• The Economy
• Horse Supply and Demand
• There is Some Good News
  • Opportunities in repair of large-ticket items
  • Figure 1-6: New Horse Trailer Purchase Plans, Poll: "Will you purchase a new horse trailer in the next year?"
• Horsemanship is a Lifestyle

Chapter 2: The Horse Population

• Introduction
• The Equine Population in the US: 7.3 Million are Considered Pets
  • Figure 2-1: Number of Horses and Ponies in the United States, Inventory, 2002
  • Figure 2-2: Number of Horses and Ponies in the United States, Inventory, 2007
  • Between 10 and 13 Million Horses in the United States
  • The Perfect Storm
  • 40% of Respondents Reduced their herds in 2008
• Growth Projections
  • Figure 2-3: U.S. Horse Population Growth, 1985-2012E (in millions)
• State-by-State Analysis
  • Texas: Almost One Million Horses
  • Texas Horse Incentive Fund Bill Signed by Texas Governor
  • California: 0ver 700,000 Horses
  • Florida: 500,000 Equines and Growing
  • Table 2-1: Top Three States' Equine Population Growth, 2003-2009
  • Other Key States: Oklahoma, Kentucky, Ohio, and Missouri
  • Table 2-2: Breeding Statistics, by State, 2007
• Horses, by Use
  • Table 2-3: U.S. Horse Population, by Use (in millions)
  • Figure 2-4: Horse Population, by Use, 2009 (as a percent of total)
• How are Horses Used?
• Horse Population, by Breed
  • Quarter Horses: America' s Choice
  • Figure 2-5: Quarter Horse Registrations, 2003, 2007, 2008, 2012E Racing Thoroughbred Headcount Overstated by 100%
  • Health of the Thoroughbred Industry
  • Figure 2-6: Thoroughbred, Price Per Yearling, 1998-2008
  • Table 2-4: Average/Median Price Per Yearling, 1990-2008
  • 2009 Foal Crop lowest since 1997
  • Figure 2-7: Annual North American Registered Thoroughbred Foal Crop, 1999-2009
  • The American Paint Horse: New registrations decrease by 45%
  • Still, there are about 600,000 Paint Horses in the U.S.
  • Figure 2-8: Paint Horse Registrations, 2003, 2007, 2008, 2012E
  • Figure 2-9: U.S. Horse Population, by Breed, 2009 (percent and in millions)
• Data Discrepancies Abound
  • Figure 2-10: Horse Ownership, Types of Horses Owned (% of total mentions)
• "Other" Horses Comprise About 40% of the US Population
  • Gaited Horses: One million horses, and 35 different breeds
  • Mustangs
• Growth Despite Lower Registrations
  • Boutique Horses are a Viable Marketing Opportunity
• Where are All These Horses Kept?
  • Figure 2-11: Horse Boarding vs. Keeping at Home, 2006
  • Unwanted Horse Coalition Survey: Over 20,000 interviews with Horse Owners!
  • Horses and acreage
  • Table 2-5: Poll: "How many acres are there where your horse lives?"
  • Figure 2-12: Horse Acreage

Chapter 3: Horse Owners and Caretakers

• The American Horse owner
  • She' s 47 and Married and Owns a Single-Family Home
  • Figure 3-1: Income Level of Horse Owning Households
  • 3.9 Million Households Owned Horses in 2008
  • Figure 3-2: Trended Pet Ownership as a Percent of the U.S. Household Population
  • Figure 3-3: Number of U.S. Households That Own a Pet versus the Number of U.S. Households That Own Equine (in millions)
  • Figure 3-4: Number of Horses Owned by Tenure, Presence of Children, Primary Product Purchaser
  • Figure 3-5: Horse Ownership
• Horse owners by Segment
  • Professional Owners
  • Recreational horse owners
  • Figure 3-6: Number of Events Participated in During the Past 12 Months
  • Casual and Intensive Recreational Owners
  • Figure 3-7: The Equine Market Segment Overview
• Horse owners by Discipline
  • Western Disciplines
  • Reining: Interest and Spending Surges: What Recession?
  • Roping
  • Roper Demographics
  • Figure 3-8: Demographics of USTRC Team Ropers, by Age and Gender Characteristics (percent)
  • Figure 3-9: The Stereotypical USTRC Team Roper
  • Barrel Racing
  • Barrel Racer demographics
  • Cutting
  • Cutter Demographics
  • Team Penning
  • Team Penner Demographics
  • Ranch versatility events
  • Trail Riding: The largest number of participants!
  • Trail Riding is family-oriented, and often FREE
  • Trail Rider Demographics
  • What About Endurance Riding?
• English Disciplines
  • Dressage
  • Dressage Rider Demographics
  • Eventing
  • Eventer Demographics
  • Hunters and Jumpers
• Natural Horsemanship
• Sources of Information for Equine Owners
  • Figure 3-10: Information Sources
  • RFD-TV: 9.4 Million Weekly Adult Impressions

Chapter 4: Equine Feed Products and Companies

• A $9 Billion Industry
• Feeding Defined
  • No Grains or Concentrates
• The Costs of Feeding Horses
  • Figure 4-1: Dollars Spent Feeding Horses in the United States, 2008-2009
  • Equine Feeding, One of the Top Two Annual Expenses
  • Figure 4-2: Items Currently Owned, Amount Spent for Items in the Past 12 Months
• The Companies Don' t Divulge Information
  • Figure 4-3: Company Shares of the Equine Grain and Concentrates Segment of the Feed Market, 2009
  • Table 4-1: Two Industry Leaders, at a Glance

Florida Market Analysis

• Top Five Companies Control 75% of Florida' s Market
  • Table 4-2: Volume Share of Equine Feed in Florida Market, by Manufacturer, 2008
  • Figure 4-4: Volume Share of Equine Feed in Florida, 2008

The Producers

Land O' Lakes Purina Feed

• The Acquisition in 2001
• History
• The Parent, Land O' Lakes
  • Figure 4-5: Land O' Lakes Revenue, by Segment, 2008 (in $ billions)
  • Feed Segment Reorganized in 2008
  • Feed Mills Operating Below Capacity in 2008
• The Products and Brands
  • Lifestyle Feed Brands
• Feed Division (LOL/Purina) Financials
  • Table 4-3: Purina (Land O' Lakes Feed Division) Net Sales, 2004-2009E (in $ millions)
  • Figure 4-6: Purina (Land O' Lakes Feed Division) Revenue, 2004-2009 (in $ billions)
• 2009 Outlook for Land O' Lakes and Purina
  • Sales Suffering at Land O' Lakes, but 2009 Earnings up 35%
• Purina Mills Horse Business Group
  • Purina is About Education
  • Purina Market Share Steady
• Purina Mills Products and Brands: Strategy remains Purina' s #1 Product
  • Strategic Strategy Ads
  • Horseman' s Edge # 2
  • Equine Senior: #1 in Senior Feed
  • Ultium: Breakfast of Champions
  • Purina offers Free Feeding Trial for One Horse
  • New Product Line: WellSolve
  • Competition to WellSolve
  • A note about the Research for WellSolve L/S and Special Needs Horses
  • About One Half of Purina Dealers Stock WellSolve
  • Price is Top of the Line
  • Unique Full Scoop Formula for Weight Control
  • Marketing WellSolve to Veterinarians
• Production and Distribution
  • The Role of the 850 Local Cooperatives
• Sales, Marketing and Advertising
• Research and Development: Over $13 million Spent in 2008
• Competition, According to Purina
  • Farnam Platform: Made by Purina
  • Farnam Platform and Tractor Supply
  • Platform: Uphill Battle
  • Two-Stop Shopping

Cargill

• Cargill and Nutrena, a Rich History of Acquisitions
  • Cargill Financials
  • Table 4-4: Cargill Finances at a Glance
  • Cargill is the Largest Privately Held Company in the United States
• Closing Feed Plants
• Products and Brands
  • Nutrena is the Brand Leader in Equine Feed in the United States
  • Nutrena SafeChoice: Competes with WellSolve L/S at half the price
  • Nutrena LiteBalance Competes with WellSolve W/C at half the price
  • EnergX: Revolutionary Oat-Replacement Product
  • Figure 4-7: Glycemic Index When Fed at Equal Energy Levels
  • Cargill' s Other Brands: ACCO, Agway, Prime Quality
• Sales and Marketing
  • Team Nutrena
  • Nutrena Partners With Chris Cox in 2009
• Nutrena R&D, not exclusively equine
  • Nutrena' s Focus is Nutrients not Ingredients
  • Do ingredients REALLY matter?
  • Take Home Message to Equine Feed Consumers: Buyer Beware
• Nutrena Targets Horse Owners Concerned About Safety
• Nutrena' s Competition

Second-Tier Companies Battle for Market Position Behind Purina and Nutrena

Manna Pro and Walmart

• The Company
• Calf-Manna: Not Just for Calves
• Manufacturing and Distribution
• Equine Product Line

Mars, Inc.

• Buckeye
• Seminole Feed, Mars Horsecare team up
• Major Marketing Push in the United States
• Three Senior Feeds from Buckeye
• Hay Replacement Products
• Doane Petcare Purchase

Cavalor: New Feed Introduced in the United States

• The Products
• Ultium' s New Rival is Cavalor

Regional Mills: National Influence

• Over 100 Different Brands Recommended by Veterinarians
  • Figure 4-8: Locations of Regional Feed Companies in North America

The Southeast Market

• Seminole: A Regional Company with National Reputation
  • The Products
  • Retail Store Personnel "SOLD" on Seminole
  • National Expansion and Public Offering?
• OBS: Ocala Breeders' Supply Snares 11% of the Florida Market
• Southern States, a Virginia-based Farmers' Cooperative
  • Growth Via Acquisitions
  • Southern States' Equine Focus
  • Products and Brands
  • Legends is the #1 Southern States Brand
  • Southern States Offers "No Cost Feeding Trials"
  • Southern States Partners with Triple Crown
  • Senior Feed, #3 in Veterinarian Survey
  • Triple Crown Educates Consumers about Companies Using "Least Cost Formulation"
• Regional Companies Own Ohio
  • Kalmbach Feeds, since 1963, Upper Sandusky, OH
  • Tiz Whiz
  • TDI: Another Ohio-based Premium equine feed company that uses a Fixed Formula
• Pennfield Equine Feed Technologies: Premium Fixed-Formula
  • Kentucky Equine Research
  • Focus on Nutrition of the Performance Horse

Distribution

• Tractor Supply
  • Figure 4-9: Tractor Supply 2008 Segments, as Percent of Total Sales
  • Vendors and Distribution Network

Growth Opportunities for Feed Companies: Equine Disorders and Diseases

• Obese/Overweight Horses: As high as 51%
  • Natural Grazing vs. Overfeeding, Which is the Culprit
  • Insulin-Resistant Horses
  • Equine Polysaccharide Storage Myopathy (EPSM)
• Feed Grass (or hay), as nature intended
• Explosion in New Feed Choices
• Throwing Supplements Away
  • Figure 4-10: Share of U.S. Retail Sales of Pet Supplements and Nutraceutical Treats by Animal Type, 2004 vs. 2007 (percent)
  • Figure 4-11: Share of U.S. Retail Sales by Animal Type and Category: Pet Supplements vs. Nutraceutical Treats, 2007 (percent)
  • Figure 4-12: Form of Horse Supplements Usually Used

Hay and Pasture: The Basics are Back

• Hay Production
  • U.S. Hay Harvest and Production, 2008
• Many Middlemen Involved
• What else is known about Hay?
• What stable hay prices mean for equine feed companies
• Beyond 2009

Feed Stagnant, At Least for Now

Chapter 5: Equine Health Products and Companies

• Table 5-1: Post-Merger Sales, Based Upon 2008 Sales (in $ millions)
• Pre-and Post-Merger Market Shares
  • Figure 5-1: Pre-Merger Worldwide Market Shares
  • Figure 5-2: Post-Merger WW Market Shares

The New #1, Worldwide: Merck

• The Merger
• Merial: Steady Sales and Salesforce Structure
  • Steady sales growth
  • Salesforce Overlap
• Animal Care Just a Small Portion of Merck Business
  • Figure 5-3: Merck Revenues, Post Merger
  • Merial' s Rabies Vaccine # 1 Worldwide
  • Consistently Steady Sales Growth
  • Table 5-2: Merial Sales Growth (in $ billions)
  • Figure 5-4: Merial Sales Growth (in $ billions)
  • UlcerGard and GastroGard
• Over 90% of racehorses have Gastric Ulcers
  • Despite education, horse owners are not that concerned with Equine Ulcers!
• Unpublicized Facts about Equine Ulcers
• Free Scoping to Market UlcerGard
  • More Merial Marketing
  • Selling Prevention instead of a Cure
  • UlcerGard Ad Campaign: Stay on Guard
• Non-prescription Competition for Ulcer Prevention
  • Antacids
  • Herbs Heal Ulcers
  • Generic Omeprazole
• Alfalfa hay: Simple and Inexpensive Ulcer Protection
  • Figure 5-5: How Buffering Capacity of Alfalfa Hay Helps Reduce and Prevent Gastric Ulcers
• New Fecal Blood Test Now Available to diagnose ulcers
• Equioxx: Merial' s Breakthrough in Equine Pain Relief
  • Why Does Equioxx Work without Causing Ulcers?
  • Marketing Equioxx to AQHA Members who Train and Show
  • Injectible Equioxx Debut
• Colic and GI Issues Number One Concern Among Horse Owners
• Merial Vaccine Marketing to Vets
• Merial' s Zimecterin-brand Wormer # 1 Choice
  • Merial' s Other Wormer Brands
  • Merial offers New Satisfaction Guarantee
  • But Renowned Parasite Experts Disagree

Intervet/Schering-Plough Animal Health: Worldwide Market Leader in Animal Health

• Table 5-3: Growth Rates, by Company, 2007-2008
• Intervet: Pioneer in Vaccines
• Intervet: Pioneer in Customer Education
• Banamine, #1 in Brand Awareness in Pain Relief
• Safe Niche in Wormers, for now
• Marketing
  • "We' re For the Horse"
• Over 50% of health-conscious horse owners administer their own vaccinations

Pfizer and Fort Dodge

• Fort Dodge
• Pfizer
  • The Brands
• Fort Dodge: Brand Leader in Vaccines
  • West Nile Innovator # 1 West Nile Vaccine
  • Is West Nile Still A Serious Health Threat to Horses?
  • The Mosquito Shot and the AQHA
• Worming Products Quest and Quest Plus
  • Marketing and Parasite Resistance
• Dewormers are the Leading Health and Nutrition Product Purchased at Retail
  • Figure 5-6: Leading Equine Health and Nutrition Products Purchased at Retail, 2007
  • Brakes put on Deworming Market Growth
  • Rotation vs. Education
• Competition from "Natural" Worming Products
  • DE: Hype or Serious threat to "profitable poisons"?
• New Product Development
  • X-Pel Natural Wormer: The Future of Equine Parasite Control?
  • New Product from Turkey
  • Patent has expired on Duddingtonia flagrans
• Fecal Egg Count: A home test in development?
  • New Zealand Company Launches Equine Fecal Egg Count Kit
• Equimax: Effective and Safe
  • Marketing

Second-Tier Companies

• Bayer: 8% of the Animal Health Market Worldwide
• Novartis Animal Health: 6% market share in animal health
  • Novartis History
  • A New Class of Unique Wormers (AADs) Launched by Novartis

Other Companies of Note

• Virbac S.A.
  • Figure 5-7: Virbac Sales Growth, 2005-2009E (in million Euros)

Central Garden and Pet

• Background
  • CG&P Acquisitions
• Farnam
  • Farnam, the #1 Brand (at retail) in OTC Horse Products
• Sales are Currently Flat at CG&P
  • Pet Products Financials
  • Farnam Sales Increased, 2007-2008
  • Recognizable Brand Name, Website and click-thru Service
  • Farnam' s Wormers
  • IverEase Discontinued Shortly After Launch
  • EquiAid is a Farnam Brand
  • Horse Health, another "Discount" brand
  • Quitt: Cures Wood Chewers?
  • Farnam Product Line, an array second to none

W. F. Young/Absorbine: A Heritage of Innovation Since 1892

• Absorbine Today
• Innovative Products Fuel Demand
  • Stall Safe Disinfecting System
  • Myoplast, the European Secret, is Out
• Growth by Acquisition: Equine America
• One Target Market: Aging Baby Boomers
  • Marketing to America' s Future: Facebook and Horsegirl TV

Boehringer Ingelheim Vetmedica: Growth due to Swine not Equine

• New "Joint Health Management Program" Launched April 2009
• Surpass Acquired from IDEXX
  • Competing head to head with Merial' s Equioxx
• Limited Equine Product Line

The Middlemen: Veterinary Supply Companies

• Table 5-4: Veterinary Supply Companies, Ranked by Revenues, 2008-2009
• Butler Animal Health
  • Growth via Acquisition
  • #1 in Equine Supply
• MWI is #2 in Sales
  • But #1 in Customer Service
  • A 12% average growth rate into 2009
  • MWI Revises 2009 Revenue Expectations
• AHI of Westlake, TX, is Catching Up
  • 2008 Sales Up but Disappointing in 2009
  • Looking for "Selective" Acquisitions to become Number One
• What About Webster? #2 in Companion Animal Supply
  • Expansion and Growth through Acquisition
  • Milburn Equine is Devoted to Horses
  • Webster Financials, 33% higher for 4Q 2009
  • Results of the Acquisition
  • Specialized Sales Force
• PVPL: The Only Veterinary-Owned Distributor
• Why Do Equine Vets Need so much TLC?

Chapter 6: Equine Services

• A $13 Billion Market
  • Figure 6-1: Equine Services, Shown as Shares of Total Market, 2009
  • Figure 6-2: Equine Health Services Shares

Veterinary Care

• In the Top 10 Fastest Growing Professions
  • Figure 6-3: Salary Comparison, Veterinarians vs. Other Health care Professionals, 2008
  • Veterinarian Shortage Predicted
  • Table 6-1: Equine and Mixed Animal Veterinarians, 2006-2012
  • The AAEP
  • Equine Veterinarians: $2.3 billion in Direct Spending
  • The Role of the Equine Veterinarian
  • Table 6-2: The Veterinarian' s Role
  • Table 6-3: Veterinary Expenditures, by Pet Type
• Guarded Future
• Products Bought Through Vets
  • Figure 6-4: Supplements/Medications Obtained from Your Veterinarian versus Other Retail Outlet
• Marketing to Vets
  • Over 40% of horse owners rely on their vet for health information
  • Feed and Supplement marketers are not taking advantage of this phenomenon

Hoof Care

• Improving Knowledge
  • Methods to improve your hoof-care knowledge
  • Table 6-4: Poll: "During the past 3 years, which of the following methods have you used to improve your hoof-care knowledge?"
• Meet the Farriers
  • "Good Old" Backyard Horses can add up to a Billion dollars
  • Figure 6-5: Type of Horses Handled by Farriers
• Barefoot vs. Shoes, a Hot Topic, even among Veterinarians
  • The Do-It-Yourself Craze Is Affecting the Equine Hoof Care Market
  • Barefoot year round
  • Table 6-5: Poll: "Excluding foals and brood mares, what percentage of horses that you provide hoof care for go barefoot year round?"
  • Costs of Routine Hoof Care
  • Figure 6-6: Charges for Hoof-Care Work, by Region
  • Marketing to and Through Farriers: A captive audience
  • Farnam and Farriers Secret
  • Full-time Farriers are a Valuable Marketing Opportunity
  • Footcare in an average day
  • Table 6-6: Poll: "How many horses do you provide footcare for in an average day?"
  • Future Farrier Facts

Dental Care

• 8,000 Equine Dentists in the U.S.
  • State Licensing for Equine Dentists
• Cost of Dental Work
• Dental Care is Becoming "Routine"
  • Table 6-7: Poll: "How often do you have your horse' s teeth floated?"
• Future Outlook for Equine Dental Care
• Market Size Guesstimate

Other Health Services

• Massage
  • Equinology
  • Equissage
  • Other Programs
• Equine Acupuncture
  • Acupuncture Without Needles?
  • Equine Chiropractic

Training and Boarding

• Figure 6-7: Amount Spent on Services in the Past 12 Months
• Transportation: $3 billion and shrinking
• Unregulated and Unaudited
• Race Horses are no longer the Cash Cow for Transporters
• Insurance
  • Mortality Insurance
  • Major Medical
  • Who Insures Their Horses?
  • Figure 6-8: Poll: "Do you buy insurance for your horse(s)?"
  • Pet Insurance: Part of Employee Compensation Packages
  • Markel and Equisure, Current Market Leaders
  • Figure 6-9: Markel Specialty Program Insurance, 2008 Gross Premium Volume ($230 million)
  • Equine Product Marketers offer Insurance
  • Pfizer' s PreventiCare Program
  • Purina May be Next

Chapter 7: Future Outlook and Trends

• Introduction

Unwanted Horses

• The Unwanted Horse Coalition Releases its Survey Data
  • Survey of 128 Colorado Veterinarians
• Wild Horses: 10,000 more than "acceptable" levels
  • How Does the BLM Work?
• Slaughter
  • Pros and Cons to Slaughtering Horses
  • Some Consensus Among the Experts
  • Equine Slaughterhouses Return to the United States: Montana is First
  • On the brighter side of the unwanted horse and slaughter issues
  • Racetracks and the Thoroughbred Retirement Foundation Offer Solutions
  • Every Horse has an Owner. Every Owner Has a Responsibility
  • The Jockey Club Encourages Funding for Proper Retirement of Thoroughbred Horses with New Program
  • Companies Pitch In to Help
  • Horse Rescue Groups Offer Solutions
  • Even Elvis Presley is Helping Rescued Horses
  • FINALLY: No-Cost Gelding of Stallions Used For Breeding
• Natural Horsemanship
• Natural Equine Products
  • Who started this Revolution?
  • Parelli Natural Horsemanship is the Largest and Most Organized
  • Figure 7-1: Growth in Parelli "Savvy Club" Member Revenues, 2005-2008 (in $ millions)
  • Understanding the Revolution
  • Jessica Jahiel, PhD, the Voice Of Reason in the Equine Market
• Senior Horses and Senior People
  • Table 7-1: Baby Boomers, by Age
• Equestrian Communities: A Major Marketing Opportunity
  • The Economy
  • Horse Supply and Demand
  • There is Some Good News
  • Opportunities in repair of large-ticket items
  • Figure 7-2: New Horse Trailer Purchase Plans, Poll: "Will you purchase a new horse trailer in the next year?"
• Horsemanship is a Lifestyle
  • A Market in Flux