Periodic Reporting for period 1 - PetLife (INTRODUCTION OF A RANGE OF L-CYSTEINE DERIVATIVES AS NUTRITIONAL ADDITIVES INPET FOOD, TO REDUCE OBESITY AND LENGTHEN ANIMAL LIFE)
Reporting period: 2016-03-01 to 2016-08-31
Humanisation of pets is one of the most important trends in pet food industry. As these pets are increasingly humanised, consumers become more willing to spend greater sums on top quality foods, and more likely to spend money on their pets health before their own. The steady increase of pet food sales is mainly driven by high-end products, as pet owners’ willingness to get the best for their pets strengthened.
Technical objectives: i) optimise the process of obtaining the derivatives of L-Cysteine at an industrial level, ii) scale up the current process to industrial readiness, and iii) evaluate performance and fine tune the scaled PetLife plant to enable Axeb Biotech´s entry to market.
Commercial objectives have also been established for our project: i) development of a business innovation plan including a detailed commercialisation plan and a financing plan in view of market launch, ii) definition of a customer development plan, iii) registration of our L-Cysteine derivatives by the EFSA, and iv) definition of a detail communication strategy to engage customers.
OPERATIONAL STUDY An assessment of how well the solution solves the problem and takes advantage of the opportunities available in the market: Axeb has defined the problem and has formulated a solution strategy by carrying out a situation analysis and market research. We have studied the market opportunities, the current market segments and the projected growth in each segment besides an assessment of the costumer profile and demographics factors.
TECHNICAL STUDY An evaluation of the practicality of the solution and the availability of technical resources and expertise to implement and maintain: Axeb has carried out an assessment of the technological requirements and available tools in the field of manufactured pet food.
ECONOMIC STUDY Study of the cost-effectiveness of the solution to know if the project is possible, given resource constraints: A financial plan has been designed to estimate costs (cost to develop, payback period, etc.) and find financing sources.
SCHEDULE STUDY An assessment of how long the solution will take to implement: Axeb has designed a work plan containing description of all tasks and the timeframe used to carry out every action. We have considered constraints on the project schedule and whether they could be reasonably met.
LEGAL STUDY An evaluation of how well the solution can be implemented within existing legal obligations: Patentability study was conducted besides an assessment about regulation and legislation affecting the project.
After the execution of this feasibility study, the following conclusions have been reached:
CHOOSING ONE L-CYSTEINE DERIVATIVE Due to the rigorous regulatory approval requirements and the high cost of studies that will have to be carried out, we have decided to work with only one L-cysteine derivative. AXEB has chosen that is expected to have a benign toxicological profile, and therefore it will be easier to gain EFSA approval.
PRODUCTION OF OUR OWN DRY DOG FOOD Initially, AXEB’s goal was to produce the L-cysteine active ingredient and to launch it onto ingredients and additives market. However, after conducting the feasibility study, our company has decided to produce a complete pet food in collaboration with a contract manufacturer and to launch it onto nutraceutical and premium pet food market.
DISTRIBUTION CHANNEL Survey results show that almost 45% of pet owners buy pet food at pet stores or veterinary clinics, and more than 30% of them trust on their veterinarian advice when they have to choose their pet food. For this reason, AXEB decides to work with distributors linked to veterinary clinics or/and pet specialty stores.
NEED FOR ADDITIONAL PRODUCTION CAPACITY The technical study indicates that given the PetLife sales forecast, a new installation needs to be built to meet additive demand.
In the past years, AXEB has developed a portfolio of L-cysteine derivatives for plant nutrition application with potential commercial value. AXEB decided to extend its use to animal nutrition, specifically dog nutrition, and enter this new field by working with other companies support, since our company has no experience in this sector. Our goal is to integrate the active principle into a potential product; in this case, into complete weight management pet food in order to lengthen life expectancy in dogs.
In the next 24 months, the new PetLife additive and the complete product will be fully developed, registered and tested; and AXEB expects that its quality, security, efficacy and commercial value will be confirmed, in order to turn the prototype into a real commercial product. At that point, the active principle and the complete PetLife formula will be brought to market and sold mainly in veterinary clinics and pet specialty stores.
In most places around the world, the following trends seem to hold true:
- Dog food sales are growing at a faster pace than cat food sales.
- People are mostly buying their pet food at retail grocery chains, at pet superstores and on the Internet.
- There are good signs that the economy is now post-recession, so leading companies are gearing up with new food product launches.
Escalating nuclear families in emerging economies are boosting the demand for pets. This in turn, is steering the market. Higher life expectancies lead to more pet adoption among the geriatric population. Pets, especially dogs, help elders with their routine chores and serve as their companions. As proof of this, we have identified the following trends:
PET OWNERSHIP IS INCREASING Between 2010 and 2014, European pet population increased from 240 million to 284 million, placed in 75 million households, and it is expected to keep growing over the next years. The estimated percentage of European households that have at least one cat or one dog is 45%.
PET OBESITY RATE CONTINUES TO RISE Pet obesity is the biggest health issue facing domestic animals throughout Europe, yet it is almost completely avoidable. Nearly 50% of pets in Europe are overweight or obese. The biggest concern with this issue is that most pet owners cannot identify an obese dog or cat; in fact, almost 90% think their pets are in the normal weight range.
HUMAN AND ANIMAL BOND CORRELATES TO PET SPENDING Pet owners in Europe are increasingly considering their pets as family members. This pet humanisation leads to specialised formulas addressing: arthritis relief, sensitive skin, diabetes, heart health, weight loss and management, etc. Households that view their pets as family members spent €389 annually on veterinary care, compared to €236 spent on average in households that just saw their pet as a companion, and €169 on those who viewed their pet as property.
PET OWNERS ARE BECOMING PREMIUM SHOPPERS The increased humanization of pets and the human/animal bond have given rise to an important type of pet owner: the premium pet product shopper. Pet owners who view their pets as family members are becoming premium shoppers that are more willing to invest and spend on products and services for their pets even in difficult economic times.
PetLife project aims to provide a solution to a growing problem in Europe —pet obesity— focusing research and innovation cooperation with European countries, and other nations in the rest of the world. R&I will improve our understanding of the causes and mechanisms underlying pet health and disease, being an investment in better health for all. Precisely, PetLife project will contribute to the improvement of pet health, which in the end will affect the health of their owners, as they will enjoy their pets for longer time and in better condition.