Peek No : 8
August 03, 2003

Hello!

Ever since the first issue of Marketspeek, our research team's tentacles have been stretching far and wide. The result: we found ourselves working on the pet care sector.

It will be of interest to you to know that the analysts who worked on this issue were seriously thinking about raising pets. And by the time you read this, they have probably become proud owners of pets of their choice.

Like always, our weekly peek into our economy takes the first priority.

UBS Index of Investor Optimism

Investor confidence has improved in August. The Index of Investor Optimism increased seven points, partially recovering from a steep fall witnessed last month.

Chain Store Sales Index

The chain store sales index increased 0.2% in the week ending August 23. This is the third gain in the last four weeks. Improved sales last week helped push year-over-year growth to 4.5%. This stands as the best growth rate since December 2002.

Agricultural Prices Index

Agricultural prices increased by 2.9% in August. Strong demand appears to be the force behind this rise. This indicates that conditions are improving for farmers.

Happy Peeking!

Editorial Team
Marketspeek
Executive Editor - Dr. Sharon Livingston
Editor - Vijay
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 Week's Peek

Pet Care industry - America

  • The pet care sector in the US is estimated, in value terms, at $ 30 billions.
  • This sector can be broadly classified into Pet foods, Pet supplies, Pet services and Veterinary services.
  • The shares of each of these segments during the last fiscal:

  • The sector is growing at an annual rate of around 4%. This rate is expected to be constant for another five years. As a result, by fiscal 2007, the value of the sector is estimated at $ 36.5 billions by industry sources.
  • The indicative rates of annual growth of each of the segments that make up the pet care sector are:
    • Pet foods - 4.25%
    • Pet supplies - 4.50%
    • Pet services - 3.50%
    • Vet services - 4.50%

Vital Statistics - Pet Care

  • Reasons for pet ownership in the US are:
    • Urban alienation
    • Slow down in human birth rates
    • Increasing no. of singles
  • Pet ownership is concentrated in the age group of 45 to 64 year olds. This group possesses the highest level of household income, compared to other age groups in the US. This age group is also touted as the most active spending group in the US.
  • Lifestyle-centered pet care problems are on the rise in US. The common problems under the lifestyle realm are:
    • Bad odor
    • Obesity
    • Hair sheds
  • Age-based illnesses also form an important area of concern. It has been estimated that in the US, at least 4.5 million dogs and an equal number of cats are suffering from age-based ailments.

   Analysis - Pet Care

  • The pet services market had been the least active - both on the growth front and also on share enjoyed within the pet care sector. This market is slated to do some catching up. The recent recognition of services rendered to pets shows the fast maturing of the pet care sector.
  • Leading animal health companies are subsidiaries or strategic business units (SBUs) of large pharmaceutical companies. The contribution of animal health business to the parents' turnover averages around 5%. But, given the higher scope for profitability - thanks to lower level of application costs, the focus on animal health business is poised to rise.
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 Wish I were


The second richest man in the USA. One of the largest shareholders of some of the nation's best known companies: Coca-Cola, Gillette and the Washington Post.

Yes, you've guessed right. We're talking here of Warren Buffett, the financial genius. His astoundingly successful company, Berkshire-Hathaway is a conglomerate that owns more than 40 companies and employs nearly 150,000 people. And wait - there's more! He has achieved a phenomenal 25% return on investment over the last three decades, accomplished with a staff of barely a dozen.

If Buffett had a business card, it would identify him as chairman and chief executive of Berkshire Hathaway Inc. But he is far better known -- indeed, world-famous -- as the greatest stock market investor of modern times. The figures, though often cited, still astound: Had you put $10,000 into Berkshire when Buffett bought control of it in 1965, you'd have $51 million now, vs. just $497,431 if the money were invested in the Standard & Poor's 500-stock index.

And how has he pulled this all off? Well, there hardly seems to be any strategic plan. There's also apparently, no `synergy' between disparate holdings, none of the usual `tools of management' that we hear so much about.

His `modus operandi' however is extremely simple. What he really does is to buy companies that are run by the right people and then get out of their way - pronto! In essence, he focuses on two simple variables: the price of the business and its value. As he does not concern himself with the stock market, it allows him more time to understand his businesses; and occasionally to check the market to see who has done something foolish that presents a buying opportunity.

Through all this he retains his sense of enjoyment. "There is nothing remotely as fun as running Berkshire,'' he says. So naturally, he's still going strong, with no plans to retire. ''I like what I do so much that I don't consider it work.''

What we can say then with reasonable certainty about him is that this guy is exactly what he seems. A plain-speaking, teetotaling man of uncrackable integrity. He works really, really hard and sticks to his investing and management principles through boom and bust.

For further reading:

http://news.bbc.co.uk/1/hi/business/2999697.stm

http://www.conscious-investor.com/warren-buffett.html

http://bookstore.mymanagercenter.com/n_0471442593.htm

http://www.salon.com/tech/books/2003/01/24/buffett/index_np.html

http://www.refresher.com/!buffett3.html

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 BrandFact
Alltrista is the largest wooden match manufacturer in the United States. Alltrista produces 12 billion matches each year.
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This Week that Age

August 31, 1887 - Thomas Edison patented the Kinetoscope, the first device for producing motion pictures.

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 Insight
Whenever an individual or a business decides that success has been attained, progress stops.
- -Thomas J. Watson Jr
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The information presented in this Newsletter is not based on any primary research undertaken exclusively for this purpose; it is based on secondary sources of information, as current as the researchers were able to collect from the sources. However, should any specific client need up-to-date information on this (or any other) segment, they may commission Executive Solutions to do such research.