ALGEO Master's in international business MIB - BUSINESS PLAN
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ALGEO, FEEDING YOUR PETS AS FAMILY
Master’s in international business MIB
FINAL MASTER PROJECT
BUSINESS PLAN
ALGEO
FEEDING YOUR PETS AS FAMILY
Group Members:
ELIZABETH WILSON
LUIS MANUEL GONZALEZ
SERGIO DIAZ
Joaquín Costa, 41, 28002 Madrid
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ALGEO, FEEDING YOUR PETS AS FAMILY
Tabla de contenido
EXECUTIVE SUMMARY..................................................................................................................................................9
MARKET ANALYSIS ..................................................................................................................................................... 11
INDUSTRY DESCRIPTION AND OUTLOOK...................................................................................................................................... 12
WORLD MARKET TREND................................................................................................................................................................ 13
GROWING MARKETS IN PET FOOD IN EUROPE ........................................................................................................................... 15
EUROPE MARKET TRENDS ............................................................................................................................................................. 17
COUNTRY SELECTION MATRIX (GMOA).............................................................................................................. 18
LOCAL MARKET ENVIRONMENTAL ANALYSIS ............................................................................................................................ 19
FIVE FORCES ANALYSIS ................................................................................................................................................................... 20
PESTEL ANALYSIS ......................................................................................................................................................................... 21
Analysis of France’s Political ............................................................................................................................................. 21
Analysis of France’s Economy ........................................................................................................................................... 22
Analysis of France’s Social System................................................................................................................................... 24
Analysis of France’s Technology ....................................................................................................................................... 25
Analysis of France’s Legal ................................................................................................................................................... 26
Analysis of France’s Environmental ................................................................................................................................ 26
FRANCE PET FOOD MARKET ................................................................................................................................... 27
TARGET MARKETS ........................................................................................................................................................................... 28
LEAD TIMES ...................................................................................................................................................................................... 31
COMPETITION ................................................................................................................................................................................... 33
Main Competitors ................................................................................................................................................................... 35
Indirect competitors ............................................................................................................................................................. 37
COMPETITIVE EDGE ................................................................................................................................................... 38
REGULATORY RESTRICTIONS ......................................................................................................................................................... 38
COMPANY DESCRIPTION ................................................................................................................................................................. 40
Added Value.............................................................................................................................................................................. 40
Canvas business model ......................................................................................................................................................... 41
Swot Analysis ........................................................................................................................................................................... 41
MARKETING AND SALES ACTIVITY ....................................................................................................................... 42
MARKETING STRATEGY .................................................................................................................................................................. 42
PRODUCT STRATEGY ....................................................................................................................................................................... 42
BUYER PERSONA .............................................................................................................................................................................. 42
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ALGEO, FEEDING YOUR PETS AS FAMILY
SALES REVENUE ............................................................................................................. ERROR! BOOKMARK NOT DEFINED.
DISTRIBUTION CHANNELS & PROMOTION .................................................................................................................................. 45
PRICING STRATEGY: ......................................................................................................................................................................... 46
COMMUNICATION STRATEGY ......................................................................................................................................................... 46
Digital Marketing ................................................................................................................................................................... 48
SALES STRATEGY......................................................................................................................................................... 50
SALES STRATEGY BY CHANNELS. .................................................................................................................................................. 50
COMPENSATION PACKAGES: ........................................................................................................................................................... 51
Veterinarian Clinics Compensation and Benefit Program ..................................................................................... 52
WEBSITE ........................................................................................................................................................................................... 55
ABOUT THE PRODUCTS & SERVICES .................................................................................................................... 55
DETAILED PRODUCT DESCRIPTION (FROM USER’S PERSPECTIVE).......................................................................................... 55
RAW MATERIALS .............................................................................................................................................................................. 58
OPERATIONS ................................................................................................................................................................. 60
PRODUCTION AND SERVICE DELIVERY PROCEDURES & CAPABILITY ..................................................................................... 60
PRODUCT WAREHOUSING, HANDLING & SHIPPING ..................................................................................................................... 61
OPERATION BASE............................................................................................................................................................................. 63
SUMMARY OF OPERATING COMPETITIVE ADVANTAGES ........................................................................................................... 64
OPERATIONS PLAN & COSTS. .................................................................................................................................. 65
WAREHOUSE, SHIPPING AND HANDLING COSTS. ......................................................................................................................... 65
SUPPLIERS ......................................................................................................................................................................................... 65
MANAGEMENT AND OWNERSHIP ......................................................................................................................... 67
MANAGEMENT STAFF STRUCTURE ............................................................................................................................................... 67
LEGAL STRUCTURE .......................................................................................................................................................................... 68
BOARD OF DIRECTORS ..................................................................................................................................................................... 69
FINANCIAL ANALYSIS ................................................................................................................................................. 70
PROFIT FORECAST ........................................................................................................................................................................... 72
WEBSITE ........................................................................................................................................................................................... 72
DEMAND DISTRIBUTION OF SUBSCRIPTION PACKAGES ............................................................................................................ 73
VETERINARIAN CLINICS .................................................................................................................................................................. 74
SALES FORECAST ......................................................................................................................................................... 76
WEB SITE .......................................................................................................................................................................................... 76
FIRST YEAR FORECAST ................................................................................................................................................................... 77
5 YEARS FORECAST ......................................................................................................................................................................... 78
VETERINARY CLINICS ...................................................................................................................................................................... 79
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ALGEO, FEEDING YOUR PETS AS FAMILY
ALL CHANNELS ................................................................................................................................................................................. 82
INVENTORY ................................................................................................................................................................... 83
STOCK UNITS AND VALUE FORECASTING .................................................................................................................................... 83
REQUIRED FUNDING TO COVER NEGATIVE CASHFLOW AND INITIAL INVESTMENT................................................................ 87
FINANCIAL STATEMENTS AND PERFORMANCE ANALYSIS .......................................................................... 88
BALANCE SHEET .............................................................................................................................................................................. 88
INCOME STATEMENT ....................................................................................................................................................................... 88
CASH FLOW STATEMENT ................................................................................................................................................................ 89
RATIOS ............................................................................................................................................................................................... 89
ANALYSIS: ...................................................................................................................................................................... 91
CONCLUSION ................................................................................................................................................................. 94
BIBLIOGRAPHY ............................................................................................................................................................ 95
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ALGEO, FEEDING YOUR PETS AS FAMILY
Table Index
Table 1. Worldwite top 5........................................................................................................ 13
Table 2. COuntries statistics ................................................................................................ 18
Table 3. Country Selection Matrix (GMOA)......................................................................... 18
Table 4. France: demands, Output and prices ..................................................................... 23
Table 5. Subscription Model Expected Return. ................................................................... 49
Table 6. Salesman Comission #1 ........................................................................................... 51
Table 7. Salesman Comission #2........................................................................................... 51
Table 8. Price per product .................................................................................................... 52
Table 9. Compensation by type of product .......................................................................... 52
Table 10. Profit analysis over compensation........................................................................ 53
Table 11. Bonus commission for quantity per month. ......................................................... 53
Table 12. Viability of compensation and benefit Program ................................................... 54
Table 13. Viability of compensation and benefit Program 2 ................................................ 54
Table 14. Website prices and profits by product. ................................................................. 55
Table 15. Algeo's formula. .................................................................................................... 59
Table 16. Operation costs ..................................................................................................... 65
Table 17. Operation Standards ............................................................................................. 65
Table 18. Variable cost structure .......................................................................................... 70
Table 19. Fixed costs structure .............................................................................................. 71
Table 20. Initial investment .................................................................................................. 71
Table 21. Dog food consumption .......................................................................................... 72
Table 22. Product presentations .......................................................................................... 72
Table 23. Product presentation profits ................................................................................ 73
Table 24. Demand Distribution of Subscription Packages .................................................. 73
Table 25. Average profit per Subscription and dispersion of profit scenarios..................... 73
Table 26. Veterinarians’ compensation packages ................................................................ 74
Table 27. Veterinarians’ compensation packages #2 ........................................................... 75
Table 28. Veterinarians’ bonus commissions ...................................................................... 75
Table 29. Less profit scenario for clinics. ............................................................................. 75
Table 30. Demand distribution ............................................................................................ 76
Table 31. First Year Forecast .................................................................................................77
Table 32. 5 Years Forecast .................................................................................................... 78
Table 33. Samples cost ......................................................................................................... 79
Table 34. Sample conversion ............................................................................................... 80
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Table 35. Clinics forecasting ................................................................................................ 81
Table 36. All channels sales and profit forecast .................................................................. 82
Table 37. Operation Standards ............................................................................................ 83
Table 38. Stock Units and Value Forecasting ...................................................................... 83
Table 39. EBITDA & Cashflow forecasting. Year 1. .............................................................. 84
Table 40. EBITDA & Cashflow forecasting. Year 2 .............................................................. 85
Table 41. EBITDA & Cashflow forecasting. 5 Years. ............................................................ 86
Table 42. Payback point ....................................................................................................... 87
Table 43. Required funding to cover negative cashflow and initial investment ................. 87
Table 44. Balance Sheet ....................................................................................................... 88
Table 45. Income Statement ................................................................................................ 88
Table 46. Cash Flow Statement ............................................................................................ 89
Table 47. Ratios .................................................................................................................... 89
Table 48. Overall Investment Analysis .................................................................................91
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ALGEO, FEEDING YOUR PETS AS FAMILY
Table of Figures
Figure 1. Revenue in the pet food market. Source: Statista, September 2019, based on IMF,
World Bank, UN and Eurostat. 12
Figure 2. Pet food growth. (Source: Statista 2019, Pet Food Worldwide) 13
Figure 3. Basic Cost of Owning a Dog. Stregoski, J. (2019) 14
Figure 4. Trend that is influencing pet owner’s behavior. Korucu (2018) 15
Figure 5. Agriculture and Agri- food in EU. Source: Statista 2019 16
Figure 6. Global Trends in Pet Care. Source: EuroDev 2019 16
Figure 7. Pet Food Market Concentration of Competition . 2019. Sources: Mordor
Intelligence 17
Figure 8. Key Trends in Developed Markets. Source Euromonitor International from
national statistics/UN/OECD/UNESCO Data for 2021 are forecast. 17
Figure 9. Mayor Pet food player. Source Global Pet Food Market - Growth, Trends, And
Forecast (2020 - 2025) 18
Figure 10. France - Key Facts 2019. Source: CIA- The world Factbook. Source: MarketLine
2019 19
Figure 11. Five Forces Analysis. Own elaboration 20
Figure 12. France’s PESTEL, Source: MarketLine 2019 21
Figure 13. Ease of doing business in France. Source Euromonitor International from the
World Bank/Heritage Foundation 22
Figure 14. Household income &consumption in France. Source: OECD Economic outlook.
2019 24
Figure 15. Education and Skills in France Source: Euromonitor International from national
statistics/UN/OECD/UNESCO Data for 2021 are forecast 24
Figure 16. Education and Skills in France Source: Euromonitor International from national
statistics/UN/OECD/UNESCO Data for 2021 are forecast 25
Figure 17. Internet User in France Source: MarketLine PESTLE Country Analysis Report:
France 2019 25
Figure 18. Judicial Structure in France Source: MarketLine 26
Figure 19. ALGEO Target Segmentation. Own elaboration 29
Figure 20. How Algeo deliver works? Source: Tuiniti 2019 32
Figure 21. Top five pet food brands in France. Source: Euromonitor International, 2018 34
Figure 22. Forecast for France Pet Food Market Sources: France Pet Food Market 35
Figure 23. Popular local Brands in France of humanization and premiumization pet food.
Own elaboration 36
Figure 24. Competitors quality matrix. Own elaboration 40
Figure 25. Canvas Business Model. Own Elaboration 41
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ALGEO, FEEDING YOUR PETS AS FAMILY
Figure 26. SWOT Analysis. Own Elaboration 41
Figure 27. Buyer persona #1. Own Elaboration 42
Figure 28. Buyer persona #2. Own Elaboration 43
Figure 29. Source: Sales revenue of pet products per type of animal in France. Statista (2017)
43
Figure 30. Dogs Recommended Daily Feeding. Source: PetMD
https://www.petmd.com/blogs/nutritionnuggets/dr-coates/2015/july/are-you-feeding-
your-dog-right-amount-32905. 2015 44
Figure 31. Distribution channels in france. Source: Nielsen (16/10/2019),
http://www.promojardin.com/flash-infos/distribution/503-animaleries-en-france 46
Figure 32. Online Marketing Areas. Source: Pablo Martín Antoranz (2019). Digital
Marketing Plan. EAE. 47
Figure 33. Digital Marketing Funnel. Source: Pablo Martín Antoranz (2019). Digital
Marketing Plan. EAE. 48
Figure 34. CPM in france. Source: Guttmann, A. “Facebook Average CPM by Country 2018 l
Statistic.” Statista, 9 Aug. 2019, www.statista.com/statistics/829495/cpm-facebook-
countries/. 48
Figure 35. Facebook funnel. Own elaboration 49
Figure 36. Source: Retail sales value of meat substitutes in Western Europe in 2018, by
category (2018). Statista. 56
Figure 37. Main components of spirulina. SOurce:
https://www.researchgate.net/figure/Main-characteristic-of-Spirulina-platensis-SP-and-
Spirulina-platensis-residue-SPR_tbl1_333764551 57
Figure 38. Proteins on spirulina. SOurce: https://www.researchgate.net/figure/Main-
characteristic-of-Spirulina-platensis-SP-and-Spirulina-platensis-residue-
SPR_tbl1_333764551 57
Figure 39. Eurolyo. Source: www.eurolyo.fr/en/ 60
Figure 40. Eurolyo 2. Source: www.eurolyo.fr/en/ 61
Figure 41. Servcorp 1. Source: https://www.servcorp.fr/en/ 63
Figure 42 Servcorp 2. Source: https://www.servcorp.fr/en/ 63
Figure 43. Servcorp 3. Source: https://www.servcorp.fr/en/ 64
Figure 44. “Production.” Cyane, www.cyane.eu/en/production/. 66
Figure 45. Management Staff Structure. Own elaboration 67
Figure 46. Demand Distribution of subscription packages. Own elaboration 74
Figure 47. EBITDA in time. Own elaboration 87
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ALGEO, FEEDING YOUR PETS AS FAMILY
Executive Summary
Have you ever asked yourself how your dog can eat hose same croquettes over and over and
still be healthy?
The current industrial dog food often includes animal meat such as chicken, veal,
turkey and others in their labels and packaging. The truth is most of the time it’s just the
carcasses, not allowed in human consumption products; to be more precise, tendons,
cartilage and bones (SANDACH). Also, industrial pet foods are over processed ingredients,
put over huge amount or pressures and temperatures that finally will destroy part of the
nutrients and benefits that their ingredients included initially.
Dog food is an important aspect for them to be in great shape and health, since dogs
have become one more member of today’s families, concerns about what they eat, and their
health are constant. And making sure they eat food that is healthy for them, could make a
direct impact on their life expectancy.
Our objective is to create a natural and healthy pet food made for our loved ones, for
the dogs of every pet owner and allow them to eat actual food that is nutritious, all this
without taking our customers to bankruptcy.
Algeo’s proposal is to create a new product based on dehydrated food ingredients
including higher protein amounts, with algae as an important component that helps our
pet’s health and it’s environmentally friendly.
The global pet food market has been growing for the last ten years, and its revenue
by 2020 amounts to €86, 601 million. The pet food industry is expecting to reach 98,148 €
millions by 2023 growing 4.3% annually. In France, the growth of the pet food industry is
expected to grow 3,7% annually, being also the third country that spends more money on
their pets.
Our marketing efforts will be centered in millennials with pets, a stable financial
situation and a healthy lifestyle, as they are the most propense to buy healthy food as well to
their dog. This target is also ideal due to their trend to buy online. Our main source of
conversions will be social media marketing, specifically Facebook, and we will grow our own
social media organically from the customers and the leads from the ads and veterinarian
clinics. Our pricing strategy is skimming as is a premium dog food and will be centered in
customer perception of value.
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ALGEO, FEEDING YOUR PETS AS FAMILY
Our sales efforts will be divided in two channels: veterinarian clinics, that will serve
as showcases and will receive endorsement of the veterinarians to obtain credibility and the
first sales at the beginning; and the other channel is our website, where we will be getting
the bulk of the sales from and making the most profit.
In order to boost veterinarians endorsement we are enrolling them in our
compensation program that rewards the sales made by each veterinarian and compensates
reaching sales goals, additionally, commission will be paid to the salesman (veterinarian as
well) that will visit the clinics to enroll them in that way we reduce our fixed salary costs and
we will pay over performance.
To enhance our flexibility and reach and reduce our initial investment, the
operations and logistics will be outsourced to Eurolyo as our main producer and Amazon
for our logistics, giving us enough flexibility to test the market and adapt to our target needs
and making possible that we sell our product all over Europe if we decide to expand.
Algeo’s rentability will depend on our sales growth rate so we reach fast the
breakeven point, as we offer a subscription model the growth after the breakeven point will
be smother as we intend to increase renewal rates over times. According to our forecast
model and calculations, break-even point will be reached within the first 7 months and the
payback time is expected to be 1,33 years. The project will be highly profitable, producing
more than 1 million euros in the first 5 years, all of this with a conservative growth rate (same
as the industry growth) and 60 thousand euros as total initial investment.
10ALGEO, FEEDING YOUR PETS AS FAMILY
Market Analysis
The Company is going to have its distribution center in Paris France is situated in
Western Europe, bordering the Bay of Biscay and the English Channel. It is located between
Belgium and Spain to the southeast of the UK and borders the Mediterranean Sea between
Spain and Italy. It places it in a diverse metropolitan area which has experienced significant
growth in the past six years, according to Euromonitor International (2019) a trend will
continue through 2024. Even though our sales will be generating mostly by our website.
The Company’s chosen location will maximize its ability to tap into a steady stream
of local consumer traffic.
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Industry Description and Outlook
The global pet food market has been growing for the last ten years, and its revenue
by 2020 amounts to €86, 601 million. The pet food industry is expecting to reach 98,148 €
millions by 2023 growing 4.3% annually. (Statista, 2019). North America is the largest
segment of the market share of 39% of the worldwide pet food market. Moreover, The United
States is globally where the higher revenue is generated in relation to population per capita
revenues of €11.63 are expecting to be generated by 2020.
Figure 1. Revenue in the pet food market. Source: Statista, September 2019,
based on IMF, World Bank, UN and Eurostat.
12ALGEO, FEEDING YOUR PETS AS FAMILY
Figure 2. Pet food growth. (Source: Statista 2019, Pet Food Worldwide)
The following graph shows the volume in millions of kilograms in the Pet Food
segmentation that is expected to grow 50,277.1 millions of kilograms by 2013. (Statista,
2019).
The following table shows the top five Worldwide of the countries that spend more on their
pets:
Table 1. Worldwite top 5.
Top 5
United States €26,459m
United Kingdom €4,279m
France €3,930m
Brazil €3,874m
Russia €3,228m
Source: Statista 2019
World Market Trend
Pet food industry, preferences of customers and trends in dog food market are
changing with the development of technology and lifestyle. Worldwide customers are
searching for healthier alternatives to implement in their own lives and as pets are becoming
13ALGEO, FEEDING YOUR PETS AS FAMILY
a part of their family; consequently, they are changing the way to feed their pets. According
to Stregoski (2019) in her article Cost of Owning a Dog state that a pet owner spends
between 250 -700 € annually to feed a dog depending on the dog size with stand dog food.
Moreover, this amount may vary nowadays customers are feeding their pets with special
food such as dry, organic, freshly made food or any other premium super pet food.
Figure 3. Basic Cost of Owning a Dog. Stregoski, J. (2019)
Moreover, Europe comes the second largest pet industry after North America, to
increasing demand for premium pet food and it is projected to drive a growth niche in the
region. European consumers are changing their shopping behavior and the big brands need
to keep up to fulfill the customer needs. Pets now are considering more as a family member
and pet owners want the best for their beloved dogs. (Korucu, 2018)
According to Korucu (2018) the trend that is influencing pet owner’s behavior that
definitely has to be considering in the pet industry to take purposeful pattern in the years
ahead:
● Pet food with clean label: This means that consumers want to know where
the products come from.
● Pet Parents: Owner are calling themselves parents of their pets this means
that they are concerned about preventive health care of their pets.
● Personalization: “Pet parents” are buying raw food in order to prepare
themselves or buying gourmet food.
● Humanization of pet food: Pet parents are looking for products, which are
natural product or locally grown. This food is considered as human
consumption food.
14ALGEO, FEEDING YOUR PETS AS FAMILY
● E-commerce: Millennial generation is increasing sales by buying online for
convenience.
Figure 4. Trend that is influencing pet owner’s behavior. Korucu (2018)
Growing Markets in Pet food in Europe
Due to millennials are waiting longer to get married, they are now the main drivers
to growing premium pet food in West European market (EuroDev 2019). As the economy is
getting harder for Millennials and they are choosing to raise a pet instead of getting married
but is for them is not a pet, but their four- legged child, they pamper their dogs and buy for
them the best food and other pet products.
The Premiumization on pet market is growing as a result of pet parents wants the
best for their dogs, they want them to live longer, and customers are turning to brands that
offer natural and high quality ingredients such as dry natural food, GMO- free, gluten- free,
and not artificial ingredients pet food. For this reason, In the European Union countries are
launching new products that are changing the consumer purchase habits, moreover the
market is growing rapidly and there are mainly three opportunities to growth:
● Human- grade snacks and food
● convenience
● Technology- driven innovation.
15ALGEO, FEEDING YOUR PETS AS FAMILY
Figure 5. Agriculture and Agri- food in EU. Source: Statista 2019
Figure 6. Global Trends in Pet Care. Source: EuroDev 2019
16ALGEO, FEEDING YOUR PETS AS FAMILY
Figure 7. Pet Food Market Concentration of Competition . 2019. Sources: Mordor Intelligence
Europe Market Trends
In the figure 8 shows the key trends in the pet food market which are turning the
consumer behavior that are accelerating growing making superfood segmentations the most
attractive market to the entrepreneur.
Figure 8. Key Trends in Developed Markets. Source
Euromonitor International from national
statistics/UN/OECD/UNESCO Data for 2021 are
forecast.
The following figure 9 Illustrates the brands that are leading the pet food industry
worldwide. The pet food industry is one of the industries that is performance well even the
pet owner purchase behavior is changing to buy natural base food to their pets. As a result,
the major players are forced to follow human health trends incorporating super premium
17ALGEO, FEEDING YOUR PETS AS FAMILY
pet food products in their productions in order to reach a specific niche (Global Pet Food
Market, 2019).
Figure 9. Mayor Pet food player. Source Global Pet Food Market -
Growth, Trends, And Forecast (2020 - 2025)
Countries Statistics
Table 2. COuntries statistics
Own elaboration
Country Selection Matrix (GMOA)
Table 3. Country Selection Matrix (GMOA)
Own elaboration
According to our research, France would be the best country for us to start operations at.
18ALGEO, FEEDING YOUR PETS AS FAMILY
Local Market Environmental Analysis
We decided to establish our office in France considering that one of the top five
countries in revenues worldwide. Also, France is one of the countries in the European Union
that spend more money on premium pet food, and the fourth launching natural based pet
food. Furthermore, according to Passport (2019) in its country report more dog owners are
seeking reward their pets. Furthermore, sales grow 2% in 2019 and premium re-hydrated
food posted its high value sales of 5%.
Figure 10. France - Key Facts 2019. Source: CIA- The world Factbook. Source: MarketLine 2019
19ALGEO, FEEDING YOUR PETS AS FAMILY
Five forces Analysis
Figure 11. Five Forces Analysis. Own elaboration
20ALGEO, FEEDING YOUR PETS AS FAMILY
PESTEL Analysis
In order to identify the external factors that can become potential challenges and
risks that influence our business plan, we are examining the environment in which we will
establish our business in order to help plan a solid-based strategic. the factors to consider
PESTLE as political, economic, social, legal, technological and environmental.
Figure 12. France’s PESTEL, Source: MarketLine 2019
Analysis of France’s Political
France is a ranking key to do business in the eurozone due to the President
Emmanuel Macron’s business- friendly reforms that are facilitating leading to make more
attractive business framework and consequently boosting employment (Euromonitor
21ALGEO, FEEDING YOUR PETS AS FAMILY
international 2018). Hence, those reforms make startup business France is one of the best
countries to do business also, the existence of solid governance and the adherence of the
institutions to the EU standards. However, there exists a challenge consequence of the
terrorist attacks across France on 2015 which result xenophobia between population.
On the other hand, there are the political policies that are making food safety an
issue in France, as far as we are concerned for being a food company we have to be informed
about all the policies of food politics and French public health care regardless we are focus
on pet food f French government policies are almost the same for human and pet food. Under
other conditions, there is Brexit, if the UK get out of the EU that bring us an advantage UK
now export 80 % of pet food within the European Union if United Kingdom get out that
means that France have tremendous opportunity to grow and export more.
Figure 13. Ease of doing business in France. Source Euromonitor International
from the World Bank/Heritage Foundation
Analysis of France’s Economy
Growth during 2020 will be consistent at a 1,2% during 2020 according to the latest
economic analysis. Constant job creation, tax cuts and measures taken on social emergency
impact helps raise household incomes and consumption. with the good financing conditions
and the business profits, France economy will keep quite strong in a global condition where
economics are weakening. Having a strong economy in a macroeconomic level helps our
industry, where pets are gaining more and more relevance in the household expenditures.
By allowing people expend more they will most likely increase the budget destined for their
loved ones, their pets.
22ALGEO, FEEDING YOUR PETS AS FAMILY
Table 4. France: demands, Output and prices
23ALGEO, FEEDING YOUR PETS AS FAMILY
Figure 14. Household income &consumption in France. Source: OECD Economic outlook. 2019
A clear and consistent growth of France economy is necessary for our product to be
successful at an early stage.
Analysis of France’s Social System
France is a country with a high proportion of education, consequently consumers are
more attentive to what ingredients and food they consume themselves and their pets.
Although, France is a country with an aging population and that group of people are turning
dogs and cats as a companionship, young people are living single or childless and are
adopting pets as an alternative. furthermore, France as well development and educated
population is joining the humanization pet food increasing the premium food segmentation.
Figure 15. Education and Skills in France Source: Euromonitor International
from national statistics/UN/OECD/UNESCO Data for 2021 are forecast
24ALGEO, FEEDING YOUR PETS AS FAMILY
Figure 16. Education and Skills in France Source: Euromonitor International from
national statistics/UN/OECD/UNESCO Data for 2021 are forecast
Analysis of France’s Technology
France has a favorable high developed in the information and telecommunications
sector. Capital investment in the sector has been increasing 24.8% according to Euromonitor
International (2018) large amount of tech companies such as google, Samsung, fujitsu, and
amazon has been established in Paris. Due to Amazon has a huge distribution center in Paris
and around France make our business suitable to use the amazon as a distribution channel
for our product deliver. Also, French consumers are using online platforms to do their
regulars purchases which gives us an advantage since our product will be in selling online
one.
Figure 17. Internet User in France Source: MarketLine PESTLE Country
Analysis Report: France 2019
25ALGEO, FEEDING YOUR PETS AS FAMILY
Analysis of France’s Legal
Legal framework in the pet food sector are becoming is easier within in the European
Union as a result of open trade between the EU and also the open to foreigners investors,
however; the European Pet Food Industry has rules policies health safely and every brand
has to registered in the World Canine Organization in order to meet their pet food statfarads.
Moreover; the commercial movement of animal’s rules regulations not only for France but
for all European Union Countries at this point pet food companies have to be aware to meet
all regulations of the Eurozone (IZSAM, 2015).
Figure 18. Judicial Structure in France Source: MarketLine
Analysis of France’s Environmental
France was ranked as a second on the environmental performance due to its stronger
environmental policy framework. The government has adopted a series of carbon budgets in
the first three months of running 2019-2023. Pet food industry is responsible for a quarter
of the greenhouse gas emissions emitted in the production of the food. Algeo, is an organic,
human-grade, AB certified pet food, our customers will be doing their part to help not just
their pets, but also our planet, Plus, their pets will enjoy better digestion, improved skin,
higher energy, reduced allergies, and more. Moreover, as a younger generation ourselves we
26ALGEO, FEEDING YOUR PETS AS FAMILY
are conscious that the difference in pricing can be compared to the difference in pricing for
human food and takes into account how healthy the food is and whether or not it’s
sustainably sourced.
France Pet Food Market
The pet food industry remains continually remained to be relevant over the years
given that animals such as cats, dogs, continue to be companions in many homes. Pet
owners, especially in the developed nations like France, treat their animals as their friends
or family members which has contributed to an increase in demand for pet products. The
research carried out by Koyande et al. (2019) suggests that the pet food industry has
expanded dramatically over the past five years owing to the economic recovery experienced.
Despite the economic improvement, there has been an increase in competition from online
retailers, supermarkets, mass merchandisers, among others who have given the consumers
a range of options that can contribute to competitive prices. Significant factors that affect
the pet industry market are government regulations. Government regulations have a severe
impact on the business operations of pet stores as they limit their activities. New entrances
into the industry are also limited due to due to the entrance policies. Pet stores are, for
instance, required to obtain licenses based on the policies set and even policies on the
welfare of animals, which dictate how animals need to be maintained.
The pet food supplies industry in France is also controlled by several factors such as
consumer needs. In France, consumers careful with the health of their pets, which is a trend
of pet humanization in the market? A large pet food industry section is thus focusing on high
quality foods and services for pets. The pet trend in France is also such that pet stores are
also allowed to offer their services in large hotels and restaurants given that a large
population requires food and water supplies for their pets when on vacations. There are also
exclusive restaurants for pets, and food shops are required to offer unique services to pets.
Humanization and innovation in the pet industry are also the trend in the industry due to
the changing food and service demand patterns by the pet owners. The pet food supplies
industry thus is required to continually keep up with the pet food demand trends because
the pets are regularly being treated as members of the family. Further, product
differentiation is a crucial driver for the industry due to the need for functional flavors and
diet needs.
EU also provides regulations regarding labeling, hygiene, as well as the health of the
animals as a measure of control to the pet food industry in France. Import and export
specifications are also highlighted, which is a result of the growing pet obesity incidence,
27ALGEO, FEEDING YOUR PETS AS FAMILY
which has required the pet owners to limit the calorie intake of their pets. Colliard et al.
(2016) points out that pet weight issues are proving to be a dampener in the industry as there
is a rising need for smaller pets. There are also changing trends in urbanization where many
people are moving to smaller apartment which drives the demand.
The increase in prices per unit is contributing to the stability in the market. The pet
food industry in France is split based on the type of products offered, the prices, types of
animals being served, as well as the sales channel. The largest segment of the industry is that
of dry foods, while snacks and wet foods have lower market segments
(grandviewresearch.com). Some pet owners are also opened to trying new pet products to
thrive their pets, and the choices include high protein, vegetarian supplies with high
antioxidant levels like fruits, which is also a growth contributor to the market (France Dog
Food Market Data, 2017).
The pet food industry in France is consolidated with a few companies in the market.
The primary food producers in the sector are P&G, Nestle, Agrolimen, Affinity, and Mars
Petcare, and the positions they hold in pet food distribution are outstanding. Other smaller
pet food industries are also increasingly growing in the region owing to the high disposable
income from pet food consumers in single or two-family households. The individual
business organizations have managed to make strong brand recognition, and premium food
production is at the center of the businesses. The economic situation in France has also
contributed to an increase in price sensitivity; as such, the private labels have begun
marketing their premium products. The room has also been created for medium-priced to
average premium supplies.
Target Markets
Based on the market trends and consumer’s behavior the shift in pet “ownership is
changing to “parenting” and this trend has been crucial to define our market target
segmentation. aforetime, pet owners feed their pets with family meals leftovers. Nowadays,
new generations of consumers appear and are now becoming aware about the food
ingredients. Furthermore, buyer is looking food based on the pet's age and breed. The
owners thus have more expenditure on their pet foods and supplements. According to
Passport (2019) points out that the French Pet owners are also concerned about the
nutritional value of the food that their pets consume as it is a reflection of their values and
lifestyle choices, which is one of the target market drivers.
28ALGEO, FEEDING YOUR PETS AS FAMILY
Thus, our dog market segmentation is based on Humanization food which include:
● Dry Food
● Natural Organic Food
● Nutritious Food
● Re-hydrated
As follows the Mega trend in France conducted by Euromonitor International (2019)
and for our purposes our focus target are Millennial consumer and pet owner with healthy
lifestyle.
● 24 to 39- year-olds (Millennials)
● 40 to 54 - year-olds (Gen X)
● 55 to 74 - year-olds (Baby Boomers)
Figure 19. ALGEO Target Segmentation. Own elaboration
The target market for French pet food stores is baby boomers with pets. The aging baby
boomers are filling their homes with pets given that many of them have grown children who
no longer live with them as such, have high demand for food for their pets. This group is a
perfect market for pet food products, given that they are also financially stable and keep up
with the changing pet food prices. Different scholars point the group to be ‘pet enthusiasts’
as they take pets as affordable luxury which they treasure. This target group is the dominant
consumer of the supplies, which strengthens France is one of the most developed nations,
and its population is aging; as such, they are turning to cats and dogs for companionship.
29ALGEO, FEEDING YOUR PETS AS FAMILY
A significant population of Millennials, single people or those with no children also
view pets as an easier alternative. More than half of the population in France has pets, and
the choice pets include cats, dogs. Zentek (2014) notes that pet owners are increasingly
concerned about the welfare of their animals; as such, pet food is becoming a significant
priority to the owners. More pet owners are gradually buying premium foods for their
animals that are customized the company consumption as such, it will continue being the
prime target due to the revenues generated from the group and their consumption loyalty.
Strong commitments are made by the company to increase the number of baby boomers
with pets as statistics show that a significant group in this category is attracted to their dogs
and cats. The dominant pets are dogs as such supplies for this target group will be for this
category, although differences apply based on the breed.
The other target group is young couples who are turning to pets for companionship
or single people. This group tends to have an average income, and they spend enough in dog
and cat foods and treats. With the increasing changes in demand for pet foods such as diet
needs like low calorie foods and those with high nutritional values, the expenditure of this
group is bound to increase. The category also has high demand for pet services and this
demand is likely to increase due to pet health and safety needs (Carrión & Thompson, 2014).
Other supplies that the group seeks are cat and dog toys, cages, pet collars, wet creams, and
other supplies. This target market is, however, fragmented at both the wholesale and retail
categories, although this also serves as an opportunity for the companies to compete and
thrive.
Couples with young children are also the other target market due to the demand for
pets by young children. This population, however, contributes minimal revenues for the pet
companies, given that the families have average incomes and have significant
responsibilities which make their expenditure on pet food and supplies less. The population,
however, has a range of pets, which includes cats and other mammalian animal categories,
which increases the range of pet food supplies. Other target market is e-commerce
consumers. A significant population in France opts to purchase their products on an online
platform; as such, this group is targeted as it is an opportunity for the pet food players to
increase their sales. Concerns such as pet obesity and overall pet health and safety are,
however, to be considered for this group of consumers.
30ALGEO, FEEDING YOUR PETS AS FAMILY
Lead Times
One factor that our company should consider is the lead time. Nestle & Pollan (2013)
define the lead time as the time from the start until the completion of a process. This
company needs to review its lead time because the pet owners in France are primarily
concerned about the delivery of healthy meals to their dogs. The pet food industry in France
at the moment is undergoing a renaissance owing to the picky nature of pet owners regarding
pet food delivery and the expiry date labels of the pet food delivered. The primary
consideration that needs to be made, as such is the time between packaging and delivery.
Critical time that should be considered is also the time between an order placement and its
delivery. The choice for a pet food supplier in the France market is determined by the
delivery time which means failure to keep up with the time will lead to a loss of customers.
The company also needs to keep in touch with suppliers so that they supply pet food
in time to meet with consumers demands. Proper audits need to be done to ensure that the
stocks measure up to consumer demands, but also, they should not be more than what
cannot be dispatched before the expiry dates. It is important and we are aware of establishes
contingency arrangements so that supplies can still be made in cases where it may fail to
meet the delivery requirement to ensure relevant lead times are observed. Also, we consider
the type of food product that should be delivered and the framework for the specific foods.
For instance, there are cases where additional needs are established, or pet food demands
are reduced in the same framework, the company will thus be required to make an
adjustment to the lead time. As company we consider lead times, for instance, for fresh dog
foods. These will require to be delivered within the shortest time. If a consumer is like close
away from the distribution center, arrangements could be made to deliver the food in the
same day from the time of order placement.
Carrión & Thompson (2014) point out that in France, where foods that are not as
per the written agreement are requested, a supplier needs to issue the estimates of the lead
time when the ordering is issued. It should not be fixed, although an expected delivery date
should be given. Our company thus needs to make use of different written communications
to make clarifications of pet food deliveries and it should also offer its clients and potential
clients their workable food packaging and delivery time. It should also communicate any
changes to the food products in advance, preferably before the changes are made.
Also, if the clients need to make amendments a clear notice should be issued to the
company in advance through writing for the adjustments to be made. In the times where the
company may need to introduce new pet feeds, it is important that at least 12-week trial time
should be issued. The first two weeks should be for weaning the new diet, the next eight
weeks for feeding the pets the new food, and the last two weeks for weaning pets on the
31ALGEO, FEEDING YOUR PETS AS FAMILY
original menu. When issuing the new diets, the food plans should be issued as well with
client customization based on their diet preferences and delivery times.
Based on the previous fact we are going to partnership with amazon as a supply chain
deliver, we offer deliver within 48 hours from the order has placed and if the customer is
close to the distribution center may be delivered in the same day.
How this work?
Figure 20. How Algeo deliver works? Source: Tuiniti 2019
We are taking advantage of Amazon supply Chain technology which management
approach is to embrace technology. As the argument about our target segmentation we are
focus on the largest population that have a deep loyalty to shopping online thus, amazon is
the shopping platform with wide- ranging strategies that allow to deliver orders faster. Also,
it makes workable to startup companies.
Moreover, Amazon make it practice the delivery process for us as a small company
because we do not have to have a warehouse to store our product or hire delivery driver what
could happen at high costs for an entrepreneurial company. Moreover; Amazon has the
resources to meet our client’s needs. such a delivery the products within 48 hours from the
placed order. Also, the security that amazon make their customer that their order will be
delivered without complications.
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