With the 2015-2016 National Pet Owners Survey now out from
the American Pet Products Association (APPA), we see a healthy climb in pet
ownership has taken place during the past two decades, with penetration rising
to nearly 65 percent. That’s some 80 million households, over 10 percent of
whom are first-time pet owners. Moreover, the majority of those new pet owners
are aged 18 to 50 (Millennial and Gen X) and they apparently like to spend more
on their pets – whether it’s on gadgets, toys and gifts, or things like trips
to the vet. This data represents a primary force vector that is fueling what
was seen as a $73 billion pet products and services market last year, according
to experts at market research firm Packaged Facts.
Given that the APPA data indicates U.S. households
collectively own nearly 86 million cats and 78 million dogs, with a reported
annual spend of around $28 and $47 respectively on toys, we have toy markets
worth somewhere in the ballpark of $2.4 billion for cats and $3.7 billion for
dogs. The comparatively more conservative APPA boil-down from diverse industry
sources estimates that some $61 billion will be spent on pets this year in the
U.S. and one of the major driving factors continues to be the growing body of
scientific data that shows pet ownership is good for human health. In fact, 64
percent of respondents in the APPA data indicated health benefits from pet
ownership were important to them.
According to data from the APPA report and non-profit
research and education organization HABRI (Human-Animal Bond Research
Initiative), there is a growing number of studies detailing the health benefits
to humans of the human-animal bond. In fact, 97 percent of the 1,000 doctors
polled were convinced that there are valuable health benefits to pet ownership
and would recommend it to patients. One of the classic examples here is the
University of Minnesota’s Stroke Research Center study that tracked over 4,400
Americans aged 30 to 75 over a decade, finding significantly lower risk of
heart attack (40%) and heart disease (30%) among those who owned and played
with a cat routinely. Stress relief is just the tip of the iceberg of course
and the health benefits of pet ownership range from enhancing social
interaction skills (particularly among children with autism and elderly folks
with dementia), to boosting immune function.
One leading theory about a big part of the reason the
human-animal bond is so good for us, is that playing with pets taps into
countless centuries of evolved biochemistry from associating with animals in
this way, stimulating our body to (among other things) release oxytocin, a
powerful hormone made by the hypothalamus. The hypothalamus actually links the
endocrine system to the central nervous system via the pituitary gland where oxytocin
is stored, and is the center of the limbic system, or paleomammalian brain, the
seat of emotional life and a core driver of memory formation.
In much the same way that we humans are wired to play with
pets and enjoy it, cats and dogs are similarly adapted on a cellular level to
benefit from playing with us. But deep down inside, the undomesticated wild
animal still lives on in our pets, and that is one major reason why OurPet’s
Company (OTCQX: OPCO) took home the New Product Showcase Award in the Cat
Product Category at this year’s massive SuperZoo industry trade show for
retailers organized by the World Pet Association. The company was awash in
accolades as its new Catty Whack® hide and seek action game for cats wowed
those in attendance. The Catty Whack taps into a feline’s deep-seated need to
hunt for prey, brilliantly simulating what is appropriate to the cats natural
instincts with a quick little feather wand that darts in and out of a number of
holes around the perimeter of the small, circular floor device. This randomized
darting is accompanied by timed bursts of audio from the company’s patented
electronic RealMouse® sound, resulting in a captivating experience for cats
that is also highly entertaining to watch.
With non-skid rubber feet and a carpeted scratching area for
cats to get out their punchiness on, the Catty Whack elegantly showcases OPCO’s
grasp of both design and animal psychology, marking the latest and greatest in
a long string of superb concept executions. Sales are improving for OPCO as
conversion to the Pet Zone brand nears completion around the end of the year
and the company anticipates a very robust holiday season for its numerous
offerings, which are sold nationwide at leading retailers, as well as at
etailers like Amazon.com. From high-quality stainless steel bowls with bonded
rubber bottoms and elevated feeder stands like the Designer Diner™ and Barking
Bistro™, to a full line of litter boxes ranging up to its self-cleaning
SmartScoop Automatic Litter Box, OPCO is really the only compelling pure play
designer in this market that investors have access to.
With a strong mind to developing tight IP around its
mounting portfolio of toys, as well as feeding and waste management solutions,
OPCO is looking to take its established ability to innovate and capture market
share through compellingly higher value products, and grow the company towards
an ever-larger retail presence. An IP book with over 160 individual patents is
quite an arsenal for OPCO to have at its command along this journey and this
same IP position also forms a highly effective defensive emplacement for the
business model against product encroachment by competitors in the retail space.
Record Q3 net revenues reported in November of around $6
million, and net income ($410,450) that was up 428 percent year-over-year,
underscore OPCO’s robust sales growth, driven in large part by its cat toys and
bowls/feeder lines. The company’s shrewd defense of its core IP is evident from
the recent Loving Pets Corporation patent infringement settlement in October
(529 utility patent, covering feeding dish with rubber on bottom that does not
extend up the sidewall) and the company actually reported nearly $15,000 in
other income during Q3, a figure which more than doubled year-over-year on the
strength of patent infringement settlements.
Helmed by Dr. Steven Tsengas, a Fellow at the Ohio Academy
of Science, as well as the National Inventors Hall of Fame and the American
Society of Patent Holders, OurPet’s Company has the visionary muscle to
continue to capture market share on the strength of its innovation and design.
Dr. Tsengas is a technical savant and serial entrepreneur with over 75 utility
and design patents under his belt, as well as the personal founding of over
half a dozen successful high tech and consumer product companies since 1976,
and he has even helped provide financial and managerial overwatch for several
other start-ups besides. The entire OPCO team measures up to the captain of the
ship and the latest word out of OPCO is that the company anticipates launching
a few new trend-setting products over the next several quarters. Investors
should keep an eye out for new product announcements and familiarize themselves
with the product lineup to get a better sense of the company’s position.
About MissionIR
MissionIR is committed to connecting the investment community with companies that have great potential and a strong dedication to building shareholder value. We know our reputation is based on the integrity of our clients and go to great lengths to ensure the companies represented adhere to sound business practices.
Sign up for “The Mission Report” at www.MissionIR.com
Please see disclaimer on the MissionIR website http://www.missionir.com/disclaimer.html
MissionIR is committed to connecting the investment community with companies that have great potential and a strong dedication to building shareholder value. We know our reputation is based on the integrity of our clients and go to great lengths to ensure the companies represented adhere to sound business practices.
Sign up for “The Mission Report” at www.MissionIR.com
Please see disclaimer on the MissionIR website http://www.missionir.com/disclaimer.html
