HOW DOGS CAN SAVE THE ELK FARMING INDUSTRY
by Russell Sawchuk, Deerfarmer.com Digest

The elk farming industry in North America was built on velvet antler. Elk velvet antler (EVA) has been used in Asia for over 2,000 years as a medicinal and health product. High demand and prices for velvet, especially from Korea, fueled the growth and expansion of the elk farming industry in the 1980s and 1990s in Canada and the United States.

Then came CWD! With the discovery of Chronic Wasting Disease in a few farmed elk in Saskatchewan and later in Colorado, Korea closed its borders to the importation of North American velvet antler. The export markets remain closed, with no immediate prospect of them reopening. The loss of the Korean market has had devastating effects on the industry.

During the good times, there were some feeble attempts by the industry to develop a domestic market for velvet antler products. However, not much was done on a co-ordinated, national basis. Some individual producers were successful in developing farm-gate sales and distribution through local health food stores.

Clearly, for the industry to thrive again, significant American markets for EVA must be developed. Interestingly enough, it appears that the dog health market may be the saviour for elk farmers.

There are many good reasons why selling elk velvet antler to dog owners is an attractive opportunity for our industry. These include:

• A large target audience with over 60 million dogs in the United States alone.
• A growing demand for products to treat an estimated 10 to 15 million dogs with joint problems and arthritis.
• A study by Alberta Agriculture market research staff found that the greatest need in the pet health market is for products to treat arthritis.
• People are more interested in using "natural" health products for themselves and for their pets.
• EVA works in about 70% to 85% of dogs with arthritis and joint problems.
• Velvet antler has other health benefits in addition to treating problems with arthritis, e.g., greater energy, faster healing.
• Independent, peer-reviewed scientific evidence that velvet antler is effective in alleviating the condition in arthritic dogs (see below).
• Market research showing where and how to best sell EVA to dog owners.
• Unlike many other competitive products, velvet antler appears to have very few negative side effects. Toxicity studies show no adverse effects even with very high dosages.
• Selling EVA products to the pet market has fewer regulatory requirements and issues compared to selling velvet antler to the human markets.
• Demand for pet health products is non-seasonal and relatively recession proof.
• The largest market is here at home; thus there are no trade or export issues.
• Elk velvet antler is an annually renewable resource.
• Elk farming is a highly-efficient and environmentally-friendly agricultural activity.

Velvet antler for dogs appears to be a perfect product for a very attractive market!

Here are some statistics that we compiled to help the industry assess the market potential of the pet nutraceutical and health sectors.

United States

• 35 million (out of 105 million) households own a dog
• 60.7 million dogs (US Pet Food Institute)
• 76 million cats

Europe

• 55 million households own a pet
• 41 million dogs
• 47 million cats

United Kingdom

• 4.8 million (out of 24.6 million) households own a dog
• 4.5 million households own a cat
• 6.1 million dogs
• 7.5 million cats

Japan

• 9.5 million dogs
• 7.1 million cats

Canada

• 7 million dogs (estimated).

We have included available statistics on cats as well. There is reason to believe that EVA will work with cats as well.

According to a survey by APPMA (American Pet Products Manufacturing Association), there are 65 million dogs and 77.7 million cats in US households. APPMA estimates that pet owners spent $31 billion in 2003 to care for, feed, spoil and pamper the American pet population.

Other findings from the APPMA survey found:

• Dogs and cats are in at least one-out-of-three US households.
• One-third of small animal owners consider their pets as children or as family members.
• Companionship, love, company and affection along with fun to have in a household are the top benefits associated with pet ownership.
• The majority of US pet owners have purchased a gift for their companion animals within the last 12 months.

Knowing the number of dogs, what is the potential demand for velvet antler products among dog owners? For our calculations, we assume that the average arthritic dog will require 500 mg of velvet antler powder per day.

• If 500,000 dogs or 0.8% of all US dogs were on 500 mg of EVA per day, this would require 124 tons of green velvet antler annually. This is approximately the volume of velvet antler currently produced each year in Canada and the USA.
• If 1 million dogs or 1.6% of all US dogs used velvet antler, this would require 248 tons of velvet antler each year.
• If 5 million dogs or 8% of all US dogs used velvet antler, this would require 1,240 tons of velvet antler, or the entire world's current production!

This is why this opportunity is so momentous! A very small penetration of the dog market could consume all the velvet being produced in North America. Establishment of this one market would be a significant driving force to getting the industry back to profitability and growth.

The other advantage of establishing a domestic market is that most of the revenues would stay in North America. Doing some quick calculations on the volumes described above, we found that:

• If 500,000 dogs were using velvet antler, this would result in $7.4 million annually going to producers (based on $30/lb) and $91.2 million in yearly retail revenues (based on $0.50 per dog per day).
• If 1 million dogs were using velvet antler, producers would received $14.8 million and the yearly retail revenues would be $182.4 million (using the same assumptions).
• If 5 million dogs were using velvet antler, revenues to producers would be $74.4 million with retail sales being $912.5 million.

Therefore, going the value-added route by selling capsules directly to dog owners and/or selling wholesale to pet stores or veterinarians would keep much of the money within the industry.

Dr. Maxim Moreau and his colleagues at the Faculty of Veterinary Medicine, University of Montreal recently published the results of their study on the effectiveness of velvet antler and dogs. A powder of elk velvet antler was evaluated on client-owned dogs with osteoarthritis (OA) in a clinical, double-blind, and placebo-controlled study. Thirteen dogs received a placebo for 30 days and then velvet antler for 60 days. Twenty-five other dogs received velvet antler for 60 days. Measures included gait analysis measured by a force plate, clinical signs assessed by an orthopedic surgeon, performances in daily life activities and vitality assessed by the owners, and complete blood analysis.

On placebo, the 13 dogs did not show significant improvement; however, their gait, their performance in daily life activities, and their vitality were significantly improved after treatment with velvet antler. The 25 dogs on velvet antler showed similar improvements. No clinical changes were revealed on blood analysis.

The researchers concluded that administration of velvet antler was effective in alleviating the condition in arthritic dogs. (Canadian Veterinary Journal, Volume 45, February 2004, page 133. All correspondence and reprint requests should be made to Dr. Maxim Moreau at m.moreau@umontreal.ca ).

The above study was initiated and funded by Qeva Velvet Products Corporation of Calgary, Alberta Canada. Qeva Corp., in conjunction with Steppingstones Partnership, Inc. (owner of Deerfarmer.com) also undertook a sixteen-month long

market research project to determine the best strategies for the marketing and promotion of dog health products to North American consumers. Free samples of Qeva's elk velvet product were made available to dog owners through Steppingstones' arthritis-in-dogs.com website. In return for a free sample, dog owners agreed to complete a questionnaire before and after the treatment providing data about their dogs, the treatment results and their buying preferences.

In this study, there was an observed improvement in 70% of the dogs after taking velvet antler. The dog owners reported no change in 21% of the cases. Using pre-post score changes, the greatest improvements were seen in energy levels, endurance and reduction of pain. Even in the dogs where the owners did not notice any changes, pre-post scores were statistically higher in energy and endurance levels. In 72% of the cases, improvements were noticed within ten days.

The elk industry now has the scientific evidence it needs to convince veterinarians and dog owners that velvet antler is an effective product for treating arthritis and joint problems in dogs.

Below is a marketing plan for the elk farming industry to develop these North American dog health markets. I have prepared this Plan to help industry associations, distributors and producers sell elk velvet antler products to dog owners.

Before a marketing plan is implemented, several things need to be in place:

1. Suppliers and adequate supplies of velvet antler capsules. No use getting distributors and consumers frustrated because they can't, or don't know where to, obtain EVA. To date, the industry has done a poor job in compiling this information and making it readily available. This must change if the proposed marketing campaign is to be successful.
2. Quality assurance. There is a risk of poor product getting into the marketplace because some producers are interested in cutting costs and maximizing profits. Just because the velvet is for dogs does not mean that lower or inferior grades should be used. The positive results found in the research were based on top quality product designed for human consumption.
   Perhaps some type of national certification and branding program is required to assure buyers that they are getting the best North American elk velvet antler available.
3. Co-ordination of marketing activities. Given that NAEBA, the state associations and individual producers have limited resources, co-ordination of effort is highly desirable. Sharing responsibilities for media releases, convention and trade show booths, and the other promotional activities described below will produce better results.
4. Shared promotional materials. It does not make economic sense to have every association and producer design and print their own brochures and other promotional materials for marketing velvet antler to veterinarians and dog owners. High-quality materials that can be used by multiple players, for a multitude of purposes, are the way to go.

As a small industry, we do not have the resources to undertake extensive marketing right across North America. But according to our market research study, there are geographical regions that show better potential than others.

In our research and experience, some 94% of the demand and sales came from the United States and only 6% from Canada. Therefore, the focus certainly has to be on the American dog owner.

Within the United States, we found the greatest interest/potential in the southeast and mid-Atlantic states. The northeast and western states (except for California) showed the least interest.

According to our research, the following states showed the greatest potential for establishing markets for velvet antler for dogs:

• Florida
• California
• Texas
• Pennsylvania
• New York
• Ohio
• Michigan
• North Carolina
• Illinois
• Washington

Therefore, we recommend that marketing and promotion campaigns be first targeted at these states, beginning with Florida, California and Texas.

So how does the industry reach the dog owners in these states? We do not have the resources or money for a mass media marketing campaign. Again we turn to the results of our market research study.

When asked what their main source of information is about dog health products, our respondents said:

• My veterinarian 68%
• Internet 60%
• Other dog owners 30%
• Dog magazines 17%
• Pet stores 11%
• Retail stores 4%
• Dog clubs 2%
• Other 4%

The vet is the most important source of information about dog health products. The second is the Internet. (This finding must be viewed by caution as all of our survey respondents used the Internet. This may not be true with the general population.)

This list also shows where advertising would be less effective, e.g., dog clubs, retail and pet stores and dog magazines.

The veterinarian is a key health information gatekeeper for pet owners. Therefore, any effective strategy for marketing velvet antler must include making veterinarians aware of velvet antler and its potential benefits for dogs with osteoarthritis.

An additional benefit is that veterinarians are also looking for ways to increase their revenue sources. Many vets will be interested in selling elk velvet antler products to their clients.

[At my suggestion, an Ontario elk farmer took out an ad in the same issue of Canadian Veterinary Journal that the Moreau research article appeared. In a note to me, he said that he had received a great response and had sold cases of velvet antler to vets in every province in Canada as a result of the ad. This demonstrates that vets are willing to sell velvet antler to their clients once they have seen the scientific evidence of its benefits.]

According to the American Veterinary Medical Association there are over 81,000 practicing veterinarians in the United States, of whom some 69,000 are members of the AVMA. There are about 46,000 vets in private practice – 68% males and an average income of $84,000 (before taxes). Some numbers for the specific high-priority states mentioned above include 1,500 vets in Pennsylvania, 1,700 in Michigan and 1,500 in Illinois.

A group of particular interest is the American Holistic Veterinary Medical Association ( http://ahvma.org ). AHVMA has a list of members by state/province on its website.

Here are some strategies to make American veterinarians aware of the benefits of velvet antler and to get them interested in carrying and selling EVA products:

1. Media releases – a news release about the research findings should be prepared and sent, along with a copy of the article and a supplier list, to each veterinary medical association in the United States. (A list of these associations and their contact information is available at: http://www.avma.org/statevma/default.asp . Another useful source of contacts is our Arthritis-in-dogs.com site – http://www.arthritis-in-dogs.com/html/links.htm ).
2. Advertising in veterinary professional journals – as shown above, an ad in a veterinary journal can have very good results. Elk associations and/or individual producers should consider advertising in their state's veterinary association newsletter or magazine. Contact the association and ask for an advertiser's kit. It will have all the information you need including rates, closing dates, numbers distributed and a readership profile.
3. Conventions – having a booth at a convention with hundreds of veterinarians is an effective way to market to these professionals. It is a good opportunity to meet the veterinarians in person, hand out brochures and free samples, and even sign them up to carry your product. NAEBA and/or state elk associations may want to attend on behalf of their producers to reduce costs. However, there is no reason why individual elk producers should not consider this approach as well. Here are a few conventions to consider:

• The American Veterinary Medical Association Convention for 2004 will be held in Philadelphia, PA on July 24 to 28, 2004. See their website – http://www.avma.org – for more information.
• The California Veterinary Medical Association Annual Conference is being held in San Francisco at the Renaissance Parc 55 Hotel on June 25-27, 2004. See http://www.cvma.net for details.
• The American Holistic Veterinary Medical Association will hold it annual convention in Kansas City, Missouri (Kansas City Marriott Downtown) on September 10-14, 2004. For more information see http://ahvama.org/annual_conference/main.html

4. Direct mail – for a fee, most state veterinary associations will include your brochure or flyer along with their mailing to their members. Another approach to reaching veterinarians is to rent mailing lists from commercial firms or the associations. This is a more expensive approach but at least you know that your information will get to the vet, and will not be lost in hundreds of other messages. Holistic vets should be high on the priority list for any direct marketing. You can obtain a list of holistic veterinarians and their contact information from the AHVMA website at http://ahvma.org .
5. Customer requests – a good way to get the vet's attention and interest is to have his/her clients asking for velvet antler products for their dogs. In any direct-to-consumer marketing undertaken, it is important to remind people to ask their vet about velvet antler for their dog.

Finally, every elk producer should ensure that every veterinary he knows has information about the research findings concerning velvet antler and dogs with arthritis.

The Internet is an important tool that the elk industry must use in its campaign to promote velvet antler. The Internet can be used to:

• Provide research and other information about velvet antler and its effectiveness for arthritic dogs.
• Tell dog owners, veterinarians and interested distributors where to get elk velvet antler.
• Recruit distributors, retailers and veterinarians to sell velvet antler products.
• Sell EVA products directly to consumers via on-line stores.

The challenge with the Internet is that it has become so big (35 million websites at last count) that it is often difficult to be found. However, we already have a couple of related websites that rank high in the search engines. These are our arthritis-in-dogs.com and velvet-antler.com sites. Since search engines first look at the content of the domain names, both these tend to do well in searches using these words.

Here are our recommendations about taking full advantage of the Internet to develop a velvet antler dog market:

1. Each state/provincial elk association MUST compile a comprehensive directory of its members who have velvet antler products for sale. Name and phone number is not enough. Full contact information is essential along with where they sell (locally, nationally or internationally) and how they sell (farm-gate sales, wholesale, through retailers, on-line). This information must be placed on a separate page of each association's website.
2. The Arthritis-in-dogs.com website needs to be updated with current information and used to direct people to places where they can purchase velvet antler products for their dogs.
3. The Velvet-antler.com website needs to be completed in a format similar to our venison-meat.com site. This includes information on research, resources and a supplier directory.
4. All generic promotional materials such as brochures and media releases should include the addresses of appropriate websites.
5. Both on-line and off-line promotional activities should be undertaken to make the public and other potentially interested parties know about websites containing information about velvet antler.

A co-ordinated Internet strategy will ensure that North American dog owners become aware of the benefits of velvet antler, and will make it easy for them to purchase the product.

There are many other strategies that could be used as well. Unfortunately we have run out of room here. However, if we can successfully implement the few strategies discussed above, I am positive that the demand for velvet antler will increase significantly. This in turn will provide much needed cash to elk producers who have suffered many hardships in the last few years. It could also be a turning point for the industry to return to growth and prosperity!

Russell Sawchuk, Deerfarmer.com

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