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WWW.IBISWORLD.COM
Antal Neville
17 International Trade
33 Key Statistics
Industry Definition
19 Business Locations
33 Industry Data
Main Activities
Similar Industries
22 Competitive Landscape
Additional Resources
33 Annual Change
4 Industry at a Glance
33 Key Ratios
5 Industry Performance
25 Barriers to Entry
Executive Summary
25 Industry Globalization
Current Performance
Industry Outlook
27 Major Companies
28 Operating Conditions
28 Capital Intensity
13 Supply Chain
30 Revenue Volatility
14 Demand Determinants
31 Industry Assistance
16 Major Markets
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Main Activities
Similar Industries
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Additional Resources
IBISWorld
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Industry at a Glance
Horse & Other Equine Production in 2014
Key Statistics
Snapshot
Revenue
Profit
Exports
Businesses
$1.5bn
-4.1%
1.8%
$117.2m $362.8m 168,776
Demand from racing and individual sports
% change
There are no
Major Players in
this industry
12
% change
Market Share
12
18
Year 06
08
10
Revenue
12
14
16
18
Year
20
08
10
12
14
16
18
20
Employment
SOURCE: WWW.IBISWORLD.COM
p. 27
5.8%
7.5%
0.8%
Thoroughbred foals
Thoroughbred
breeding stallions
1.9%
Racehorses
Consumer
Confidence Index
11.3%
52.9%
Trade-weighted index
Price of feed
19.8%
Show horses
p. 5
SOURCE:
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SOURCE:
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Industry Structure
Mature
Medium
Regulation Level
Medium
Technology Change
Medium
Medium
Capital Intensity
High
Barriers to Entry
Industry Assistance
Low
Industry Globalization
Concentration Level
Low
Competition Level
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 33
High
Medium
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Industry Performance
Profit
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Industry Performance
% change
% change
2
4
6
Year
0
1
08
10
12
14
16
18
20
Year
08
10
12
14
16
18
20
SOURCE: WWW.IBISWORLD.COM
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Industry Performance
Current
Performance
Thoroughbred racing
and breeding
Competition
from other
forms of gaming affects
demand for race horse
production
public concern about the treatment of
retired racehorses and an NTRA that is
limited in its marketing and strategy
development for the industry.
However, consumers have not
completely lost interest in horse racing.
In fact, viewership of televised events has
increased. For example, the Belmont
Stakes drew in 20.6 million viewers in
2014 when the Triple Crown was at stake,
up from 7.0 million viewers in 2013. The
tune-in was the second-largest on record
for the Stakes, trailing only the 2004 race
when another Triple Crown was at stake.
The Rolex Equestrian Championship is
another annual horse racing event that is
gaining slightly higher viewership. As
viewership and interest spreads and
disposable income increases, the decline
in betting has slowed. In addition, the
increasing popularity of racinos,
combination race tracks and casinos, in
the past decade has helped generate more
interest for the sport in the past several
years. As a result, despite the five-year
overall decline, revenue is expected to
grow 1.9% in 2014.
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Industry Performance
International trade
A
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Industry Performance
% change
Industry
Outlook
12
0
12
24
Year 06
Revenue
08
10
12
14
16
18
20
Exports
SOURCE: WWW.IBISWORLD.COM
Turnaround in horse
racing
Profit expansion
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Industry Performance
Profit expansion
continued
Trade conditions
The
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Industry Performance
Products and services enjoy
wholehearted market acceptance
20
Maturity
Quality Growth
Company
consolidation;
level of economic
importance stable
15
10
Quantity Growth
Decline
-5
Shrinking economic
importance
-10
-10
-5
10
15
20
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Industry Performance
industry
is M
ature
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Supply Chain
42452
71121b
11
11521
33311
42382
42451
42491
54194
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0.8%
7.5%
Thoroughbred
breeding stallions
1.9%
Racehorses
5.8%
11.3%
Thoroughbred foals
52.9%
19.8%
Show horses
Total $1.5bn
Thoroughbreds have the highest breeding
value, particularly those with a proven
winning track record, since they are able
to mate up to 200 mares per year.
Show horses
While show horses also command much
higher prices than their utility-based
counterparts, racehorses often outshine
their value. Still, horses bred for these
purposes command high price tags in the
tens or hundreds of thousands of dollars
and account for a larger percentage of
revenue than recreational horses or
horses used for utility. Some of these
horses compete in dressage, jumping and
rodeo events.
Demand
Determinants
SOURCE: WWW.IBISWORLD.COM
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Demand
Determinants
continued
Racehorse demand
Demand for racehorses is primarily
driven by activity in the downstream
horse racing industry. An increase in
horse racing will increase demand for
racing Thoroughbreds. The prosperity of
US racehorse production depends on the
level of wagering at racetracks.
Meanwhile, the amount of prize money
and incentive payments received by
racehorse owners also determines the
funds available for purchasing
Thoroughbreds from studs.
The popularity and participation levels
of alternative animal racing and other
sports can also indirectly influence the
demand for horses. Like many Western
nations, the US has developed an
extensive greyhound racing circuit that
provides an alternative to traditional
horse racing. An increase in greyhound
racing can translate into reduced activity
in horse racing, thus lowering demand
for racehorses.
Export demand
Exports account for about one-fourth of
all industry revenue and are driven
mainly by the sale of horses for racing
purposes, including Thoroughbred
breeding. The value of the dollar relative
to the currencies of the United States
biggest trading partners, as indicated by
the trade-weighted index (TWI), forms a
part of export demand. As the TWI rises,
the value of the dollar increases relative
to the currency of foreign nations. On the
other hand, as the TWI falls, US horses
become more affordable to foreign
buyers. However, because highperformance racehorses are a high-value
commodity, buyers are often undeterred
by added expenses related to exchange
rates and are more motivated by the
pedigree of a horse. As such, in addition
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Major Markets
16.7%
Domestic racing
24.5%
Exports
17.1%
Showing
23.1%
Other
Total $1.5bn
18.6%
Recreation
SOURCE: WWW.IBISWORLD.COM
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Major Markets
continued
International Trade
Level & Trend
xports in the
E
industry are H
igh
and D
ecreasing
Imports
in the
industry are
Mediumand
Increasing
Exports
Although exports account for a significant
share of revenue, their value has dropped
slightly in the past five years. Highperformance horses for racing, which
make up the lions share of the value of
exports, are in low demand due to the
sports waning popularity. High-end
show horses are still in high demand,
though breeders in other countries,
particularly in Europe, have attracted
more of the global market in recent years.
Other
Other markets for horses include farm
and ranch work, carriage horses, polo
horses, rodeos and police work. Horses
bought for these and other miscellaneous
uses account for a significant share of
industry revenue. Nevertheless, there is
some crossover between this market
segment and the showing or recreational
segments. Polo horses, for example, can
be used for recreational sport as well as
professional sport.
Exports
Mexico and Canada are consistently strong
sources of demand for US exports. The
shared borders between the United States,
Mexico and Canada facilitate easier
transportation. Also, reduced trade barriers
from these countries participation in the
North American Free Trade Agreement
(NAFTA) further facilitates trade. Exports to
these two countries primarily consist of
greater volume of less expensive horses. The
United States shares an agriculture and
ranching history with both its neighbors; as
such, many horse dealers close to a border
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$ million
International Trade
continued
0
200
400
600
Year 06
Exports
08
10
12
Imports
14
16
18
20
Balance
SOURCE: WWW.IBISWORLD.COM
Exports To...
Imports From...
11%
Ireland
10%
Canada
12%
Japan
42%
11%
37%
Ireland
Germany
All others
20%
Netherlands
16%
Mexico
22%
All others
19%
United Kingdom
Year: 2014
Total $362.8m
Total $324.2m
SOURCE: USITC
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West
New
England
AK
0.0
Great
Lakes
WA
ND
MT
1.7
Rocky
Mountains
ID
OR
1.9
West NV
0.6
1.8
SD
1.8
WY
1.7
MN
1.2
2.6
Plains
CO
1.6
KY
2.0
OK
4.4
NC
1.9
TN
AZ
NM
2.4
1.3
Southwest
TX
11.7
HI
0.1
2 NH
3 MA
4 RI
5 CT
6 NJ
7 DE
8 MD
0.3
0.5
0.2
0.7
0.5
0.2
SC
Southeast
1.8
MS
AL
1.9
1.5
GA
2.0
1.7
LA
1.7
FL
3.3
Establishments (%)
0.1
0.8
AR
0.7
2.9
3.8
WV VA
2.4
3.9
3.3
CA
West
3.1
MO
KS
3.0
OH
2.6
1.7
3.3
IN
IL
1.7
UT
PA
2.4
1.7
0.3
1 2
3
NY
2.4
5 4
MI
2.8
IA
NE
1.9
WI
ME
MidAtlantic
9 DC
0.0
Less than 3%
3% to less than 10%
10% to less than 20%
20% or more
SOURCE: WWW.IBISWORLD.COM
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Southeast
The greatest equine inventories and sales
occur in the Southeast region. The
regions large proportion of horse sales is
explained by its heavy involvement in
racing and historical factors. Kentucky
alone, home of the Kentucky Derby,
accounts for about 6.0% of all horse and
pony revenue due to the states
dominance in the horse racing industry.
Kentucky is also referred to as the
Bluegrass State due to the quality of its
pastures, which are optimal for raising
horses. According to the Kentucky Horse
Park, the state produces roughly 30.0%
of Thoroughbred foals born in the
country each year and, during breeding
season, it is home to roughly 20,000
Thoroughbred mares and 368
20
10
Southwest
Southeast
Rocky Mountains
Plains
New England
Mid-Atlantic
Great Lakes
0
West
Business Locations
Establishments
Population
SOURCE: WWW.IBISWORLD.COM
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Business Locations
continued
Plains
The Plains region is expected to account for
the third-highest sales volume. Specifically
for this region, Missouri, Minnesota and
Iowa exhibit the highest regional
concentrations of equine sales volumes.
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22
Competitive Landscape
in
this industry is L ow
identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:
Cost Structure
Benchmarks
Profit
Profitability can vary widely between
different production segments. For
example, stud horses, or horses kept for
breeding, tend to be highly profitable
because their bloodline is crucial in
determining price. Racehorses also
generate a high profit margin based on
the high quality of their performance.
However, some businesses record losses
on their horse and other equine
production, but remain in business by
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23
Competitive Landscape
Industry Costs
(2014)
8.4
7.9
11.5
18.4
59.8
51.2
100
80
Percentage of revenue
Cost Structure
Benchmarks
continued
60
Profit
Wages
Purchases
Depreciation
Marketing
Rent & Utilities
Other
40
20
3.0
4.3
9.3
3.9
1.0
9.2
8.0
4.3
SOURCE: WWW.IBISWORLD.COM
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24
Competitive Landscape
Cost Structure
Benchmarks
continued
Basis of Competition
Level & Trend
ompetition
C
in
this industry is
Mediumand the
trend is I ncreasing
Internal competition
Price and quality are the two factors on
which most equine producers compete.
Competition between equine ranches is
primarily based on price because horses
and other equines are price-sensitive
commodities. Moreover, basic equine
stock is relatively homogeneous. Thus,
the main basis for distinguishing between
suppliers is price.
In contrast, specialist equine
producers compete on a platform of
quality where horse bloodlines are
extremely important. Buyers of
Thoroughbreds meant for racing, for
instance, are less sensitive to price
changes than customers in other breed
segments. The premium prices for
Thoroughbreds reflect the high
production costs associated with animal
husbandry as well as the specific traits of
the horse produced. Thoroughbred
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25
Competitive Landscape
Barriers to Entry
Level & Trend
arriers to Entry
B
Industry
Globalization
Level & Trend
lobalization
G
in
this industry is
Highand the trend
is I ncreasing
Level
Medium
Low
Mature
High
Medium
Medium
Low
SOURCE: WWW.IBISWORLD.COM
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26
Competitive Landscape
Trade Globalization
200
Export
150
100
50
0 Local
0
80
120
Imports/Domestic Demand
160
200 Export
Exports/Revenue
International trade is a
major determinant of
an industrys level of
globalization.
Exports/Revenue
Industry
Globalization
continued
Global
150
100
50
2004
0 Local
0
2014
Import
40
80
120
160
Imports/Domestic Demand
SOURCE: WWW.IBISWORLD.COM
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Major Companies
Other Companies
Darley America
Westphalia Ranch
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Operating Conditions
of capital
intensity is H
igh
Capital intensity
Economy
Agriculture,
Horse & Other
Forestry, Fishing
Equine
and Hunting
Production
Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
Livestock Production
Support Services
Capital Intensive
Labor Intensive
Old Economy
Agriculture and Manufacturing.
Traded goods can be produced
using cheap labor abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialize
in niche, high-value products.
SOURCE: WWW.IBISWORLD.COM
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Operating Conditions
Capital Intensity
continued
Technology
& Systems
Level
The level
of
Technology Change
is M
edium
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Operating Conditions
Level
The level
of
Volatility is M
edium
Volatility vs Growth
1000
Revenue Volatility
Hazardous
Rollercoaster
100
10
1
0.1
Stagnant
30
10
Blue Chip
10
30
50
70
Regulation is
Mediumand the
trend is S
teady
State regulations
Equine producers must comply with state
regulations that aim to control the impact
of agriculture on the local environment.
Regulations commonly relate to the size
of operations, waste disposal, odor
control, animal health and water quality.
For startup farms, county zoning policies
also impact on location decisions.
Increasing public concern about the
treatment of animals is placing pressure
on regulatory authorities to tighten
controls on horse ownership. Non-profit
organizations, such as the Animal
Protection Institute (API), have played a
key role in bringing the welfare of horses
to the attention of the American public.
Although the organization has no
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Operating Conditions
Relevant legislation
A 2007 ban on slaughtering horses for
meat was lifted in 2011. Also in 2011, the
Federal regulations
In 2014, a new Farm Bill was passed (The
Agricultural Act of 2014). Key provisions
include reinstating federal emergency
disaster relief programs that had expired
in 2011. These programs include the
Livestock Indemnity Program (LIP), the
Livestock Forage Program (LFP) and the
Emergency Livestock Assistance Program
(ELAP). Following a natural disaster,
equine farmers will be able to apply for
loans and may be able to receive funds.
The industry benefits from increased
funds to support conservation programs
by livestock producers (Environmental
Quality Incentives Program and
Conservation Security Program) and
increased funds for export development
through the Market Access Program,
which is designed to promote US
agricultural or livestock products to
foreign export markets.
Industry Assistance
Level & Trend
he level of
T
Industry Assistance
is L owand the
trend is S
teady
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Operating Conditions
Industry Assistance
continued
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Key Statistics
Industry Data
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Sector Rank
Economy Rank
Industry
Revenue Value Added Establish($m)
($m)
ments
2,011.0
579.2
171,967
2,160.7
605.0
166,843
2,348.6
655.3
168,694
2,000.8
314.1
165,375
1,824.5
507.2
160,476
1,708.8
507.5
169,117
1,570.6
422.5
170,301
1,389.1
482.0
172,043
1,455.9
528.5
170,553
1,483.4
527.0
174,799
1,492.6
534.2
176,630
1,519.9
545.3
180,323
1,561.3
555.5
183,513
1,617.5
568.9
185,020
1,624.7
568.3
187,291
28/37
27/37
6/36
1078/1319 1060/1319
57/1318
Enterprises Employment
157,533
733,183
165,643
762,509
167,080
796,597
158,184
787,135
152,252
770,444
162,352
800,609
161,193
813,422
165,620
856,313
166,156
874,297
168,776
877,633
169,302
881,248
172,018
881,989
172,902
885,373
175,095
890,244
175,902
895,736
6/36
3/37
54/1318
49/1319
Exports
($m)
549.7
573.8
471.6
484.4
512.9
436.8
366.4
475.0
378.8
362.8
351.2
345.3
346.2
329.4
322.0
19/27
262/405
Imports
($m)
337.7
335.1
413.0
331.9
231.0
235.3
311.5
309.9
323.6
324.2
351.3
384.8
405.7
429.9
454.7
17/28
294/406
Wages
($m)
374.0
384.6
415.7
332.1
290.1
334.9
298.4
277.8
279.6
273.3
279.0
285.4
288.5
292.3
290.5
23/37
1067/1319
Domestic
Demand
1,799.0
1,922.0
2,290.0
1,848.3
1,542.6
1,507.3
1,515.7
1,224.0
1,400.7
1,444.8
1,492.7
1,559.4
1,620.8
1,718.0
1,757.4
22/27
317/405
Enterprises Employment
(%)
(%)
5.1
4.0
0.9
4.5
-5.3
-1.2
-3.8
-2.1
6.6
3.9
-0.7
1.6
2.7
5.3
0.3
2.1
1.6
0.4
0.3
0.4
1.6
0.1
0.5
0.4
1.3
0.6
0.5
0.6
12/36
20/37
540/1318
937/1319
Exports
(%)
4.4
-17.8
2.7
5.9
-14.8
-16.1
29.6
-20.3
-4.2
-3.2
-1.7
0.3
-4.9
-2.2
23/27
339/405
Imports
(%)
-0.8
23.2
-19.6
-30.4
1.9
32.4
-0.5
4.4
0.2
8.4
9.5
5.4
6.0
5.8
17/28
286/406
Wages
(%)
2.8
8.1
-20.1
-12.6
15.4
-10.9
-6.9
0.6
-2.3
2.1
2.3
1.1
1.3
-0.6
32/37
1189/1319
Domestic
Demand
(%)
6.8
19.1
-19.3
-16.5
-2.3
0.6
-19.2
14.4
3.1
3.3
4.5
3.9
6.0
2.3
11/27
171/405
Annual Change
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Sector Rank
Economy Rank
Industry
EstablishRevenue Value Added
ments
(%)
(%)
(%)
7.4
4.5
-3.0
8.7
8.3
1.1
-14.8
-52.1
-2.0
-8.8
61.5
-3.0
-6.3
0.1
5.4
-8.1
-16.7
0.7
-11.6
14.1
1.0
4.8
9.6
-0.9
1.9
-0.3
2.5
0.6
1.4
1.0
1.8
2.1
2.1
2.7
1.9
1.8
3.6
2.4
0.8
0.4
-0.1
1.2
19/37
27/37
11/36
780/1319 1049/1319 410/1318
Key Ratios
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Sector Rank
Economy Rank
IVA/Revenue
(%)
28.80
28.00
27.90
15.70
27.80
29.70
26.90
34.70
36.30
35.53
35.79
35.88
35.58
35.17
34.98
19/37
590/1319
Imports/
Demand
(%)
18.77
17.43
18.03
17.96
14.97
15.61
20.55
25.32
23.10
22.44
23.53
24.68
25.03
25.02
25.87
10/27
192/405
Exports/
Revenue
(%)
27.33
26.56
20.08
24.21
28.11
25.56
23.33
34.19
26.02
24.46
23.53
22.72
22.17
20.36
19.82
9/27
130/405
Revenue per
Employee
($000)
2.74
2.83
2.95
2.54
2.37
2.13
1.93
1.62
1.67
1.69
1.69
1.72
1.76
1.82
1.81
37/37
1318/1319
Wages/Revenue
(%)
18.60
17.80
17.70
16.60
15.90
19.60
19.00
20.00
19.20
18.42
18.69
18.78
18.48
18.07
17.88
15/37
660/1319
Employees
per Est.
4.26
4.57
4.72
4.76
4.80
4.73
4.78
4.98
5.13
5.02
4.99
4.89
4.82
4.81
4.78
8/36
966/1318
Average Wage
($)
510.10
504.39
521.84
421.91
376.54
418.31
366.85
324.41
319.80
311.41
316.60
323.59
325.85
328.34
324.31
37/37
1319/1319
Share of the
Economy
(%)
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
27/37
1060/1319
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Industry Jargon
IBISWorld Glossary
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IBISWorld Glossary
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