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Home Lifestyle Food

How China presents opportunity for pet-food majors

by Staff Writer
February 8, 2021
in Food
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Chinese consumers prefer to feed pets with imported products
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Chinese consumers prefer to feed pets with imported products

just-food’s China market columnist Peter Peverelli digs into the country’s growing pet-food market.

Due to rising living standards and urbanisation, phenomena referred to as “empty-nest youth” and “empty-nest elderly” have soared in China.

The former will strike many western readers as odd, as empty-nest syndrome is typically linked to the elderly. However, remember the subject of the previous Eye on China column the growing number of Chinese young adults living on their own. They enjoy a level of freedom their parents and earlier ancestors had not even dreamed about but they are culturally still Chinese, with a communitarian inclination.

If you are not ready for regularly sharing your home with another person but still would like a companion, then a pet is an attractive alternative. The number of these empty-nest youths in China is expected to reach 92 million this year. This comes on top of the more than 250m Chinese aged 60 and above, who traditionally more often own pets.

In China, pet owners are not necessarily in the highest income bracket. Some 49.6% of pet owners earn CNY4,000 a month or lower, with a further 26.2% in the CNY4,000-9,999 a month bracket, according to Beijing-based Intelligence Research Group. However, that does not mean pet food should be priced low in China. As pets are perceived as replacements for children, Chinese dote on their pets as they do on their children.

Pets are not limited to traditional cats, dogs, fish and birds. Pet ducks, pigs, lizards and other animals have also become perceived as pets. In 2019, the popularity of a celebrity pet duck on Weibo, TikTok and other platforms set off a wave of duck raising, as reported by media outlets including AsiaOne last summer.

However, at present, cats and dogs still occupy a leading position, and more than 90% of pet owners raise these animals. The number of cats and dogs raised in cities and towns increased significantly in 2019: dogs reached 55.03 million, an increase of 8.2% year-on-year. Cats reached 44.12 million, an increase of 8.6% (IRG. 11/12/2020).

Trade association The China Pet Food Alliance has published the following values of the Chinese pet food market, including estimates for 2021 and 2022.

China’s pet-food market size by value

Source: The China Pet Food Alliance

Traditionally, Chinese used to feed their pets with leftovers from their own meals. The arrival of pedigree pets increased awareness of animal nutrition. In particular, as cats and dogs have become perceived more as members of the family, their owners are willing to buy special pet food and snacks.

The top-selling pet-food brands in China are still dominated by imports (though partly produced domestically). Online platform Maigoo ranks the top five as: Mars’ Royal Canin; Nestlé’s Purina in second; another Mars brand – Pedigree – in third; Pro Plan, also owned by Nestlé, in fourth; and Nature Bridge in fifth.

Only Nature Bridge is a domestic brand, produced by Shanghai-based Ruiji Pet Needs Co., Ltd. Ruiji was jointly established with an undisclosed Norwegian partner in 2002. The company’s founder got his inspiration for ‘natural’ pet food during his stay in Norway, according to the Ruiji website. However, the brands listed six to ten in this list are all domestic players.

The preference for imported food reflects the emotional attitude of Chinese pet owners: nothing but the best for them and foreign pet food is accredited similar higher quality as imported human food.

The import value of pet food soared from 2017 to 2019, more than doubling between 2017 and 2018 to US$206.4m and growing again by 49% in 2019 to $307.6m, as per China Customs data, quoted by chemlink.com. Even during the pandemic period, imports continued to grow rapidly.

The customs data also show that, while almost half of the imported pet food was canned pet food up to 2017 (43.5%), the ratio of canned food started to decrease rapidly from 2018. It was only 23.6% in the first four months of 2020.

Foreign parties intending to export finished pet food or pet food ingredients to China need to seek a registration at the Chinese Ministry of Agriculture and Rural Areas (MOARA). Up to the end of April 2020, 822 formula pet food (staple food) had valid MOARA registration approvals, among which 282 were cat food, and 540 were dog food. New Zealand heads the list of regions with licensed companies with 121 facility registration approvals. The countries with double-digit licenses are: the US (36), Thailand (32), Germany (21), Spain (13). and the Netherlands (12).

In August 2019, the website gouminwang issued a China Pet Industry White Paper 2019, providing valuable information regarding the product qualities that concerned Chinese pet owners most. Some 54% of pet owners said nutrition was the product characteristic they valued most, the research stated.

The white paper did not note an apparent preference for domestic or imported brands but over half of the pet owners in the first-tier cities will choose imported brands. The latter show a distinct preference for pet food from Canada or the US. These figures show an interesting contrast with the number of import licenses. Canada has only nine licensed companies against 212 for New Zealand. However, the New Zealand companies include a number of ingredient suppliers.

As for preferred sales channels, the white paper states half the pet food was purchased online, followed by specialist pet stores (30%), supermarkets (10%) and others (10%). During my visits to supermarkets in the major Chinese cities, I have seen well-positioned special displays for pet food and most of the pet owners among my Chinese friends buy their pet food there. The large volume of online sales in 2019 can probably be attributed to the ’empty-nest youth’. My acquaintances tend to be in the 60-plus age bracket.

So, what are the opportunities for international players in this market? These are still overwhelmingly in the cat- and dog-food segments. With its recent launch of Lily’s Kitchen, Nestlé is trying to cash in on the broader organic trend in China. Feed for the emerging group of other pets seems to be a segment for potential growth, although there is insufficient information for even estimating that potential.

Another promising segment is pet snacks. The white paper mentioned above shows the per capita expenditure on snacks increases faster than that on pet food. There are opportunities here for innovative products, with a focus on flavours and nutrition. Healthy snacking is booming in China these days and owners will be conscious of looking for equivalent products for their pets.



Source by www.just-food.com

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