E-commerce and pet wellness are reshaping the pet food market in China

The pet economy is an important sector of the Chinese market, which is facing a steady growth over the past 5 years with an estimated revenue of approximately 490 billion RMB in 2022.The extremely fast and lasting development is due to a significantly high number of factors which made the Chinese pet market one of the most flourishing in the world. Among these factors, the increasing incomes of Chinese workers during the past few years surely is the most crucial one. Along with the growth of the revenues there are the so called “singles economy” and “silver economy”, which we will explain later. As a result, the Chinese pet market does not only include actual pets, but also toys, kennels, and food. More pets equal more food, and this rapid growth contributed to create a pet food market which in 2022 reached almost 170 billion RMB of revenue.

Why do people buy more pets?

In the past few years, the number of pets in Chinese houses has enormously increased, growing from 130 million in 2016 to the stunning number of 200 million animals in 2020. Dogs are the most popular pets in Chinese households, immediately followed by cats.

distribution of pet owners by pet type 2021
Source: iiMedia, designed by daxue consulting, distribution of pet owners by pet type 2021

This trend also has continued in 2022, when dogs have been reconfirmed as Chinese owners’ favorite pets. Dog food remains the most sold pet food in China as well, holding a market share of 53%. Cats’ popularity is raising fast in the last few years though, growing around 19.4% annually. In fact, according to statistics by the government of Canada, from 2017 to 2021 the cat food market in China has registered a 30% growth, bringing it to a revenue of 4.1 billion USD.

The latest trends show that there are three main factors which helped to create a highly developed pet economy in China: the increasing income of a medium Chinese worker, the singles economy, and the silver economy.

2013-2021 Disposable household income in China
Source: iiMedia, designed by daxue consulting, 2013-2021 Disposable household income in China

Since 2013, the average disposable income of a Chinese worker faced an enormous growth, going from 18,311 RMB to 35,128 RMB in 2021. This development helped a lot the Chinese market, because the richer people are, the more likely they are to spend money.

Less marriages and more old people are pushing the pet economy

Along with this phenomenon goes the singles economy, because an ever-increasing number of people prefer buying a house and a domestic animal instead of getting married and having kids. In 2020 the number of marriages in China was 8.14 million, 1.13 million less than 2019. The main reasons for this decline can be the hard work and the frenetic lifestyle that the population is suffering. People don’t have enough time to raise kids or to buy family-sized houses, because they are highly priced, so they prefer buying a flat and having a pet, it requires less time and less attentions than a kid

Another driver of growth is the silver economy. This economy refers to people who have more than 65 years old, whose number in China is facing an enormous growth. From 2014 to 2021 the number of old people in China grew to almost 270 million and approximately the 61% of them lives with a pet. Due to the frenzy of everyday life, young people such as children or grandchildren can’t always be with the elder ones. As a result, most of them buy animals to have a companion during the day, improving their life and happiness. This phenomenon gives a big push to the economy, because other than the costs related to the pet itself, there is also plenty of expenses a pet requires during its life, including toys and food.

With pets also comes the pet food…

Nowadays, the pet food market in China is turning into a key driver for consumption, because it’s characterized by a lively and ever-increasing market which is receiving more and more financial support by the big industries. Compared to other developed countries, the pet food market In China is only at its infancy, the first industries in this sector launched their activities in the Chinese market starting from 1990 with the entrance of the first multinational pet brands, including Mars Inc., Nestle and Purina pet food.

According to data from the China Feed Industry Association, in 2021 China’s pet food production reached 1.13 million tons, with a year-on-year increase of 17.3%. The largest pet food producing regions are the northern ones, with Hebei and Shandong on the lead, which reached a production respectively of 429,487 tons and 268,064 tons. Since 2015, the market of pet food faced an enormous growth: in 2021 it generated around 155 billion RMB, recording a growth rate of 11%.

Size of pet food industry in China 2015-2023
Source: iimedia.com, designed by daxue consulting, Size of pet food industry in China 2015-2023

The market has also increased because more young families, whose majority is formed by millennials, decide to buy a house on their own and follow the philosophy of “Dual Income No Kids” (DINK). Following this lifestyle, they prefer having pets instead of children, so that they can be freer and save more money for their interests.

Following these trends, more pet food industries are beginning to mushroom across the country, especially homegrown brands, and local start-ups, even though foreign brands are keeping the lead as the most profitable players.

When it comes to the type of pet food, because it has a more detailed quality control and a deeper process of Research and Development than the wet one. Pet food brands don’t just try to feed the animals, there is also a more complex system of nutritional benefits, which can improve the pet’s bones, muscles, circulatory and immune system.

One of the most common ways to purchase pet food is through e-commerce, according to a survey published by iimedia.com in 2022, out of 1,390 people who were interviewed, more than 60% of pet owners prefers buying online their products. This trend is growing especially thanks to the pandemic and the silver economy. Elder people prefer buying their products online instead of going outside, because it’s faster and more convenient, since it doesn’t require any effort. In fact, the big pet food producers are trying to enter the world of e-commerce to affirm their brand name in the Chinese market.

Asiatic giants of pet food production

In China, there are very few big brands producing pet food, because of more investments into domestic production. However, in 2020, 10 of these big brands combined detained more than 30% of market share. In the lead there is Mars Inc., whose products alone represented the 10,5% of the total sales. The podium in this ranking is shared by other two big pet food producers: Gambol and Bridge Petcare, which have a combined market share of more than 7%.

Leading players in China's pet food market
Source: statista.com, designed by daxue consulting, Leading players in China’s pet food market

Such high market concentration is possible thanks to some factors which conditioned the success and the sales of the first ones Firstly, we have the e-commerce: Asian giants of online purchasing such as Alibaba and Taobao guarantee a solid growth over time and a customer retention. It is cheaper, requires less time and the customer doesn’t even have to move from his house. Following this trend, more and more pet food brands began to appear into e-commerce sites, otherwise they would perish to the ones which brought this innovation.

The main example of the “rush” to e-commerce is the leader of the chart up here: Mars Inc. Indeed, in 2016 Mars announced a business partnership with Alibaba. For the first time in the pet food economy, customers could finally experience the “one stop shopping center”: people could purchase everything they needed through a single e-commerce app, including pet food, and the products would have been delivered to their houses as fast as possible, even if the consumers were situated in rural China, by using “Rural Taobao”.

Not only “pet food”, but also “pet wellness”

Apart from the e-commerce, there are also other innovations that pet food industries implemented to their products. For example, Royal Canin, one of the biggest competitors of Mars Inc. in 2019 released its firs sub-health pet nutrition products during the Pet Fair Asia in Shanghai. These products did not simply nourish the dog, but also improved their fur and health. Another example of products which improve the life of our four-legged friends is represented by the major pet food manufacturer in Taiwan (China): Fwusow Industry Co. Ltd. In 2020, the industry developed a line of dog food integrating OxC-beta, a vitamin which would help in supporting the immune functions.

Another way in which pet food industries can make their own name in the Chinese pet market is through investment. In fact, in 2020 Mars announced its plan to build Asia’s largest modern pet food plant in Tianjin municipality, which has an estimated expense of more than 100 million USD. Another huge investment is promoted by Nestlé, whose company on the Chinese market wanted to expand its product range. Resulting on a 230 million RMB in 2021, following their previous investment of 730 million RMB in May 2020, in which the brand focused more in dry pet-food and wet canned-food.

Pet food, an actual gold mine

  • Chinese pet food is now one of the most flourishing markets in China. Not only industries are investing hundreds of millions of RMB in research and development of their products, but they are also promoting themselves by using the biggest e-commerce platforms in China.
  • Pet food is becoming more sophisticated and more accessible to everyone, even if the consumer lives in the rural areas, far away from the main cities. Since 2017, this sector faced an enormous growth which is still going on, especially after the pandemic.
  • The pet food sector can only get better and wealthier as time passes by, there will be more incomes due to the singles economy and the silver economy, because of both the aging population and the decrease of marriages.
  • These factors are making the pet food market a gold mine of the Chinese economy, a gem unknown to the majority of companies.

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