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Chinese Pet Economy Is Booming With 170.8 Billion YUAN Market Size

on April 05, 2021

1. The pet economy is booming, with market size of 170.8 billion YUAN

Since my china’s pet industry’s formation, although the market has grown, the scale has not been very large. After the new dog-raising policy released in 2012, the pet industry seemed to be injected with a “booster,” and the market growth rate was unusually obvious.

According to the “White Paper on China’s Pet Industry in 2019,”, Chinese pet market has reached RMB 170.8 billion. It has expanded nearly five times compared with 2012, the pet economy has become increasingly hot, and the industry’s scale has continued to grow and improve.

china pet industry market scale

In 2019, the number of pets in china had exceeded 168 million, and the main breeds are cats and dogs.

According to data from the China Business Industry Research Institute, china’s pet dogs account for 34%, and cats account for 20%. The two together exceed half of the number of total pets.

This shows that china’s pet owners have an increased preference for cats and dogs.

The result is that most of the food and pet services in the market are for cats and dogs. The other pets are fish, hamsters, tortoises, and rabbits. The types of pets are diversified.

number of pets in china

proportion of pet breeds in china

2. Food and medical care are the core of the pet industry chain

The growing pet economy brings an increase in demand for pet products and services.

The pet industry chain mainly covers seven subdivision niche business:

  • Upstream products include pet trading, pet food, pet supplies;
  • Downstream services mainly include pet medical treatment, pet grooming, pet training, pet insurance, etc.

Food and medical treatment have always been hot in the pet industry, but overseas products have occupied a significant market share. As a rigid demand, pet food accounts for up to 33.8% of the industry, followed by pet medical treatment, which accounts for 22.9%.

pet industry market composition

According to Euromonitor data in the Pet food field, Mars alone has a market share of 76.4%, and the competitiveness of domestic brands is insufficient.

In the medical area, Chinese Domestic pet hospitals are expanding rapidly, but they rely heavily on foreign medical products. Imported products such as pet vaccines, veterinary drugs, and diagnostics account for nearly 90% of the market.

3. Five new features of the pet industry

The wokeepet also found that The industry shows five unique characteristics after looking at the domestic pet economy status in 2019, mainly reflected in consumer groups, industrial chain, pet breeds, etc. How will these changes affect the pet economy?

3.1. Consumers are getting younger and younger, and 25-30 age young people have become the leading consumer

The market has always believed that the pet industry’s development is closely related to the aging of the population. This is indeed the case in European and American countries.

In the United States, where the pet market is the most developed, the aging population and continued income growth are the main factors driving the pet market’s prosperity, with nearly 50% of the pet owners over 45 years old.

But in China, young people are the main ones in pet consumption. Judging from age, According to data from Goumin,

the 20-40 aged people are the primary pet products consumers, accounting for 77% in 2019, and they are the primary pet owners. In terms of gender, Female consumption is dominant. 88% of the mainstream cat and dog pet owners are women.

We also found a very interesting thing:

the rapid growth of 20-30 aged users are the leading pet products consumers in 2019 and has shown a continuous growth trend.

In 2016, 48% of 30-40 aged pet owners were the main population, and 20-30 aged people accounted for only 17%. By 2018, the 20-30 aged pet owners has reached 43%, becoming the main population keeping pets.

The pet economy belongs to young people, and the growing consumer group is indeed driving the pet industry to prosperity.

  • In the hearts of young people, pets are regarded as a member of a family. Users are willing to pay for pet consumption. In 2018, china’s per capita pet consumption was 5,016 yuan, an increase of 15.3% over 2017, and 80% of the consumption was Contributed by the 30-40 aged pet owners.
  • Secondly, young people are more receptive to new things. In addition to pet food, young people are willing to try consumption such as beauty, photography, foster care, insurance, training, etc. This also promotes the development of the pet industry chain’s downstream service market.
  • Besides, we see that “shared pets” and “pet internet influencers” are also sought after by young people, and new economic forms continue to emerge.

3.2. The pet industry is “upgrading consumption.”

When nowadays people shouted that they were “consumption downgrading,” we found that pets not only “eat better,” but “service products for pets” has also begun to rise, and the industry seems to be upgrading.

The reason why the pet industry is upgrading consumption, we have observed two key points:

  • On the one hand, the growth rate of mid-to-high-end pet food sales is much better than that of the low-end market.

According to the “2018 Pet Consumption Trend Report”, mid-to-high-end food for pet dogs and cats (20-25 RMB yuan per kg) has the highest year-on-year increase, reaching 100.69% and 136.54%, which is twice the increase of low-end food. Indicating consumption People are more willing to buy big-brand, high-quality rations for pets.

  • On the other hand, Services of insurance, grooming, training, photography, foster care, and funeral pets around the downstream industrial chain are emerging. In these newly pet service markets, people aged 25-35 account for nearly 70%, reflecting that young people are more receptive to new things and are more willing to spend money on services.

Data show that consumption in the pet service industry in the first half of 2018 increased by 82% compared to the second half of 2017, and the development trend is very strong.

3.3. Local brands take pet treats as a breakthrough

Pet food is divided into the main food and treats.

The main food has always been a big part of pet product consumption, with foreign brands occupying more than half of the market share.

We found that the pet main food market share has gradually declined since 2015, with a decline of 7.84%, while the treats market has grown by 3.79%, accounting for 21.8% of the pet market.

Due to the small investment of international brands in pet treats and insufficient competition, treats have become a breakthrough for Chinese domestic companies. New suppliers continue to enter the market and adopt differentiated competition strategies.

At present, for major domestic pet food companies, we found that in addition to companies such as Peidi and China Pet, six other companies in the industry received financing in 2018, indicating the capital market’s attention and recognition of local brands.

Another reason is that pet treats products are not standardized and cannot be produced in a highly mechanized manner like leading food. Many production processes of treats still need to be handmade; labor costs accounted for 30%. The relatively low labor cost in China has become an advantage in developing the pet treats industry.

3.4. The pet market other than cats and dogs is growing significantly

Except for cats and dogs, which account for more than half, more pets are coming to the family. Statistics show that in 2017, 16% of pet fish, 10% of hamsters, 9% of tortoises, and 7% of rabbits were kept as pets in China. The types of pets are becoming more and more diversified.

The sales of these “niche” pet products also have a significant upward trend. According to the “2018 Pet Consumption Trend Report” data, the sales of bird/insect products have increased by 179% year-on-year, and the increase in hamsters, pet reptiles, and rabbit products has also increased. Up to about 90%.

year-on-year growth chart of other pet supplies sales in 2018

The diversification of pet breeds objectively provides opportunities for new entrants. Qingtong Capital Discovery At present, mainstream pet food, medicine, supplies, and services are all for cats and dogs. Other pet products and services are relatively less competitive and have excellent market potential.

3.5. Pet insurance has become a new trend

Pet insurance was hot in the pet service industry in 2018. Not only it attracted capital attention, but relatively companies have also begun to increase.

We found that there are two main types of pet insurance: medical insurance and liability insurance. Among them, medical insurance is an essential product that is also promoted by insurance companies. Its annual premium is about 500-1,000 yuan, and the insured amount ranges from 5,000 to 20,000 yuan.

 Compared to the overseas pet insurance market development, china’s pet insurance industry has growth potential. 

Sweden, the world’s first to issue pet insurance, has more than 30% of pets insured, with market size of 2.4 billion yuan. According to the “2018 China Pet Industry White Paper” survey, the proportion of pet owners buying insurance for their pets is only 5% and 8%, and the insurance ratio is significantly lower.

China’s pet insurance market has not been formed for a long time, and users’ consumption habits have yet to be established. A survey on the willingness to purchase pet insurance shows that 60% of consumers hold a wait-and-see attitude. More than 80% of pet owners are willing to purchase medical insurance for pets. This reflects the potential for the pet medical insurance market.

4. Multi-dimensional layout of capital in the pet industry

WHEN THESE CHANGES ARE TAKING PLACE IN THE PET INDUSTRY, HOW DOES THE CAPITAL MARKET DO, AND HOW DOES CAPITAL AFFECT THE PET MARKET’S DEVELOPMENT?

After sorting out the 32 financing events in the pet industry in 2018, I found that capital is no longer over-focused on the pet medical and food fields as in the early days. As well, capitals focused on the newly emerging pet service supplies industries.

Among them, the number of pet supplies financing accounted for 28%, and the number of pet services accounted for 21.9%

distribution of pet industries in financing events

5. Opportunities for the pet industry in 2020

Currently, china’s pet ownership ranks third globally. Still, the proportion of pet households is only 6%, far below the pet market penetration rate of over 30% in the United States, Germany, Japan, and other countries.

As china’s pet industry develops, the rate of family pets and the numbers continue to increase, and the demand for pets products will continue to grow.

Besides, the emotional needs of the aging population may provide new opportunities for the pet industry.

From the view of the industry chain’s upstream and downstream conditions, the pet industry segmentation is a trend. As the consumer group in the pet market continues to get younger, the 20-30 aged generation has become the mainstream of pet raising, and a new pet service market is taking shape. Especially in insurance, beauty, foster care, etc., young consumers are more willing to accept, and consumption is more regular. The average consumption of a single pet is increasing year by year. Pet services are continually improving and developing.

Domestic companies’ differentiated competition strategies work quite well for the pet food market, facing intense competition from international brands.

On the one hand, avoid the highly competitive pet primary food market, start from the treats food market, and expand to the entire industry chain.

Besides, avoiding offline supermarkets where international brands are more influential.

Turning to online e-commerce channels, focusing on online marketing, and seizing the online market may become a new development idea.

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