Market
Trends Global
Changing
attitudes to pet ownership drive pet food sales
Author: Jacqueline Zhuang, Euromonitor Shanghai
Pet
ownership in China is on the increase and attitudes towards
pets are changing, with Chinese people demonstrating greater
love and care towards their pets, according to the latest
report from Euromonitor International.
China?s
fast-paced economy and increasing levels of disposable incomes
are having a positive impact on the pet industry. New research
from global market analyst, Euromonitor International, shows
that pet ownership in China substantially increased between
1999 and 2004. Driven by the growing population of pets, demand
for pet food products has also been stimulated to a large
extent. Although small in scale compared with Western developed
countries, the Chinese pet food market offers high growth
potential as it becomes increasingly regulated.
Growth
of Pet Food
Owing
to the Government?s relaxed control in the breeding of cats
and dogs, dog and cat ownership grew rapidly between 1999
and 2004. Euromonitor?s latest research shows that the percentage
of the Chinese population owning dogs and cats increased from
5% and 14% respectively in 1999 to an estimated 7% and 15%
in 2004, which indicates the increasing popularity of dogs
and cats in China. Hence, Euromonitor International estimates
sales of dog and cat food reached nearly RMB1.6 billion in
2004, representing current value growth of 13% over the previous
year. Sales of other pet food such as bird food and fish food
were valued at RMB3.9 million in 2004, up by 11% in current
terms from 2003.
Market
Insight
China?s
pet population has grown by a remarkable 20% in five years,
from 240,799,000 in 1999 to 291,315,000 in 2004. Euromonitor
suggests that the first contributing factor is associated
to one-child households and a growing ageing population. Smaller
family sizes have helped to create a greater demand for pets,
which are seen not just as animals, but as true extensions
of the family. In this context, the family pet is seen as
a companion to the child and then, when the child grows up
and leaves home, a source of comfort to the parents. Second,
a change in perception is taking place with pets increasingly
being seen as companions particularly for many urban dwellers,
who, with their higher levels of disposable incomes, are willing
to spend more on their pets. Third, as Chinese society is
going through an unprecedented transformation, interpersonal
relationships have become more complicated than ever. As result
many people now depend on their pets to relieve stress and
loneliness. Finally, Euromonitor?s research shows that for
many young adults, keeping a pet also stands as a fashion
and identity statement.
With
the further development of the above factors, Euromonitor
forecasts that the pet population will continue to grow strongly
between 2004 and 2009, thus creating lucrative sales opportunities
for the pet food industry. Sales of pet food are mostly generated
in big cities such as Beijing, Shanghai and Guangzhou.
Major
Players in the Market
The
US-based food giant Mars dominates the pet food market in
China with its two famous brands, Pedigree and Whiskas, owned
by Effem Foods (Beijing) Co Ltd. The company?s wide choice
of products and high brand awareness among consumers helped
it to take the lion?s share of 58% of retail value sales of
dog and cat food in 2004.
Other
pet food products are mainly produced by domestic manufacturers
and typically sold in outdoor markets. Unpackaged and semi-processed
plant seeds and crops are generally sold as bird food. The
absence of dominant national or multinational players makes
other pet food highly fragmented in various regions across
China.
Owing
to the heavy presence of local players, foreign other pet
food producers were at a disadvantage in terms of price competition.
They also had to face restrictions on import and distribution
rights as well as local rampant protectionism. Euromonitor
International does not expect this situation to change in
the short to medium term as foreign players are still adopting
a wait-and-see strategy and are wary about the local erratic
customs regulations.
Through
mergers and acquisitions, global players strengthened their
product offerings and beefed up investment in production facilities,
thus further reinforcing their competitiveness in the local
market. Domestic players are making efforts to improve product
quality and vie for sales opportunities in the medium price
segment. However, due to low brand awareness, local brands
still mainly cater to low-end and mass consumer needs.
Prospects
for the Market
According
to Euromonitor International the outlook for pet food market
in China is set to be promising. Sustained economic growth
and increasing pet ownership hold the key to continued growth
over the next five-year period. Pet food, especially dog and
cat food, are expected to develop as foreign major players
increasingly see China as a lucrative pet food market. As
a result, Euromonitor expects that a wider variety of new
products will enter the market to cater to the progressively
sophisticated tastes of Chinese pet owners. |
