Numbers are important for China. The recent celebration of their 70 years under Communist rule proved this with the largest parade in history showcasing 100,000 performers and 15,000 troops at Tiananmen Square, all for its over 1.4 billion citizens and the world to see.
By the numbers: Pet ownership and spending
While all that was happening, a great assembly of 99.15 million four-legged consumers have gathered in the urban homes of Chinese people. That would be 55.03 million pet dogs and 44.12 million pet cats, with an overall consumption value of 202.4 billion yuan (US$28.8 billion) in 2019, an increase of 18.5% over 2018.
These numbers are highlights of the 2019 China Pet Industry White Paper, which came about after a 10-month survey of 40,000 pet owners ‘and people with no pets from 366 cities. It particularly focused on four representative cities: Beijing, Shanghai, Xi’an and Chengdu.
The report, released at Pet Fair Asia 2019, analysed consumption trends in those cities where 99.15 million pets represent an 8.2% increase for dogs and 8.6% for cats (7.66 million more pets total) over the 2018 population.
Of the 202.4-billion-yuan pet consumer market coming from surveyed cities, almost 62% (124.4 billion yuan or US$17.7 billion) are attributed to dog owners, who collectively spent 17.8% more in 2019 on their dogs than the previous year; the remaining 78 billion yuan (U11.1 billion) are from cat owners buying 19.6% more feline products than in 2018.
The report showed Shanghai’s cats and dogs are behind a 19.7-billion-yuan (US$2.8 billion) consumer market, ahead of the other three major cities surveyed. Shanghai is the most populous city in the world with 22.3 million people.
On average, every city-dwelling pet cat and dog in the report consumes 5,561 yuan (US$800) worth of goods per year. The per-capita consumption of a single pet dog is at least 6,082 yuan (US$864), a year-on-year increase of 9%, while per-capita consumption of a single pet cat is 4,755 yuan (US$675.50), a year-on-year increase of 10.3%, the report said.
Most spending is on pet food,
accounting for 61.4%, up 9.2% from 2018. By end-2019, the report estimated China’s urban pets would have eaten some 48.6 billion yuan (US$6.9 billion) worth of pet food. However, this amount is much larger than Euromonitor International numbers, which valued the entire Chinese pet food industry at US$1.7 billion in 2017, ballooning to US$6.1 billion in 2022.
Pet population boom
Despite concerns about the damaging effects to the pet industry of China’s trade war with the U.S. and how China’s population has actually begun to decline and age rapidly like in other highly industrialized countries, its pet industry is still looking at a very promising future.
One reason for this is China’s current pet boom as demand for companion animals comes from almost every age group. Given that the standard of living has improved across the country of late, especially in urban centres, young people, adult singles, families with small children and retirees are welcoming pets into their lives more than ever.
According to Euromonitor, China’s pet population has increased by a 7% compound annual growth rate (CAGR) from 2013-17, from 389 million pets to 510 million. It added that the pet population explosion will continue from 2018-22, from 551 million to 755 million at 8.2% CAGR. By that time, China’s population will peak at an estimated 1.411 billion, but the pets’ number will still be rising.
Fish will always be the top pet of choice in China, with 220.5 million of them in household aquariums come 2022.
Cats, whose size and demeanour make them more suitable for small-space apartments, will nearly double their number from 2018’s 87 million to 171 million in three years. With a population growth of 18.5% CAGR, cats will become China’s second most favorited house pet, followed by dogs at 136 million.
Euromonitor estimates that from 2018 to 2022, China’s dog food sales, at 29% CAGR, will continue their steady ascent from US$1.5 billion to US$14.1 billion.
Cat food sales for the same period (and also at 29% CAGR) will likewise show strong growth to reach US$2 billion.
Both types of pets in China love their dry food more than the wet kind, or at least that is what Chinese pet owners tend to buy the most. In 2022, dry food for dogs and cats in China will bring in sales of US$2.7 billion and US$1.3 billion, respectively. As for wet food, Euromonitor’s forecast is US$841 million for dogs and US$705 million for cats in 2022.
Chinese pet owners from urban centres are also leading the trend toward “premiumization” or the move toward more expensive, high-quality pet food with more nutritional value. Driven by issues with pet food safety, those who can afford to spend more are choosing imported premium pet food over locally produced economy brands.
Euromonitor data showed that in 2018, China’s market for premium wet and dry cat food totalled US$284 million while that for dogs reached US$745.4 million. Four years later, cats and dogs in the country will be meowing and barking for premium pet food to the tune of US$2.8 billion (US$793 million for premium cat food, US$2 billion for premium dog food).
But there are domestic pet food companies, too, like Shanghai Bridge Petcare Co. Ltd., that are able to challenge the dominance of Mars Inc. and Nestle SA because they have the home-court advantage and competitive offerings. Shanghai Bridge Petcare is the maker of Vigor & Sage, Nature Bridge and Kitchen Flavour pet food, which claim to have high product standards but are relatively cheaper than popular imported brands.
There’s still plenty of room for more pet food vendors in a market as gigantic as China. The thing to know is where the concentration of pet owners is. Shanghai is China’s pet capital with the highest number of registered pets in 2016, followed by Beijing, Guangdong and Jiangsu. For some reason, pet ownership is also reportedly high among residents in coastal districts along the border of China. Research firm Daxue Consulting said 54% of registered pets are in towns near the water, which sounds like the perfect place for pet food companies to dive in.
Alma Buelva is a journalist from the Philippines. When she’s not writing about business and technology, she devotes her time to taking care of animals and writing about them, too. First published in Petfood Industry.com