The Pet (Food) Industry in China
The pet (food) industry in China is strongly on the rise. It recorded the past years double-digits growth, which is relatively rare in the consumer goods industry. While accessories and services are an important part of the Chinese market, the pet food supply chain is certainly not inferior. To organise the supply chain, the JingJinJi Feed Industry Associations established on October 15th 2020 the Pet Food Branch, starting with 8 members. The Beijing International Pet Food Development Forum was held to commemorate this milestone.
JingJinJi
JingJinJi covers a large urban area, fusing Beijing, Tianjin and Hebei (Ji is the ancient name for Hebei). The current population of this area is 130 million and covers an area of over 212,000 square kilometres. In 2018 this area had a sales volume of pet food of 750,000 tonnes and a market share in China of 56%. In 2019 the volume increased to 815,000 tonnes though the relative share decreased slightly to 53% in favour of Shandong province. However, Jingjinji is still a major area for the pet food industry.
During the Forum in Beijing interesting speeches were given on the developments in the Chinese industry by specialists from the Chinese Academy of Agricultural Sciences (Mr Wang Jinquan), Nestle (Zuo Yanfeng) and JD.com (Wu Huaqing). Furthermore, Ina Enting from NAFTC gave with support of NVG and the Netherlands Embassy in Beijing a presentation with insights in the Dutch pet food industry.
Online versus offline sales
China is an online-sales market giant. It is known that 11-11 breaks every year the records in volumes and values sold. This applies also to the pet industry. Spurred additionally by COVID and the restrictions it gave, the online sales of pet related articles rose this year already by 4 points, reaching a share of 44% in the sales. Pet food takes half of the online sales, the other half is for healthcare and supplies. The increase in online sales has consequences for the offline sales; around 80% of the enterprises with offline traditional sales channels reported indeed a decline in output. It is expected that, regardless of COVID, this trend will continue. It indicates an important point of attention for the Dutch producers with an interest in the Chinese market.
Females born in the 90s drive the growth
For younger generations, cats and dogs have become their new pinnacle of life. Youngsters born after 1990 or 1995 account for more then 50% of the pet consumer group, an odd share compared to the aging population structure in China. Furthermore, based on data of JD.com, females are leading the growth of the Chinese pet market, in specific single women in the major cities. These young people have contributed to the growth of the cat and dog market and are also the key to accelerate the growth of the industry in the future. Knowing the purchasing behaviour of this group and targeting their specific needs is essential for success of a brand in the highly competitive pet food market.
Demand for healthy, small-size, fresh products
Roaming the China Pet Expo in Beijing, which was held at the same period as the Forum, it shows that pet food is almost of higher quality than human food. There is no shortage of food without grains, even gluten-free dog and cat kibble, or lactose-free milk. Data of JD.com and Nestle presented at the Forum also showed that pet owners have a high requirement for taste, efficacy, freshness and even additions of certain nutrients like probiotics to the pet food. For example, there is an increasing interest in smaller packages because it is thought that the food will remain fresher. As import of products takes a longer path than domestic produced foods, freshness and shelf life will become key issues for foreign brands.
Pets as children
An interesting development in the market of pet supplies relates to the personification of pets. Owners treat them as a child or human and take care of them in that way. The sales of pet shampoos, pet deodorants, pet drying machines (after showering), pet eye wipes, or scented cat litter all reach a 100% year-on-year growth. This personification also shows the sometimes lack of knowledge on pets by their owners, assuming that pets have the same needs as humans.
Vision for Dutch pet food industry
For Dutch pet food or accessories suppliers with interest in the Chinese market, it is necessary to analyse and understand the specific consumer market and the post-90s consumers. They are sometimes miles away from the Dutch or European consumer in their purchasing channel (online in China versus supermarket or pet store in the Netherlands), their purchasing factors (presumed taste, efficacy and freshness in China versus age and price in the Netherlands), and their pet personification (an urban – housed in an apartment – dressed poodle with nail polish in China versus a rural – with a garden at its disposal – golden retriever in the Netherlands).
Partners for International Business (PIB)
With a still double-digit growing market it is, regardless of the challenges, more than worthwhile to explore this market. The agricultural counsellor in Beijing is clustering the opportunities in the market and exploring the feasibility of a PIB for Dutch suppliers. PIB is a program with which Dutch companies can realize their international ambitions in a public private partnership. Collaborating with other companies in the sector and the Dutch government can make you stronger. If any interest, contact: pek-lnv@minbuza.nl