INSIGHTS
China's Expanding Pet Food Market Attracts Nestlé to Invest Additional $35 million
BY Chris WangApr 07, 2021
Nestlé will spend over 1 billion yuan in its Tianjin facility expansion, focusing on high-quality pet foods.

On Mar. 31st, 2021, Nestlé announced its plans to invest additional 230 million yuan (US$35 million) in its pet food processing operations in Tianjin, China. The company first announced the facility expansion investment in May 2020. Its total investment in Tianjin has exceeded 1 billion yuan, demonstrating Nestle's strong confidence and long-term commitment to the Chinese pet food market.

Details of the investment plan

According to Nestlé, the funding will support a two-phase improvement to its pet food plant in Tianjin. The first phase, which will begin production at the end of 2021, will focus on building capacity to produce prescription pet food to provide quality nutrition to sick dogs and cats. The plant will be Nestlé’s first factory in Asia, Oceania and Africa, and the fourth in the world equipped with high-end prescription grain production capacity. At the same time, it will develop high-end pet food production capacity and upgrade existing recipes to provide a wider range of food options for healthy pets.

The second phase, scheduled to start operations in the first quarter of 2023, plans to construct a new high-end pet wet food canning line. Nestlé will use its patented production technology to customize high-end canned products for Chinese dogs and cats. In addition, Nestlé will increase the amount of capital spending in supporting smart storage facilities, manufacturing capabilities and logistics. 

nestle-pet-food.jpegNestlé Purina PRO PLAN from the internet

Nestlé will double the size of its pet food production area in Tianjin through the two-phase capital increase and expansion, marking a new milestone in localized R&D and production that will further strengthen its dominance in China's domestic pet food industry.

Surged Chinese consumer demand for high-quality pet food

As the 2020 White Paper on China's Pet Industry revealed, the number of dogs and cats in China's cities and towns in 2020 broke the 100 million mark. The consumption market reached 206.5 billion yuan, among which the consumption of pet food (staple food, snack food, nutrition) accounted for 55.7%, exceeding 100 billion yuan.

Compared with foreign countries, there is still a lot of room for improvement in China's calorie conversion rate (the proportion of energy consumed by pets supplied by processed pet food commodities) and pet dog and cat penetration rate (the proportion of households with dogs and cats).

Mirand Chan, the head of Nestlé's Purina PetCare business in Greater China, said: "Over the past seven years, we have achieved high double-digit growth in our pet food business in China and are committed to driving the continuous upgrading of pet food consumption. The market has shown increasingly strong demand for high-quality pet food in terms of raw materials, nutrition and taste. Our new investments will help to deliver the best products to our consumers."

Nestlé China's official website shows that Nestlé Purina pet food has established a rich brand portfolio among dog and cat food. The brands range from global high-end brands such as PRO PLAN, Fancy Feast and ONE, to mass-market brands such as Friskies, Cat Chow and Dog Chow. 

20210108-nestle-petcare-kv.jpegNestlé Purina pet food brand portfolio from its official website

"Different brands have different positioning and strategies. The rich product line is primarily designed to meet the different needs of Chinese consumers, such as channels, prices, and nutritional requirements for cats and dogs at different life stages," Chen added.

Despite promising growth prospects in China's pet food market, Nestlé faces stiff competition from top players like MARS and new entrants like H&H, which acquired the US-based premium pet nutrition brand Solid Gold in Dec. 2020. In addition, domestic pet food brands emerge every year with eye-catching sales performance on the e-commerce channel.

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