INSIGHTS
Pet Economy in China
BY Ye ChenMar 25, 2022
The number of pet owners in China has kept growing in recent years, contributing to the surge of the pet economy in China. In the pet food market, the staple food sector is dominated by big imported brands, so most new entrants choose to explore the pet snack sector where the competition is less severe. As for the pet care sector, consumers tend to trust products released by well-known personal care/ skincare/ beauty brands, but some emerging brands still achieve good sales by focusing on niche categories.
SHARE

What lifestyles are popular in China now?

Keeping pets must be one of them.

This lifestyle is trendy among young people and the elderly who live alone. These new pet owners usually regards their pets as their family, so they take extra care of their little family members and are willing to spend much on them, thus boosting the surge of pet economy in China.

According to the 2021 China Pet Industry White Book, Chinese urban pet owners reached 68.44 million, growing by 8.7% YoY. The total market consumption reached 249 billion yuan, firmly up by 20.6% YoY.1 iiMedia Research predicted that the market size of the Chinese pet industry will be 592.8 billion yuan in 2023, 2 which is a quite optimistic expectation. Investors also have confidence in this thriving market. In 2021, the Chinese pet industry witnessed around 40 financing events, covering multiple subcategories in the pet market, from pet food to pet medical care.

Although the pet market is large, it is still in its infancy. Different categories are in different development levels. In 2020, different subcategories accounted for different proportions of urban pet consumption in China: 54.7% for pet food, 25.8% for pet medical care, 13.6% for pet supplies, 4.1% for pet grooming, 1.3% for pet foster care, and 0.5% for pet training. 2 Pet food, medical care, and supplies have larger markets, but they are also the most competitive tracks. Therefore, new entrants are entering more niche fields such as pet grooming, pet photography, pet funerals, and pet consignment to win the market.

Pet food

Among all subcategories in the pet economy, the pet food category is best-developed. Its market size was about 155.4 billion yuan in 2021 and is expected to reach 190 billion yuan in 2023. 3

Staple food has a much larger market than other pet food tracks. However, its market concentration is also higher, meaning that big companies have already dominated this market. Big companies have competitive advantages in this sector because they have higher budgets and well-equipped factories for large-scale industrial production. Also, the standardization degree of pet staple food production is high, and pet staple food does not have many distinguished types. The two reasons makes it suitable for large-scale production. In China, imported pet food brands from big companies are powerful players and have already won the most market share, such as Royal Canin, Pro Plan, and Orijen. Products from Mars even accounted for about 11.4% of the total pet food market share in China. 4

royal canin.png

ROYAL CANIN’s products

While big companies dominate the staple food market, pet snack becomes a good track for new brands. They make all kinds of product innovations to please pets and their owners. Pet owners are also willing to treat their beloved “family members/friends” with well-packaged creative snacks, making the pet snack a promising business. In 2020, pet snacks’ market size exceeded 40 billion yuan, with the highest growth rate comparing to other categories under pet food. 3 Chinese domestic companies are leading players in this sector, taking up 8 seats out of the top 10 pet snack brands in China.

pet snack.jpg

Different pet snacks

Pet care

Data from the GIM market research report shows that the global pet care market size exceeded US$232 billion in 2020 (approximately RMB 1.47 trillion) and is expected to grow at a compound annual growth rate of more than 6.1% from 2021 to 2027. 5 In China, it is a brand-new category. Many cosmetic brands are unfamiliar with this category. However, some domestic and foreign personal care giants, such as Unilever, Bloomage Bio, Chaoyun Group, etc., as well as Kiehl's, Aesop, and other well-known beauty and skincare brands, have entered the battlefield.

Consumers tend to trust pet care brands from these cosmetic giants and existing beauty and personal care brands regarding safety problems. The pet care industry does not have strict and transparent industry standards. When developing pet care products, the formulators need to take multiple reasons into consideration, such as PH value, natural edible ingredients, skin sensitivity, etc., which is quite a challenge for brands, so big brands’ products backed up by brands’ reputation and much experience becomes more popular in the market.

Besides the popularity of big brands, the pet care market also shows other four trends:

  • Functional

Functional pet care products are the main character in the pet care market, and they account for most market share. Among all functions of pet care products, deodorization, sterilization, and anti-allergy gain the most attention from pet owners and brands. Danish organic pet care brand AMO PETRIC focuses on using natural plant ingredients, such as avocado, calendula, grape seed, to develop products. It announced to use a plant protease, DeoPlex, to improve deodorization functionin its newly promoted product.

amo petric.png

AMO PETRIC’s product

  • Customized

Some brands use customized products to stand out from their competitors. For example, Chinese domestic pet care brand, Xuediao, focusing on shampoo products, launched 12 customized shampoo products for 12 different cat species. Every product is tailored for one cat species according to their hair and body odor.

Xuediao.jpg

Xuediao’s products

  • Portable

More and more pet owners like to travel with their pets, so their needs for portable products also improve. Chinese emerging pet care brand PET3 launches a fragrant bath capsule. The cute and small packaging makes it popular among many pet vloggers.

PET3.png

PET3’s fragrant bath capsule

  • Oral care

Pet care is not limited to pets’ body care and hair care and now has extended to oral care. Chinese pet care brand Cature is the representative of this sector. Inspired by human-use mouthwash, Cature develops edible dentifrice for dogs and cats, quickly opening the pet care market for the brand.

Cature.png

Cature’s edible dentifrice

In summary, with a diversity of niche sectors and a growing number of pet owners, China’s pet market is still a blue ocean for brands to explore. Choosing the right track and grabbing the opportunity is essential.

Ye Chen
ChemLinked Research Analyst
+ FOLLOW
Copyright: unless otherwise stated all contents of this website are ©2022 - REACH24H Consulting Group - All Rights Reserved - For permission to use any content on this site, please contact cleditor@chemlinked.com