Go fetch: China's Booming Pet Market

There are plenty of high-growth product categories in developing markets in Asia, and one stand out is pet-related products. Just like the rest of the world, millions of households in China added a pet to their family during the pandemic. And as we have seen in the West the rise of Double Income No Kids (DINK and SINKs), plenty of households have high disposable income and very important new family members to spoil. Nearly half of all Chinese households are now home to pets such as dogs, cats, fish, and birds.

I met plenty of proud dog owners in Beijing and Shanghai, and what I found interesting was that owners immediately picked their dogs up to pose for a photo with it, rather than just letting me take a photo at ground level. There seemed to be a desire to showcase their relationship with their dog, rather than just how cool, cute or trendy the dog is on its own. It's by no means exhaustive research, but it was very different to snapping a cute doggo pic near a cafe in the West.

An recent report from C2 Capital Partners and TMall uncovered a number of insights regarding per ownership and demographics in China, with a predictable bias to female owners in high tier cities. Products to help them monitor pets while they have returned to regular office work will be popular.

Pet Ownership Trends

One of the primary drivers of the pet boom in China is the country's growing disposable income. As the Chinese middle class expands, more people can afford to own and care for pets. This increased financial capacity means that pet owners are willing to spend more on high-quality pet products, contributing to the growth of the overall pet industry.

In urban China, cats have become the most favoured pets, with their numbers (58 million) surpassing those of dogs (54 million). The convenience and low maintenance associated with cat ownership is attractive, but as more families spend time on weekends doing activities together, there is likely to be strong growth in dog ownership.

Also, as the number of elderly people across China grows, there will be a greater demand for companionship. Pets, particularly dogs and cats, provide the emotional support and company that many older people crave and millions of middle class pet owners in the west have enjoyed for decades.

A shift in social attitudes towards marriage and family has also played a role in the growth of the pet market in China. Millennials are less keen to start a family and prefer to focus on their careers and personal development. This has led to an increased bias to treat pets as family members and focus of affection.

Market Opportunity

One of the most notable trends in China's pet food market is the increasing demand for high-end pet food. Premium pet food products, which are typically priced at over $7 USD/kg, have seen significant growth in recent years. Chinese pet owners are increasingly seeking out pet food made from fresh, natural ingredients with minimal processing and no added chemicals.

In terms of potential market size, including food, the Pet category is estimated to be worth US$30B, compared to US$60B for Skincare and Cosmetics, and US$100B for Mother and Baby. Many international brands had a presence in the market and will be looking to scale over time, however there is still plenty of room for more brands, especially for treat/training products, along with supporting products and services in every area from grooming to Vet and health services.

Consumer Spending

The average that owners spend per pet is still lagging behind developed markets, however this is taken as an aggregate of the entire country, and spending in Tier 1 cities will be significantly higher, but as a ratio of disposable income there will still be a large upside. Interesting to note in the findings from Bain is that Singapore was at the top of the list, they have some of the highest disposable income, but the ratio of it directed at their pets is the highest too. This islikely to be replicated in Shanghai and Beijing.

E-Commerce Drivers

China's pet food industry has seen a significant shift towards e-commerce, with 71% of pet owners now accustomed to online shopping for pet products. This trend has been driven by factors such as convenience, faster delivery times, and the ability to easily compare prices and product information online.

Additionally pet food is often packaged in large, heavy containers, which are inconvenient to take home from a shop. Buying in bulk online and getting products delivered will continue to be attractive post-pandemic. In the most recent Double Eleven event, pet products were one of the four most popular product categories, alongside toys, outdoor sports, and jewellery.

The Pet products and ownership trend is on the list of this year's Top Consumer Trends in China, on the UMS website, and is explored further in an a specific trend article here: Pet Parental Products.

What are some of the key trends and factors you're noticing in the China pet market? Let me know in the comments.