In the "Double Eleven" where people are more cautious in consumption, the pet economy is a track with outstanding performance.
On November 1, Magic Mirror conducted statistics on the pre-sales of Tmall’s “Double Eleven” and found that pre-sales in most industries have declined to varying degrees, while the pet-related market has seen impressive growth, with a 44% increase in pre-sales.
According to a data report released by China Merchants Securities on November 15, during the "Double Eleven" period this year, the sales of pet staple food reached 1.909 billion yuan, a year-on-year increase of 38%; cat and dog snacks also achieved rapid growth, and cat snack sales It reached 362 million yuan, a year-on-year increase of 32.73%, and the sales of dog snacks reached 121 million yuan, a year-on-year increase of 31.43%.
As early as 2018, the Forbes website pointed out in the article "Why Pet Care is One of the Most Recession-Resistant Industries" that people are replacing children with pets. This is half a joke and half a fact: People are giving birth to more and more children. Less, but the caring instinct is more satisfied in pets.
Basic pet care has become a consumer necessity like food and electricity.
According to the "White Paper on China's Pet Industry Trend Insight in 2022" released by JD.com, there will be 91.47 million pet-owning households in China in 2021, and it is expected that the number of pet-owning households will exceed 100 million in 2022.
The "2021 White Paper on China's Pet Industry" issued by the Pet Industry Branch of the China Animal Husbandry Association and recognized by the industry as the most authoritative pointed out that in 2021, China's urban dog and cat market will grow by 20.6% year-on-year, which is 8 percentage points higher than the total retail sales of consumer goods in 2021 .
Pets can help people relieve anxiety
While some industries have proven vulnerable to the recent economic downturn and record inflation, the pet consumer segment is an exception.
In August of this year, Wetney Joseph, chief financial officer of Zoetis, the world's largest animal health company, said in a live broadcast, "If you look at the history of animal health, you will find that it has been proven to be recession-resistant. The pet demographics are trending toward millennials and Gen Z, who place more emphasis on the health of their pets.”
The pet industry has a history of hundreds of years in the United States, and the proportion of households with pets has always remained above 60%, and will historically exceed 70% in 2020.
The report released by RET China Commercial Real Estate Research Center in September this year pointed out that the two most influential economic fluctuation nodes experienced by the United States since this century are the financial crisis in 2008 and the new crown epidemic in 2020.
After the subprime mortgage crisis in 2008, the U.S. GDP growth rate dropped to -2.6% in 2009, but pet food spending in the same year still maintained a small increase; in 2020 due to the new crown epidemic, the U.S. GDP growth rate was -3.4%, but the national Pet consumption still increased by 7% year-on-year, and it has continued to grow around 2020.
In fact, since 2016, the growth rate of the US pet market has been higher than the growth rate of GDP per capita.
Similarly, during the 10 years of economic downturn, the size of the Japanese pet market has not declined, and has always maintained a slight increase, increasing from 400 billion yen in 2010 to 500 billion yen in 2020.
Liu Lang, vice chairman of Xinruipeng Group, the largest pet medical chain organization in China, analyzed that with the development of material civilization, the connection between people is getting less and less, people's mental state is becoming more and more fragile, and pets have become A part of them they can count on, maybe even the only part.
"People will rely more on pets during anxious and difficult times." He told China News Weekly.
On November 18 this year, Tianyuan Pet, a manufacturer of cat climbing frames and pet nest mats, landed on the GEM. This is the third domestic company in the pet economy field to be listed this year.
Since 2022, despite facing multiple uncertainties such as the new crown epidemic and the uncertain economic situation, judging from the financial reports, many domestic pet companies have achieved significant growth in the first three quarters, with net profits of more than 30%.
In 2021, according to the "White Paper on China's Pet Industry in 2021", the size of China's entire urban dog and cat market will reach 249 billion yuan, a year-on-year increase of 20.6%.
According to the latest report released by the China Business Industry Research Institute, the scale of China's pet consumption market in 2012 was only 33.7 billion yuan. Based on this calculation, the compound growth rate of China's pet market industry will be 24.88% from 2012 to 2021.
The pet industry refers to all the industrial chains around pets, involving pet breeding and trading, and goods and services around pet consumption, including pet food, pet supplies, pet medical care and pet services.
From the perspective of subdivided industries, in 2021, among the 249 billion yuan market size of China's pet market, pet food, medical care, supplies and services accounted for 51.5%, 29.2%, 12.8% and 6.4% respectively.
From 2019 to 2021, the number of pet food and supplies brands in China will surge by 34%.
In terms of pet medical care, according to the "Pet Industry Series Research Report" released by Ping An Securities in September 2021, from 2017 to 2021, there will be nearly 900 pet hospitals registered in China every year.
As pets become more and more companions and family members of human beings, the related industry chain is still developing, such as pet clothing, pet "behind affairs" services, etc.
According to the data from Tianyancha, there are nearly 9,000 companies in China whose business scope covers pet funerals, pet funerals, and animal harmless treatment. Among them, the number of new companies will exceed 2,000 in 2021, with an annual registration growth rate of 101.43% .
China's pet market is far from mature
Lin Degui, a professor at the School of Veterinary Medicine of China Agricultural University and chairman of the Small Animal Medicine Branch of the China Animal Husbandry and Veterinary Association, told China News Weekly that China's pet industry sprouted in the late 1980s and gradually entered the country with the opening up to the outside world. After 2000 Only then did companion animals enter more families, and socially diverse life patterns emerged.
The China Small Animal Protection Association started preparations in 1988 and was formally established in 1992.
At the same time, in 1993, Mars, the world's largest pet food company, set up its first pet food factory in Chaoyang District, Beijing, and then Royal, Nestle Purina and other overseas international pet brands gradually entered China, promoting scientific pet care. ideas and products.
From 2001 to 2009, the domestic pet industry developed initially, and some local companies began to rise; in 2005, the Small Animal Medicine Branch of the Chinese Society of Animal Husbandry and Veterinary Medicine was established, and the small animal medical industry in China developed rapidly.
2015 is a crucial year for the development of the domestic pet industry.
This year, Hillhouse Capital, an important investor in this industry, began to lay out the ecological chain of the pet industry, and two years later established the Hillhouse Group, a comprehensive platform focusing on the pet industry, covering pet medical services, retail, food supplies and other diversified businesses.
In fact, since 2010, with the improvement of residents' consumption ability and the rapid popularization of e-commerce, coupled with the gradual emergence of social trends such as aging, declining birth rate, and increasing number of young people living alone, the scale of China's pet industry has continued to expand rapidly.
"The level of economic development must be an important restrictive factor for the pet industry." Lin Degui pointed out that, in fact, the number of animals raised in a city and the number of animal hospitals are very related to the overall economic situation of the city. Residents of Northeast cities also keep pets, but people The consumption on pets is lower than that in wealthy southern cities.
According to the "White Paper on China's Pet Consumption Trends" released by iResearch in 2021, the new generation of married families is the mainstream group of pet owners, and the proportion of pet owners after 1985 is as high as 74%.
The rate of pet owners with a bachelor’s degree exceeds 70%, and the proportion of pet owners with a monthly household income of more than 15,000 yuan reaches 72%.
Because of the high correlation between the pet market and the national income level, many interviewed experts pointed out that under the uncertain economic situation, China's pet economy will still grow, but the growth rate may slow down.
"In the past two years, veterinarians have clearly felt that, especially for ordinary wage-earners or young people, if their pets are going to undergo slightly expensive surgery, pet owners will be more cautious in making decisions." Lin Degui said.
On the other hand, the impact of the epidemic prevention and control policy on physical stores, including pet stores and pet hospitals, is particularly obvious. Liu Lang believes that these stores can only have a clear development after surviving this period.
The report of iResearch Consulting Company in December 2021 also pointed out that the scale of China's urban pet market will be close to 200 billion yuan in 2020, and the compound growth rate will reach 32.8% during the six years from 2015 to 2020.
iResearch predicts that from 2020 to 2023, the compound growth rate of China's pet industry will be 14.2%, which is significantly lower than that of previous years.
On the other hand, compared with Europe and the United States, the Chinese market is still far from mature.
According to the research report of Guosheng Securities, the US pet market will reach US$123.6 billion in 2021, ranking first in the world with a 40.2% share, and far ahead of other countries.
Although in terms of compound growth rate, the growth rate of the Chinese market is much higher than that of mature markets represented by the United States, but in terms of the absolute size of the pet market, it is still far lower than that of the United States.
In the field of pet food, which has the highest proportion of the market segment, under new marketing models such as e-commerce promotion and online celebrity distribution, young people no longer only understand international brands, and some small domestic brands also have opportunities.
Lin Degui said that there are so many pet food brands at present, but after a period of turmoil, how far they can go depends on the core competitiveness of the product's pet nutrition research and development and quality.
In the field of pet economy, the phenomenon of OEM is common.
As the "processing workshop" of international brands, OEM companies do not master product R&D, design and sales channels, and their profit margins are low.
For example, Tianyuan Pet, a manufacturer of cat climbing frames and pet nest mats that has just been listed recently, mainly earns its income from OEM production for overseas customers, and its customers are large chain stores in America, Europe, Australia, Japan and other countries.
Yuanfei Pet, which is mainly engaged in pet leashes, was listed on August 18 this year, and its overseas OEM sales accounted for more than 95%.
China Pet, one of the leading pet snack companies in China, will account for 75.88% of its revenue from export sales in the first half of 2022. The sales mainly come from OEM products, and the sales of self-owned brands are relatively small.
Guosheng Securities pointed out in an industry report released on November 9 this year that the current penetration rate of pet-raising households in China is expected to not exceed 20%, and there is still room for improvement compared with mature markets.
On the other hand, the competitive landscape of China’s pet industry is relatively fragmented. Overseas giants have a first-mover advantage. Domestic brands have developed rapidly in recent years. Important market segments such as food and animal health have risen, and there is broad room for domestic substitution in the future.
(Intern Li Jinjin also contributed to this article.)
Published in the 1070th issue of "China News Weekly" magazine on November 28, 2022
Magazine Title: Why Pets Are So Hot
Reporter: Peng Danni (pengdannie@163.com)
Editor: Du Wei
Operation Editor: Wang Lin
"China News Weekly" Issue 43, 2022
Statement: The publication of the manuscript of "China News Weekly" must be authorized in writing