Sector Trend Analysis – Pet food in China

Trade overview

The world's top 10 dog and cat food importers in 2021 are all located in Western Europe and North America, with the exception of Japan. Canada was the fifth largest importer of dog and cat food, reaching US$1.1 billion in 2021. China was the 11th largest importer of dog and cat food, with sales of US$581.7 million in 2021.

In 2021, Canada ranked the eighth largest exporter of dog and cat food in the world, exporting US$840.2 million worth of dog and cat food, representing a 4.0% share of the total global exports of dog and cat food. Canada was also the largest exporter of dog and cat food to China in 2021, with a 38.5% market share. Meanwhile, China ranked the second largest importer from Canada, received 21.7% (US$182.0 million) of Canadian dog and cat food exports in 2021 with a 21.7% CAGR from 2017 to 2021.

Pet food market overview

Immunity and digestion

The outbreak of the COVID-19 pandemic intensified consumer interest in products that promise to support immunity and enlightened many people about the link between gut flora and overall health. This heightened level of understanding about immunity and gut health influenced the way pet owners feel about the products they choose for their pets. According to Mintel's survey in 2020, 73% of pet owners in China look for pet foods that improve immunity, 59% for digestive support (Mintel, 2022).

Pet humanization

The continuing trend in Asia towards pet humanization, where pets are adored and regarded as companions, friends and members of the family, is driving interest in foods that can help to prevent lifestyle illnesses and diseases. (Mintel, 2021). The developing pet humanization trend is also leading to Chinese consumer health awareness starting to influence pet food too. Pet owners are showing a growing willingness to pay more for pet food if they perceive it will make their pet companion's life happier and more comfortable (Euromonitor International, 2021).

In 2021, the global pet food market had a retail value of US$114.9 billion. China was ranked the second largest market in the world, reaching US$7.5 billion in 2021, for an increase by a CAGR of 23.3% (2017-2021). Pet food retail sales in China are expected to grow to US$14.3 billion in 2026 at a CAGR of 15.3%.

Pet population and ownership

In China, the cat and dog populations increased by CAGRs of 8.9% and 2.9% respectively, from 2017 to 2021. There were 4.5% more cats than dogs in 2021. Dogs have been losing popularity in recent years and COVID-19 merely reinforced this, leading to negative growth of the dog population in 2020 and 2021 (Euromonitor International, 2021). The cat and dog populations will grow to 114.9 million and 95.9 million respectively in 2026.

Retail sales by category in China

Cat food

Current value sales of cat food grew by 30.8% (CAGR, 2017 to 2021) to US$4.1 billion. Cat treats and mixers was the most dynamic category in 2021 with a CAGR of 62.4% from 2017 to 2021. Chinese customers spent US$2.7 billion on dry cat food and US$1.2 billion on wet cat food in 2021. They spent more money buying mid-priced dry cat food (US$1.7 billion in 2021) than premium dry cat food (US$839.9 million) and economy dry food (US$118.2 million). They also spent more money buying mid-priced wet cat food (US$878.6 million in 2021) than premium (US$290.4 million) and economy wet food (US$41.4 million).

High protein and genuine meat have become the main theme for cat food in China. The preference for high protein in human food has been transmitted to pet food, under the prevailing humanization trend. International brands like Orijen and Go have increased Chinese cat owners' awareness that cats need animal protein, genuine meat to sustain health. Therefore, products with a high animal protein content, either adopting genuine meat or mixed with meat powder for the sake of cost control, have been popular in China's cat food market (Euromonitor International, 2021).

Wet cat food and treats are expected to continue registering robust growth in the next five years (2022-2026) as cat owners want their cats to take in enough moisture to stay healthy and they also enjoy interacting with their cats by feeding them treats. In the future, wet cat food is likely to witness continuous upgrading, which means it is nutritious enough to replace dried cat food. Treats with specific functions that are closely linked to the well-being of cats, such as oral care and fur digestion, are also likely to gain popularity (Euromonitor International, 2021).

Dog food

Retail sales of dog food reached US$3.4 billion in 2021, with a CAGR of 16.6% from 2017 to 2021. Economy wet dog food had the best performance in 2021 with a CAGR of 23.4% from 2017 to 2021. Mid-priced food led sales in dry dog food (US$1.6 billion in 2021) with a 15.3% CAGR from 2017 to 2021. Mid-priced wet food led sales in wet dog food (US$86.4 million in 2021) with a 21.5% CAGR from 2017 to 2021.

Freeze-dried and air-dried kibble are likely to remain popular because they maintain rich nutrition and taste. In 2020, freeze-dried products demonstrated strong resilience against the epidemic and continued expanding digital shelf space, based on Euromonitor's Via tracking tool. Another technology that is also gaining popularity is air-drying, which is similar to freeze-drying in terms of maintaining flavour and nutrition. In future, the demand for these two technologies is likely to remain dynamic (Euromonitor International, 2021).

Company shares

The top three players in the cat food sector (Mars Inc, Nestlé SA and Champion Petfoods LP) captured 14.4% market share in 2021, ahead of other competitors. However, Mars Inc had a negative CAGR of −4.5% from 2017 to 2021. Petcurean Pet Foods Ltd had the highest CAGR at 39.2% over the past five years.

Domestic cat food was considered low quality five years ago, but is now catching up, providing quality products. They are benchmarking international brands such as Orijen and Go, which offer high animal protein content but at lower prices and therefore offer high value for money. For example, domestic brand NetEase has launched dry cat food that has a similar ingredient list to Go and provides detailed information about recipes and raw material suppliers to guarantee the utmost transparency to consumers, while its unit price is only around 70% of Go. It is therefore widely recognized by local consumers and has the potential to be an important player in the mid-priced dry cat food market (Euromonitor International, 2021).

The top three players in the dog food sector (Mars Inc, Huaxing Pet Food Co Ltd and Yantai China Pet Foods Co Ltd) had 15.1% market share in 2021, ahead of other competitors. However, Mars Inc had a negative CAGR of −11.2% from 2017 to 2021. Yantai China Pet Foods Co Ltd and Gambol Pet Group Co Ltd had the highest CAGR at 23.6% over the past five years.

Domestic players, such as Gambol Pet Food Group and Yantai China Pet Foods Co, transformed from original equipment manufacturers (OEMs) to dog food brand owners. Instead of being OEMs in China, the two companies dedicated themselves to becoming brand owners by promoting their own brands, Myfoodie and Wanpy, respectively. From 2017 to 2020, the two companies' sales almost tripled and they are aiming to become China's "pride in pet food" (Euromonitor International, 2021).

Brand shares

Royal Canin by Mars Inc is the top brand in cat food (5.9% share in 2021), followed by Orijen by Champion Petfoods LP (2.5% share) and Whiskas by Mars Inc (2.2% share). Orijen saw the biggest CAGR of 33.0% from 2016 to 2020.

Royal Canin by Mars Inc is also the leading brand in dog food (4.1% share in 2021), followed by Lilang by Huaxing Pet Food Co Ltd (2.9% share) and Wanpy by Yantai China Pet Foods Co Ltd (2.8% share). Leading domestic players occupy over half of the top 10 places in dog food and their shares increased in 2021. Their constant innovation, multi-brand strategies and constant public exposure are likely to foster their further expansion in the future (Euromonitor International, 2021).

Distribution channels

E-commerce accounted for the majority of pet food retail sales in China (60.9% market share), while store-based retailing and non-retail channels accounted for the remainder in 2021. The market share of most distribution channels, whether categorized as store-based or non-store based retailing, increased at varying CAGRs between 2017 to 2021. And e-commerce increased by the largest CAGR (34.9%) in all channels, from a 42.5% market share recorded in 2017.

The share of e-commerce in pet food is the highest among all distribution channels because many pet owners are young people who are familiar with purchasing online. It is likely to continue to see share expansion.

Product launch analysis

From 2017 to 2021, a total of 1,673 pet food products were launched in China. The number of yearly product launches declined in growth by a CAGR of 9.1% from the larger launch of 386 pet products in 2017 to the lower and most recent launch of 263 pet products in 2021. Dog snacks & treats, cat snacks & treats, and cat food dry were the top categories of newly released pet food product launches while no additives/preservatives, other (functional pet) and functional pet - digestion were top claims associated with new pet food products released during the prescribed period.

Product examples

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For additional information on Pet Fair Asia 2022, please contact:

Luka Luo, Trade Commissioner
Consulate General of Canada in Shanghai
Lujia.Luo@international.gc.ca

Resources

• Euromonitor International, 2022
• Euromonitor International, 2021. Cat Food in China
• Euromonitor International, 2021. Dog Food in China
• Global Trade Tracker, 2022
• Mintel: A year of innovation in pet food and products, 2022
• Mintel Global New Products Database, 2022

Sector Trend Analysis – Pet food in China
Global Analysis Report

Prepared by: Zhiduo Wang, Market Analyst

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