Emerging and developing global markets have
caught the eye of the petfood industry in recent years, and rightly so. According
to Euromonitor International, the gross domestic product (GDP) growth of
emerging markets has far outstripped that of developed markets, increasing by
roughly 5% in 2012 and 5.25% in 2013 compared to 1.25% growth in developed
markets for those years. And while developed markets are expected to grow by
roughly 2% annually through 2017, growth in emerging markets will remain over
5.5% each year.
Petfood and pet products have seen similar
dominating growth in developing markets when compared to developed markets.
While these two segments have mostly seen growth in developed markets since 2001
(barring a significant drop from 2009 to 2010—from 4% growth to roughly -1%—that
the petfood industry is still regaining ground from), that growth has never
gone beyond 4.5% per year.
In developing markets, however, the value
of pet care has grown significantly each year, though the trend lines are far
less predictable. The petfood market, for instance, saw 20% growth in 2001,
then fell to roughly 12.5% in 2003, according to Euromonitor data. In 2004 it
was back up to 18% growth, hit a low of 12% in 2009, and has been slowly
increasing each year since then, to 14% in 2013.
the emerging markets, Latin America is garnering significant
attention from the petfood industry. Not only is it the largest global developing
market, it also contains one of the top ten pet care markets in the world
(Brazil) and two of the leading markets in dry petfood (Brazil and Mexico). There
is a particularly strong market for dog food in Latin America—approximately 75%
of the region’s pet market is devoted to dog food, a higher percentage than any
other global market, according to Euromonitor (see Figure 1).
Brazil held 8% of the global pet market in
2013 (second to the US, which held 28% of the market), and comes in fourth in a
global pet population ranking (106.2 million pets in 2012). The country has
37.1 million dogs and 21.3 million cats (see Figure 2), a significant
population for the petfood market to focus on. Brazil’s pet market bears that
out, as more than half (53%) of the market’s US$8.23 billion value is devoted
to petfood sales (see Figure 3). While a little over 50% of pets in Brazil
still eat human food, that number is quickly decreasing as pets are being
converted to commercial petfood.
According to Abinpet, the Brazilian pet
products association, Brazil’s pet market is 31% of the country’s GDP, sixth
after textiles, machinery, beauty/personal care items, telecom and electronics.
That market is heavily focused on distribution: Of the 118,705 formal pet
organizations in Brazil, 93% are involved in the distribution chain
(wholesalers and distributors). The online petfood market has a presence in the
country, particularly with dog food, and the physical pet retail options are
diverse, including everything from small pet shops—which are highest in number
but only carry 30% of petfood options on their shelves—to national mega stores,
which carry 100% of Brazil’s petfood options.
With an increasingly diverse market and
growing options for petfood suppliers looking to gain a foothold, it’s clear
that Brazil makes a solid focus point for the petfood industry.
and Argentina are two other markets in Latin America particularly worth the petfood
industry’s attention. Mexico is one of the leading markets in dry petfood
(alongside the US, Brazil, Japan and France), according to Euromonitor. It’s
also one of the three fastest-growing pet care markets overall, alongside Brazil
and Russia, in spite of a 16% VAT increase applied to petfood resulting in
price hikes. Mexico is set to see the second-largest increase in dog food value
sales, contributing US$1 billion to the US$6 billion anticipated rise in global
value sales over 2014â€“2019, according to Euromonitor.
Pet ownership is on the rise in Argentina,
with 9 million dogs and 3 million cats currently making up the majority of pet
owner profiles, according to Grupo Pilar Technical Manager Carlos Crosetti,
DVM, PhD, who spoke at this year’s Petfood Forum. Although still developing,
the petfood market in the country has taken in some of the trends being seen in
larger markets, such as specialization and premiumization. Foods focusing on
digestive health, immune system response (puppies), weight loss management,
coat health/sensitive skin, joint health, urinary tract health, heart health
and liver health are all areas of note for the growing market.
With multiple countries in the region
already holding their own on the global petfood field, it’s no surprise that
Latin America is the top emerging petfood market in the world. With nothing but
growth on the horizon, it’s also one the industry should keep an eye on.