Grupo Gigante, the partner of Petco Animal Supplies Stores Inc. in Mexico, recently announced the launch of the Petco online business in Chile.
According to Forbes Mexico, with an initial investment of US$2 million, Grupo Gigante will land in the Chilean market initially in the online space in the second half of 2022. Eventually, the company plans to enter the brick-and-mortar retail arena in that country.
Petco is the biggest retail pet specialty chain in Mexico in value sales, with 108 stores by the end of 2021, and has grown by double digits every year since its inauguration there in 2013.
Why Chile is an attractive market for Petco?
A fair question may be why a U.S.-Mexican joint venture is planning an investment in Chile, an attractive yet relatively small market that is not as close to Mexico as other markets in Latin America.
First, it is worth noting that Chile has the largest middle-class proportion of people and per capita GDP across Latin America. According to Triplethree International data, Chile is the fifth biggest pet food market in the region, with a population of 5.5 million dogs and cats. In the context of pet food, Chile is the most developed market in the region, as it holds the highest penetration rate for commercially prepared dog food.
Furthermore, Petco is targeting a potential market of around 35,000 to 40,000 metric tons of premium and superpremium pet food per year in Chile. Comparing such a market with the premium pet food space in Mexico, Chile stands as an attractive market for the specialty chain.
Taking it one step at a time
As Petco Mexico specializes in premium and superpremium pet food products, the company is a good match for other markets with sound economies and large segments of consumers that can afford them. Yet, as overall online sales are relatively small in Latin America and Chile, eventually Petco will have to enter the Chilean market with physical stores if it plans to attain the market’s potential.
So far, the company is taking small steps, and depending on the consumer acceptance of Petco’s value proposition online, the company would decide when to take the next step.
