Nestlé has inaugurated a pet food factory in Teno, Chile. The factory will produce pet food for dogs and cats, meeting growing demand from pet owners in Chile.

Nestlé invested US$120 million (CHF 117 million) in the factory to ensure high standards of quality and food safety. The site will directly employ 154 people, more than 70 percent of whom come from neighboring areas and 40 percent of whom are less than 30 years of age. According to Nestlé, the plant will produce 65,000 tons of pet food. It will produce dry food under several brands including Dog Chow, Cat Chow, Doko, Gati and Purina Excellent, for local consumption and export markets in Latin America.

The facility is also designed to meet certain environmental standards. No waste goes to landfill, a natural gas boiler reduces greenhouse gas emissions by 23 percent, and 100 percent of energy comes from non-conventional renewable sources.

Latin America's pet food market

Nestlé's investment in Chile's pet food market is indicative of the significant growth potential in Latin America. Latin America’s pet food market possibilities are a mixed bag of late-stage developing market numbers, but the region has significant future potential as pet ownership and disposable income both become more prevalent.

With a 6 percent compound annual growth rate (CAGR) for the pet food market between 2011 and 2016, according to a Euromonitor International global trends report presented at Global Pet Expo 2017, Latin America comes out on top in terms of developing regions to keep an eye on. In fact, according to Euromonitor, the area has the highest CAGR of all regions (Middle East/Africa comes in second, at 5 percent) when it comes to pet food, and the second-highest CAGR (7 percent, topped only by Australasia’s 8 percent) for other pet products between 2011–2016.

The obvious answer to this growth is that something else is growing, too: Latin America’s middle class. In 2006, the percentage of Mexico households with disposable income above US$25,000 sat at roughly 55 percent, according to Euromonitor. By 2016, that number had grown to roughly 63 percent. Brazil, Argentina, Chile, Venezuela — each of these countries had less than 50 percent of their households reporting disposable income above US$25,000 in 2006, but today at least half (and mostly more than half) of their households have extra money to spend.