The South Asian pet food market, dominated by India, while still far from taking a leadership position in the global pet food industry, had a projected compound annual growth rate (CAGR) of over 18% for the period of 2017-2022. Forecasts further suggest that India is set to increase its global pet food market share to US$270 million in 2019 and almost US$650 million by 2022.
By comparison, the global pet food market stood at US$91 billion in 2018, with a CAGR of 4.5% from 2019 to 2024. The Indian share in the global pet food market is, therefore, just above a quarter of a percent.
Mars leads the Indian pet food market
Notwithstanding that low market share, investments in pet food manufacturing in India are on the rise. Leading those investments is Mars Inc., which accounts for about 55% to 70% of the Indian pet food market revenue, with Mars Petcare in Hyderabad and Royal Canin in Mumbai.
To some extent, Mars is being challenged by local pet food manufacturers such as Provimi Animal Nutrition India, PetSetGo and Bharat International Pet Foods. However, the Mars expansion strategy is likely to stave off the competition as it continues to introduce more of its products to the Indian market, which has emerged as the fastest growing market globally, due to its sheer size with a population exceeding 1.36 billion.
Given that the country accounts for three-quarters of the South Asian region by population and 18% of the global population, pet food investments from other major players begin to make sense. The recent investments by Nestlé Purina, Farmina and Indian Broiler Group are a testament to the Indian paradigm shift away from home-cooked pet meals to packaged pet foods.
Why India is attractive for pet food investors
The upward trend of the Indian pet food market is further attributed to rising living standards, increasing adoption of pets due to changing family lifestyles and greater awareness among the population. While those factors may be of interest to pet food industry investors, it is the Indian focus on good business governance that has made it easier for the country to attract pet food investments, when compared to the rest of South Asia.
In the World Bank Ease of Doing Business Rankings 2019, India holds the 77th position worldwide, but the top position in South Asia. When compared with the 2018 Rankings, significant improvements in factors such as starting a business, dealing with construction permits, getting electricity and getting credit are driving investment potential in the country.
Indian pet food imports and exports tell a premium demand story
South Asia remains a pet food import-driven economy. The India domination of pet food imports is fascinating. It held a 76% pet food imports market share in South Asia in 2008, which dipped to 73% in 2013 before rising to 82% in 2018. In second place, Pakistan holds a steady 10% pet food imports market share in South Asia, followed by Sri Lanka and Bangladesh.
Between 2008 and 2018, Indian pet food imports saw a 797% increase by value, totaling US$45.3 million in 2018. In terms of tonnage over the same time period, Indian pet food imports increased by 746%, for a total of 24,606 tons in 2018. Comparatively, the dollar value per metric ton has only increased by 6% in the same time period, highlighting the stability of the Indian economy over the past 10 years.
Indian exports of pet food tell a story of increasing investments in pet food manufacturing in the country. Exports totaled US$38.2 million in 2018, with a growth of 489% from a 2008 start, although in terms of tonnage, India exported 9,093 metric tons of pet food in 2018, starting at 2,638 metric tons in 2008 for a growth of 245%. The dollar value per ton increased by 71% between 2008 and 2018, reaching US$4,198 per metric ton, implying that the Indian pet food manufacturing and export markets are flourishing.
Figure 1. Indian pet food imports and exports, 2008-2018
With both Indian pet food imports and exports, five countries comprise 83% of the totals, just with different countries in each category.
Source: International Trade Center Trade Map, 2019
A look at the top Indian pet food import and export markets can provide further insight, with 83% of imports come from five countries: Thailand (42%), France (18%), South Africa (14%), Italy (5%) and Spain (4%). By contrast, 43% of Indian-exported pet food reached Germany, followed by the United States (19%), the Netherlands (9%), the United Kingdom (7%) and Belgium (6%), which total an 83% share in the Indian pet food export market.
The Indian pet food exports market is focused on projecting an image of high-quality, premium products for its European and American markets. This has allowed it to inflate its dollar value per metric ton, while its internal market demand (imports by proxy) is satisfied with a stable price per metric ton, to supplement supply at the same time as it expands manufacturing potential.
