Dog food production rose in March despite Mexico’s decelerating economy, but growth is not likely to last.
Recently Mexico’s National Institute of Statistics (INEGI) reported that in March 2020, dog food production recorded a peak unseen since January 2018. According to the institute, total dog food volume production registered 92,270 tons that month.
In current value terms, dog food production rose at an unprecedented 20% compared to the same month a year earlier. Such vigorous growth suggests that the average production prices of dog food also posted double-digit growth in the same period.
Dog food growth not likely to continue in 2020
Despite the deepening deceleration of the Mexican economy in 2019 and the first quarter of 2020, dog food production was rising in that period. Unfortunately, with the impact of the COVID-19 pandemic on the economy, it is unlikely that such positive dog food production figures will prevail in the second half of 2020.
The pandemic implies a demand-side shock to the Mexican pet food market, not a supply shock, meaning production would not likely be hindered, as pet food products are considered essential products. However, as the related lockdown harmed the economy and provoked the loss of thousands of jobs, it is likely that consumption will drop and remain weak for the rest of the year.
Thus, the net adverse impact of the pandemic on pet food consumption is unavoidable. With the local economy dropping drastically in 2020, pet food consumption will show the effects of the lockdown in the coming months.
Fortunately, it is estimated that by the second half of 2021, the positive momentum of the Mexican pet food market may impel pet food demand back to its normal levels.
Back to the ‘new normal’
The so-called new normal that will occur in the coming months may support the recovery of economic activity. However, the impacts of the lockdown, particularly in the retailing environment, will endure and may modify some purchasing habits, including those of pet food.
The good news is that the local pet food market is stimulating the development of emerging channels based on e-commerce that could smooth the expected drop in 2020.
Iván Franco is the founder of Triplethree International and has collaborated on hundreds of research projects for several consumer goods industries. He was granted the Global Consultant of the Year award by Euromonitor International and authored the book 17 Market Strategies for Growth (in Spanish).
For several years, the pet food industry has celebrated the market’s growth outpacing that of many other consumer goods categories, even during the pandemic.
