The United States' pet food exports to East Asia will continue to grow despite the COVID-19 pandemic as the feeding of domesticated animals remains a necessity in this market, according to a report by the United States Department of Agriculture (USDA) Foreign Agricultural Service (FAS).
The positive outlook is based on macroeconomic trends in the region such as positive attitude changes towards pets, accelerated use of e-commerce channels for pet food as a result of COVID-19, the rising desire for pets by young and old people alike, and more middle-class households buying premium pet food. Euromonitor International estimates the East Asian food market at close to US$11 billion in retail sales in 2019, an increase of 45% (US$6 billion) from five years ago. By 2025, Euromonitor sees the market growing to US$23 billion.
Market numbers and imports/exports
The region imported US$1.52 billion pet food in 2019, a 44% increase from 2015, according to Trade Data Monitor LLC. Of this number, the U.S. market share was around 20% over the last five years, while Thailand (29%), Canada (9%) and the European Union (17%) make up 55%.
U.S. exports of pet food to East Asia reached US$280 million in 2019, a 39% increase from 2015, export data from the U.S. Census Bureau showed. Key markets registered the following U.S. export figures:
- Pet food sales to Taiwan are stable at US$35.1 million on average over the last five years. Euromonitor estimates pet food sales to Taiwan will increase by 78% until 2025.
- Exports to South Korea increased 34% from 2015 to 2019, reaching US$46.1 million in 2019. Pet food sales will grow by 34% from now to 2025.
- U.S. pet food exports to Japan were worth US$130.4 million in 2019. Here, a 10% pet food sales increase over the next five years is expected.
- Hong Kong from 2015 to 2018 was an important U.S. pet food export market, growing at an average of 73% year-on-year. But, civil unrest in 2019 pulled exports numbers down 8% to US$56.6 million in that year.
Taiwan charges a marginal tariff for U.S. pet food exports, but Japan, South Korea and Hong Kong allow U.S. pet food exports to enter duty-free, the USDA FAS report said.
Optimism for U.S. export growth in China
Despite the China-U.S. trade spat that happened during this last year of the Trump administration, U.S. pet food exports to China grew by 88% in 2018–2019, totaling US$10.9 million. But in terms of market share, it only translated to 16% of China's huge US$307.6 million annual pet food import market.
The U.S. is hopeful that with the Phase One trade agreement signed by the two countries in January 2020, U.S. pet food exports to China will be on an upward path again as they did the moment the old trade barriers were removed. As of June 2020, U.S. pet food exports to China jumped to 124% at US$11.5 million. Euromonitor projects that pet food sales in China will grow by 149% over the next five years.
With the Phase One trade agreement, the U.S. pet food exports are back to the 4% tariff rate that China charges its so-called Most Favored Nation (MFN). At the height of the trade war, China levied retaliatory tariffs up to 35%, depending on the U.S. product.
