Petfood and pet care products in China, Thailand, India, Japan, Singapore, South Korea and Taiwan
Forecast period 2007-2012
Source: Euromonitor International (
www.euromonitor.com
), contact Lee Linthicum, global petfood and pet care research
manager,
[email protected]
.
China
Continued Dynamic Value Growth Performance
Due to improvements in disposable income levels as well as
changing demographics towards favourable conditions for pet
keeping, the total pet population in China increased during
2006. This had a positive impact on total value sales of
petfood and pet care products across the country. In addition,
the continued expansion of premium wet and dry petfood through
specialised channels and of mid-priced wet and dry petfood
through supermarkets/hypermarkets into second- or third-tier
cities offers wider access to pet owners who are willing to
feed their pets with packaged petfood. All this led to dynamic
value sales growth of petfood and pet care products over the
review period.
Nestlé (China) and Royal Canin Opening Local Production
In view of the high cost of importing dog and cat food from
overseas, Nestlé (China) Ltd has set up its first local
manufacturing site in Tianjin, China. The production site was
completed in early 2007, enabling the company to reduce costs
and provide tailored products for the China pet market, which
fits with the company's intention of taking the leadership
position from Effem Foods (Beijing) Co Ltd, which had
established production sites for petfood and pet care products
much earlier than Nestlé (China).
Meanwhile, premium dry dog and cat food player, Royal Canin Au
Yu (Shanghai) Petfood Co Ltd, is planning to set up a local
manufacturing site in Fengxian district, Shanghai, over the
forecast period.
Strong Growth in Forecast Period
Value sales of petfood and pet care products are expected to
see dynamic growth during the forecast period, due to the low
penetration of prepared petfood within overall petfood
consumption as well as the increasing number of pets being kept
as companions. This will result in petfood products continuing
to see faster growth in the premium segment, as well as growing
interest in pet nutrition. Pet care products will continue to
record dynamic growth due to increasing interest in pet
nutrition and other pet care items such as pet shampoos and pet
toys.
Thailand
Economic uncertainty leads to certain changes in
purchasing habits
Following the poor economic situation in Thailand in 2006, pet
owners had to adjust their purchasing habits in 2007, with many
of them switching to mid-priced and economy dog and cat food.
However, economic uncertainty did not seriously affect the
purchasing habits of middle- and high-income pet owners who
remained willing to invest in their pets. This trend was
instrumental in driving the value growth of dog treats and pet
care products in 2007. On the other hand, manufacturers
continued to boost the awareness of the benefits of prepared
dog and cat food by participating in various shows such as the
annual "PET Expo".
"One stop" outlets gaining popularity
As pets have several needs including food, accessories and
veterinary care and as pet owners become increasingly busy, a
number of "one stop" outlets that cater to all these different
requirements, in just one location, have emerged. Furthermore,
a multitude of veterinary clinics outlets, with their own pet
shop and pet grooming centre sections, have appeared in the
cities. Supermarkets/hypermarkets outlets have also begun to
offer a much wider variety of products. While the focus in
veterinary clinics outlets is on nutritious, premium products,
the popularity of supermarket/hypermarkets outlets has grown
due to their economy and mid-priced brand offerings.
Petfood and pet care products expected to continue its
positive performance
With disposable incomes expected to increase over the forecast
period and households expected to become smaller as well as the
aging population being expected to continue to increase, it is
expected that many people will continue to seek the company of
a pet. Owing to increased awareness of the nutritional benefits
of petfood and continued increases in the pet population,
petfood and pet care products is expected to perform well with
the strongest constant value growth coming from dog treats, as
dog owners start to treat their dogs even more like family
members.
India
Changing attitudes boost sales of petfood and pet care
products
Changing lifestyles in the form of the rise in nuclear families
and double income households have encouraged the growth of pet
ownership in urban areas of India. Increasingly, pets are being
looked upon as companions and members of the family rather than
as guard dogs for example. Pet owners have started to take an
interest in their pet's diet, health and grooming. A gradual
shift towards prepared petfood was observed over the review
period and pet owners have been more willing to spend on
petfood and pet care products than ever before. This trend has
spawned an entire industry, with a growing emphasis on pet
care.
Locally manufactured brands advance while imported ones
suffer
The ban on imported petfood due to the outbreak of Avian Flu,
which importers grappled with through much of 2006, was
continued in 2007. Despite the lowering of import duties, the
reduced availability of petfood products proved frustrating for
manufacturers, importers and consumers in 2007. Whilst a few
foreign brands such as Royal Canin and Bento Kronen escaped the
ban, others, including the US brands Pro Pac and Purina, were
severely affected. On the other hand, locally manufactured
brands benefited from the breakdown in the supply chain of
imported brands.
Pooch pampering to drive value sales over the forecast
period
The nascent petfood and pet care products industry in India
offers strong growth opportunities in the forecast period. With
pets increasingly being treated as companions and fashion
accessories rather than guard dogs for security purposes, pet
owners are expected to spend more on their pets. The urban
areas of India are expected to drive the demand for petfood and
pet care products over the forecast period, while dogs are
expected to remain the preferred choice of pet for Indians.
Thus, pooch pampering and other Western pet trends are expected
to be key drivers of value growth over the forecast period.
Japan
Pet pampering pushes up sales
In 2007, petfood and pet care products in Japan witnessed
current value growth of nearly 3% on the previous year. Sales
were driven by the increasing humanisation of pets, rising pet
ownership, a stronger preference for pure breed pets, and the
greying pet population. A positive economic backdrop, and
demographics which show an increasing proportion of elderly
people and a declining birth rate, has resulted in a strong
propensity for pet owners to pamper their pets with premium
petfood. In particular, functional premium dog and cat foods
have demonstrated robust growth in sales as a consequence. As
pet care products became necessary to take care of aged pets,
pet care products recorded the highest current value growth of
the three sectors in 2007.
Growing strength of Uni-Charm Pet Care Co Ltd
Uni-Charm Pet Care Co Ltd saw an increase in its share of
overall petfood and pet care products in 2006. The company
continues to maintain the edge it has gained against Nestlé
Purina Pet Care from 2004 and is second only to clear leader
Master Foods Japan. Uni-Charm's success and growing strength
can be attributed in part to the company's commitment to
reinforcing its communications with its customers and the
support provided to its retail partners. The former is
especially key given Japanese pet owners' changing needs, while
the latter helps to boost visibility of products and,
therefore, sales.
Buoyant future in a nation where pets outnumber
children
It is expected that Japan's petfood and pet care products
market will post a constant value CAGR of around 3% over the
forecast period. As of 2007, Japan has received wide media
coverage on how pets outnumber children in the country. With a
significant proportion of the population ready for retirement
during 2007-09 on top of the declining birth rate, many of
these retirees-to-be have indicated their intention to buy a
pet when stopping work. Japanese pet owners have earned a
reputation for being astute consumers with the ability to
indulge their pets. These factors, taken together, create a
favourable environment for growth for the petfood and pet care
products industry.
Singapore
Slower but still healthy year continues for petfood and
pet care products
In 2007, the performance of petfood and pet care continued to
become more stable with already high penetration of most
products especially petfood. Volume growth remained positive,
driven by healthy growth in the pet population, especially
small mammals, fish and cats. However, bird ownership continued
to suffer from the threat of bird flu and health scares, thus
negatively affecting bird food sales too. Another factor
sustaining the positive overall growth was the increasing
indulgence of pet owners who strive to improve their pet's
welfare and are more willing to spend extra money on petfood
and pet care products. Despite the already established status
of the industry, several innovative products were launched on
the market towards the end of the review period, such as
mineral water for pets and this indicates healthy prospects for
the market.
Improved growth expected for the industry
Over the forecast period, the performance of petfood and pet
care is expected to stay positive and even improve slightly in
terms of compound annual growth rate (CAGR) for value sales.
Even with the impending tougher regulations from the government
expected in the forecast period, the industry remains
optimistic. Events such as Aquarama exhibition - focusing on
fish - are expected to raise pet owners' awareness and
knowledge. More new products and species can be an eye-opener
for visitors from overseas as well as local people. Dog food,
cat food and small mammal/reptile food are also on track to
keep performing healthily. Nonetheless, bird food has the least
positive prospect of all petfood products in Singapore
depending on how long the concerns over bird flu remain in the
forecast period.
South Korea
Recovering economy leads to moderate value growth in
2007
Petfood and pet care products was negatively affected by poor
economic performance in South Korea over late 2004 and 2005.
However, over 2006 and 2007, the economic outlook improved so
petfood and pet care products experienced moderate recovery in
value growth. Owing to the more optimistic economic outlook the
value growth of premium dog food and premium cat food also
showed signs of recovery in 2007 as pet owners began to trade
up. Players in petfood and pet care products have also
indicated that "luxury" products for pets have been increasing
in popularity in South Korea, as affluent pet owners become
more willing to spend large amounts of money on their pets.
Internet becomes a popular distribution channel
Pet shops continued to be the most important retail channel in
petfood and pet care products in 2007, as such outlets tend to
be conveniently located in residential areas. In addition, pet
shop owners focus on building ties with their customers, making
recommendations and discussing pet-related issues with pet
owners when they visit an outlet. This has helped to
consolidate the leading value share of pet shops in the
distribution of petfood and pet care products. However, the
internet has also become a more prominent channel of
distribution in South Korea and offers a wide variety of
products at lower prices, often by 25% to 30%, than in other
channels. With regard to products on the internet there are
various imported products that are very attractive to pet
owners who are concerned about the health of their pets and who
wish to purchase "premium" products.
Demographic trends expected to lead to higher pet
ownership
Pet ownership in South Korea is expected to increase further
over the forecast period owing to favourable demographic trends
such as an ageing population and an increasing number of
single-person households and households that have two incomes
but no children. These types of consumers are all expected to
have few dependents and high disposable incomes and are thus
expected to desire pets for companionship. Furthermore, they
are expected to treat their pets as family members and to
purchase "premium" products for them, as these are typically
associated with high quality. Increased focus on the quality of
life of pets is also expected to lead to increased demand for
products in pet care products such as pet accessories and
dietary supplements.
Taiwan
Premium petfood and pet care products on the rise
The petfood and pet care products market shines in terms of
value sales, while volume sales remain stagnant due to the
declining dog population. Value sales of petfood continue to
grow as consumers trade up from unprepared to prepared petfood
and from economy or mid-priced to premium brands. For
manufacturers, of more significance is the changing profile of
pet owners in Taiwan as affluent working couples, childless
families, retired individuals and financially independent
single households become the largest groups of people that own
pets. These people treat their animals as family members or
child-substitutes. They are willing to spend money on food to
keep their pets healthy, and on treats and toys to keep them
happy. They are the groups that are less likely to be affected
by the country's economic instability and the target consumers
of premium petfood and pet care products.
Local manufacturers shine
In 2007, manufacturers such as Uni-President Enterprises Corp
and Fwusow Industry Products Co Ltd are significant producers
of petfood, and Tai Kong Corp and Hai Feng Feed Co Ltd are
specialised in aquarium goods. Backed by strong distribution
networks, these local manufacturers are able to compete with
international players. Local products are generally positioned
as mid-to-low price. In 2007, major breakthroughs in research
and development from local producers such as Uni-President were
seen, as this company launched dog food with Natto pro-biotic
for intestinal health. This proved that local players are no
longer followers in the market but can be leaders in both
product invention and sales performance. Eyeing the potential
in premium products, Fwusow also announced its plans to invest
in a new production plant in Taiwan in early-2007. It aims to
grow its market share during the forecast period.
Healthy future for the market since Taiwanese consumers
enjoy the companionship of pets
Continuing growth in dog and cat food as well as pet care
products are the main drivers behind the predicted robust
growth of the petfood and pet care products market during the
forecast period. Dogs and cats are considered family members
and they are likely to receive better care than other pets.
Other petfood, on the other hand, is expected to see more
restricted development since consumer interest in other pets is
dwindling. The consumer base of fish food is decreasing also.
Fish food manufacturers are expected to focus more on the
export market due to the dwindling interests in Taiwan.