Mexico’s developing pet food market poised for growth

As pet food recovers from the effects of a VAT enacted in 2014, opportunities present themselves in this developing market.

Beaton Headshot New Headshot
(Susan Schmitz.Fotolia.com and corund.Fotolia.com)
(Susan Schmitz.Fotolia.com and corund.Fotolia.com)

Not only is Mexico among the top 10 pet care markets globally, it’s also among the fastest growing. Within that market is plenty of growth in pet food, including some surprising numbers among the premium and superpremium pet food categories as disposable income in Mexico’s larger cities allows pet owners to feed their pets commercially — and feed them well.

Mexico’s pet food market

Pet food sales in Mexico increased 13.7 percent in 2015 to MXN42.6 billion (US$2.28 billion), according to Ivan Franco, owner of Triplethree International, who spoke at Foro Mexico in June 2016. While the volume of pet food sold remained flat, sales value grew significantly, at about 10 percent net growth after accounting for inflation. These numbers are good news for Mexico, where pet food sales are just beginning to rebound from the effects of a value-added tax (VAT) of 16 percent enacted by the government in 2014.

Dog food makes up the vast majority of Mexico’s pet food market: 96 percent, or MXN40.9 billion (US$2.195 billion), according to Franco. Cat food comes in at only MXN1.7 billion (US$91.24 million). Together, the segments produce slightly more than 1 million metric tons in terms of volume, most of it dry pet food (88 percent dog food and 84 percent cat food). Wet and moist pet food shares are 11 percent for dog food and 16 percent for cat food, and snacks and chews register at less than 1 percent.

According to Franco, in spite of Mexico being more of a developing market for pet food, superpremium products account for 19 percent of dog food sales and premium products claim another 66 percent, while standard (economy) products hold just 15 percent of the market. As far as cat food is concerned, superpremium sales make up 7 percent of all sales, while premium takes the remaining 93 percent.

mexico-pet-food-market-stats

Dog food makes up the vast majority of Mexico’s pet food market.

Pet ownership trends in Mexico

But why the high premium numbers in a developing market? According to Euromonitor International, less than 40 percent of dogs in Mexico eat commercial pet food. But much of that 40 percent can likely be found in Mexico’s cities, where pet owners have solid disposable incomes and the desire to use at least some of those incomes on their pets. In addition, “pet products” continues to be a fragmented category, according to Euromonitor data, encompassing a wide variety of products and accessories produced domestically and internationally. As it’s difficult to define a leading market player amidst such fragmentation, brand loyalty is less of a factor, driving consumers to channel loyalty, instead — and that channel happens to be specialty retailers, the main distribution channel in Mexico.   

Of the 25 million dogs and cats in Mexico, 18 million live as pets in households; the rest are strays, according to Franco. Seventy-four percent of pets owned are dogs, with cats making up 26 percent of pet ownership.

Because those pets are more likely to live in urban areas, with owners who gravitate towards the premium and superpremium markets, a lot can be inferred about the households’ relationships with pet food purchasing, according to Franco. The owners are more involved and knowledgeable about what they want in their pet foods, and are more “participative shoppers,” said Franco. They’re seeking the “next generation of pet food” and focusing on health and nutrition, particularly protein and vitamin content.

2016 and future Mexico pet food market growth

According to Thriplethree data, Mexico’s dog and cat food market will reach 1.15 million metric tons and MXN61.9 billion (US$3.28 billion) in 2016, showing continued significant growth. Dog food will make up 873,300 tons and MXN43.86 billion (US$2.32 billion), while cat food will come in at 279,000 metric tons and MXN18.04 billion (US$954.2 million). Within those numbers, the premium dog and cat food market will equal 109,300 metric tons in 2016, nearly MXN13 billion (US$687.8 million), according to Triplethree.

Euromonitor expects to see continued growth in 2016, carrying on the trend started in 2015. According to the company’s data, provisional estimates indicate 8 percent growth in current value terms and 5 percent growth in volume. As far as the continued effects of the VAT implemented in 2014 are concerned, Euromonitor expects to see a continued impact on prices that will be absorbed by consumers, who will in turn become more price-sensitive. It will be difficult, according to the industry, for value growth to return to double-digit rates seen prior to 2014, but continued positive growth is expected.

Looking further ahead at the pet products segment, sales are estimated to grow by a 4 percent value compound annual growth rate (CAGR) at constant 2016 prices with sales expected to reach MXN1.5 million (US$79,359) in 2021, according to Euromonitor. Over the forecast period, other pet products will record the fastest growth, posting a 6 percent value CAGR at constant 2015 prices, driven by the increasing trend towards pet humanization. Pet owners in Mexico, following the well-established trend of more developed markets, increasingly see their pets as replacement children, thus driving up the amount spent on pampering.

Overall, it’s clear that between continued market recovery and the opportunities afforded by developments in pet owner purchasing trends, Mexico is a segment worth watching for companies looking to invest in some of the more developing global pet markets.

 

Leading companies in the Mexico pet food market 2016

mexico-pet-food-market

Unsurprisingly, perhaps, the top two companies holding significant pet food market share in Mexico are Nestlé and Mars, two of the largest and most diverse companies in the world. Malta Cleyton, a subsidiary of InVivo based in Mexico City, comes in at a distant third in market share.

 

More on global pet food market data

www.petfoodindustry.com/pet-food-market-data

Page 1 of 703
Next Page