Mars to develop pet food facility in China with US$100 million

The Chinese pet food facility development was valued at more than US$100 million, with registered capital of US$40 million, according to the management committee.

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(Gang Zhou | iStockPhoto.com)
(Gang Zhou | iStockPhoto.com)

Mars, Inc. signed an agreement to develop a pet food facility in Tianjin, China, reported Xinhua News. On January 11, Mars representatives and the management committee of Tianjin Economic-Technological Development Area signed a cooperation agreement. The Chinese pet food facility development was valued at more than US$100 million, with registered capital of US$40 million, according to the management committee. The plant will cover 110,000 square meters and it expected to annually produce more than 250,000 metric tons of pet food.

China follows global pet food premiumization trend

The conventional wisdom among experts tracking the dynamic Chinese pet food market is that pet owners in China prefer brands from outside the country, due to the perception that those products are safer and of higher quality than pet foods made in China, reported Petfood Industry. However, that situation may be changing, based on recent sales figures and reports by Chinese media.

For example, Global Times has reported that some consumers in China are now considering boycotting U.S. pet food brands because of their higher prices brought on by a 25 percent tariff, imposed by the Chinese government as part of the trade war under way with the U.S. Some Chinese pet owners also blame the U.S. for starting the war.

Another factor could be that Chinese brands are incorporating many of the product features and claims associated with premium pet foods from other parts of the world. As a result, domestic brands now own a 34 percent share of the market, up from just 26 percent a year ago, and the highest growth for those brands is occurring in premium-priced products.

Premium, natural, grain-free pet foods on the rise

That data and information came from George He, account director with GfK Retail and Technology China, as part of his presentation for Petfood Forum China 2018 on August 21 in Shanghai. While the headline was that the Chinese pet food market has reached sales of US$2.2 billion (including all brands and channels), representing a 21 percent year-over-year rise, delving a few layers down into his data helps fill in more details.

For instance, online pet food sales show the greatest growth, at 30.8 percent, and now represent 51.8 percent of the market. Yet sales in traditional brick-and-mortar outlets (“offline” channels) are still increasing by double digits, 12.1 percent, and with a 48.2 percent share of the market, these outlets provide valuable insights.

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