Thailand pet food makers go superpremium as demand grows

Learn about the current trends in the Thailand pet food market, particularly the growth of superpremium products.

Cat being scratched by a human hand
Cat being scratched by a human hand
Thailand’s pet owners, particularly cat owners, are demanding higher-quality products for their animals and are looking to the premium segments to fulfill those demands. | Shipilov77777 I

Thai Union is a Thailand-based seafood company working in both the human and pet food spaces, and its product catalog for cat food reads like a page from a Michelin-star tasting menu. For mains, they have flaked salmon sashimi style with imitation ikura (Japanese caviar), succulent (meat) loaf topped with cream sauce, chicken jelly with carrots and French-style turkey with liver, all of which can be paired with a few carefully made-for-feline soups like lamb broth or tuna soup with surimi (imitation seafood). For snacks, the company offers discriminating cats a choice of soufflés and vitamin balls in sauce or a stick of salmon biscuit. 

Thailand superpremium pet food continues to evolve

The ongoing development of a superpremium pet food segment, particularly for cats, in Thailand appears to be a natural progression for a country that has long been experiencing an embarrassment of riches when it comes to pet food. Thailand has huge pet food manufacturing capabilities that allow producers to indulge consumers with a wide array of pet food, more than what the domestic market could absorb. Local pet food labels own 94% of the market, leaving little room (6%) for imported pet food from the most well-known brands. Spoiled for choice, Thai pet owners, who in recent years grew their spending power and developed an even closer affinity to companion animals because of the pandemic, easily slipped into the pet humanization trend that makes them elevate their pets' food to superpremium grade. 

Superpremium pet food is a game changer for some 30 strongest brands, local and foreign, competing in the Thai pet food space. For these companies, dishing out the most nutritious premium and superpremium pet food that is novel and fancy at best is the new recipe for success. Flanders Investment & Trade, which provides business information to foreign investors and Flemish exporters, estimates the premium and superpremium pet food segment to be 25% of the Thai pet food market, with double-the-growth prospects each year. 

A pet food Mecca headed for higher growth

Almost unscathed by the business pains the pandemic has wrought globally, Thailand's pet market is expected to grow on all fronts from pet ownership to pet food exports. State-owned insurance institution Krungthai Bank valued Thailand's pet market at 44 billion baht (US$1.2 billion) in 2021 and said it is heading to 66.7 billion baht (US$1.88 billion) by 2026.

The Thai Pet Products Industry Association (TPPIA) said that since 2011, their industry has sustained a yearly growth of approximately 10%. It was worth 29.3 billion baht (US$830 million) in 2017, 32.23 billion baht (US$910 million) in 2018 and 36 billion baht (US$1.02 billion) in 2019. Nearly half of the market goes to pet food (mainly for dogs and cats) and the rest is divided among different kinds of pet care products and services. 

Business analysts like Mordor Intelligence and Research and Markets peg the country's pet food market's compound annual growth rate (CAGR) between 5.2% and 5.43%, respectively, from 2022 to 2027.

Meanwhile, Thailand has established itself as the world's fourth-largest pet food exporter after Germany, the U.S. and France since 2019. Also in 2019, Thailand ranked as the second-largest pet food exporter to the European Union after China in terms of export value, reaching 215 million Euro, according to Flanders Investment and Trade. 

The Thai Pet Food Trade Association (TPFA) estimates local manufacturers’ own brands account for 20% of Thai dog and cat food exports, and 80% are OEM and private labels for popular brands across the world.

The International Trade Center said Thailand exported a total of US$1.647 billion pet food in 2019. But in 2020, Thailand's pet food exports appear to have plateaued at 609,001 tons, valued at US$1.6 billion, according to TPFA president Dr. Chanintr Chalisarapong. In an article he wrote for GlobalPets, he said the 2020 numbers represented a volume increase of 13% and a value increase of 19% compared to 2019. He expressed optimism that Thailand's 2021 pet food exports would expand by at least 10%. 

“Comparing the quantities during the first five months of 2021 with the same period in 2020 shows that export value has already increased by 25%, while volume has increased by 19%,” he said.

In 2021, Thailand's top five pet food export destinations were the U.S., Japan, Italy, Malaysia and Australia. 

The business and science of superpremium pet food

Since 2017, Thailand's pet population has been increasing by 10% each year and at least one pet could be found in over one-third of households in the country. Per TPPIA data, by 2020 Thais had opened their homes to 14.5 million pets — 8.9 million dogs (62%), 3.3 million cats (23%), and other kinds of pets (15%). 

The shift from pet ownership to pet parenting is a crucial trend in the advancement of premium and superpremium pet food, and the fussy cats are the ones who have developed a taste for it and are demanding it more than dogs, at least in Thailand. 

A September 2021 report on Thailand's pet food industry from the U.S. Department of Agriculture (USDA)'s Global Agricultural Information Network (GAIN) had taken notice of this development, claiming that more pet food manufacturers are paying extra attention to cat food innovations like improved nutrition with better texture. 

“The cat food market grew almost 30% between 2019 to 2021,” said the report. “More wet products for cats are being launched.”

The report also highlighted that “for cat food, the ratio of dry to wet products is 60% and 40%, while for dog food the ratio is 80% to 20%. The increasing demand for premium cat food impacted the whole pet food industry in terms of innovation and sales.” 

Although more expensive than ordinary packaged kibble, high-end pet foods rated as human-grade and with a strong focus on pets’ health are filling up more pet bowls and opening new revenue options for the Thai pet food industry.

But it shouldn't be about profitability only. All activities around the development of high-quality pet food should be supported by pet nutrition science, said Dr. Anton C. Beynen, head of research and development for Vobra Special Petfoods BV, Veghel, The Netherlands. 

The prolific professor on animal nutrition, in his 2013 paper “Thai Petfood Industry and Pet Nutrition Science,” said the further growth of the Thai pet food business “requires an intimate alliance with pet nutrition science. The industry has to develop products in the light of issues such as market differentiation, nutrition trends, scientific progress and shrinking inventories of common ingredients.”

Beynen called for more pet nutrition experts trained in specialized pet nutrition who will support a booming Thai pet food market.

“The curriculum of veterinary students should involve classes on pet nutrition and dietetics,” he said. “For veterinary practitioners, post-graduate courses on pet nutrition should be developed. Major topics of the courses should be interpretation of pet food labels and claims and the role of nutrition in health and disease of dogs and cats.” He also said that universities in Thailand should facilitate scientific research in pet nutrition.

More opportunities for imported brands

By catering to premium and superpremium markets, pet food companies can enjoy higher margins now that the market is willing to pay extra for better quality and nutritional content. The uptrend is also encouraging market expansion that could give imported brands more room to compete even in a highly saturated pet food market like Thailand. 

The USDA report mentioned that while imported brands share a meager 6% of the Thailand pet food market estimated to be worth US$54 million (U.S. products account for 34%), there continues to be room for more imported products with a wide selection of product categories. It also helps that Thai pet owners have a more favorable view of western brands when it comes to higher-quality standards and innovations. 

Global pet food companies like Mars Inc. and Nestlé Purina with production hubs in Thailand that serve both the local market and export demand promise to roll out more premium pet food, but it's the group of well-established Thai agricultural companies, such as Thai Union, the Betagro Group and Charoen Pokphand (CP) Foods that expanded into the pet food industry, that are expected to introduce cutting-edge innovations that will excite the pet market. 

“The future winners (in pet food business) will be those Thai pet food manufacturing companies now making good profits and using this for innovation, research and development and hiring employees trained in pet nutrition science,” said Beynen.

Thailand is the largest exporter of processed tuna in the world, and the biggest names in the industry have branched out to wet dog and cat food production, a nod to the future potential of the Thailand pet food industry. TPFA's 11 members are mainly canned tuna manufacturers that use tuna and its by-products as wet pet food ingredients.

Thailand pet producers aiming to please ‘pet parents’

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