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Sector Trend Analysis – Pet food trends in China

November 2018

Executive summary

Due to a higher standard of living in China, the pet population is expected to double from 2013 with 389.2 million pets to 755.3 million in 2022.

In 2017, the Chinese pet food industry grew from US$0.5 billion in 2013 to US$1.7 billion by a compound annual growth rate (CAGR) of 35.0% over the period, and is expected to grow to US$6.1 billion by 2022.

All categories and subcategories of pet food are forecasted to grow from 2018 to 2022. Premium foods are expected to grow the fastest over the period.

Internet retailing made the largest gains in market share distribution, increasing from 10.1% to 42.2% between 2013 and 2017. Modern grocery retailers, such as hypermarkets and supermarkets, decreased from 26.9% of the market share distribution to 11.5% over the same period.

China imported Can$115.6 million in 2017, around 7.0% of their total pet food market size. Canada had the third most pet food exports to China, going from Can$0.3 million in 2014 to Can$21.4 million in 2017 with a compound annual growth rate of 329.9% over the period.

From January 2013 to December 2017, there were 955 pet food products launched in China. Most products launched were in the dog snacks and treats category and most had a function claim with a general or specific benefit of the product.

Pet population and ownership

The pet population in China has increased by a 7.0% compound annual growth rate (CAGR) from 2013 to 2017, from 389 million pets to 755 million. The pet population will continue to show strong growth from 2018 to 2022, with an 8.2% CAGR. The cat population will have the largest growth, with an 18.5% CAGR, while the reptile population is forecasted to have the smallest growth, with a 0.3% CAGR. Due to the population boom, cats will go from having the fourth largest population in 2017 to the second largest in 2022.  

The pet population boom is attributed to various factors. During the Chinese Cultural Revolution, pet owners were often only elite middle-class. However, in recent years, the Chinese population has enjoyed a higher standard of living, with more disposable income to spend on pets. For example, although China's one child policy no longer exists, many couples fear the financial burden a child could have on their lives. Also, many younger Chinese people are going out less. According to the 2017 White Book of China's Pet Industry, the pet trend among younger and older individuals is unique to China, as pet owners in other countries are primarily older. As the younger generation socialize less, and the older generation face their children moving out when they grow up, there is a desire from both generations for alternative companionship, which result in a pet adoption boom.

Pet population in China: historical and forecasted '000s of animals
Category 2013 2017 CAGR* % 2013-2017 2018 2022 CAGR* % 2018-2022
Total population 389,228.2 509,702.3 7.0 551,023.2 755,349.3 8.2
Fish population 168,227.0 184,303.0 2.3 188,520.0 220,548.6 4.0
Dog population 55,447.5 84,595.0 11.1 93,646.7 136,109.2 9.8
Bird population 74,131.4 73,457.4 −0.2 73,971.6 76,822.6 0.9
Cat population 21,906.8 68,525.9 33.0 86,959.4 171,186.4 18.5
Reptile population 4,901.0 4,940.0 0.2 4,949.0 5,002.8 0.3
Small mammal population 2,133.0 2,173.0 0.5 2,190.4 2,283.8 1.0

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

Pet ownership in China: historical '000s of households and % of households
Category 2013 2017 CAGR* % 2013-2017 2013 % 2017 % CAGR* % 2013-2017
Dog 23,965.7 25,906.7 2.0 5.5 5.7 0.5
Cat 6,364.5 8,028.7 6.0 1.5 1.7 3.2

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

Retail market size

The pet food market in China has significantly outpaced their population growth, from a 2013 starting market size of US$502.3 million to the projected size of US$6.1 billion in 2022. Every category has and will continue to contribute to the growth of Chinese pet foods. In 2017, the majority of the pet food market was comprised of dog food at 67.1%, followed by cat food at 32.2% and other pet food at 0.7%.

While traditionally pet owners have prepared their own meals for their animals, they are increasingly using prepared pet foods to save time. In addition, China is going through a similar trend as other countries, known as premiumization. Pet owners have more income to spend on higher quality pet food with more nutritional value, resulting in a surge in the market size. Companies are increasingly advertising their food benefits to differentiate their product to the increasing number of pet owners.

Pet food in China: historical and forecasted retail sales in US$ millions
Category 2013 2017 CAGR* % 2013-2017 2018 2022 CAGR* % 2018-2022
Total pet food 502.3 1,668.4 35.0 2,216.6 6,125.4 28.9
Dog food 345.5 1,118.9 34.1 1,485.3 4,102.7 28.9
Cat food 147.7 537.8 38.1 718.7 2,005.3 29.2
Other pet food 9.1 11.7 6.6 12.6 17.5 8.6

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

In 2017, most of the Chinese pet food purchases were made from Mars Inc. and Shanghai Bridge Petcare Co Ltd. , which sold almost 60% of the pet food products. Mars Inc. is known for brands such as Pedigree, Whiskas, and Cesar, while Shanghai Bridge Petcare Co Ltd. brands include Vigor & Sage, Nature Bridge, and Kitchen Flavor. Nestlé SA followed behind with 5.4% of the total market share in 2017, and is recognized for brands such as Purina and Friskies.

Despite their increase in pet food sales in China, Mars and Nestlé, lost market share from 2013 to 2017, with −5.2% and −22.8% CAGR, respectively. Domestic companies, such as Shanghai Bridge Petcare Co Ltd. and Rongxi have been able to provide generally cheaper products with similar quality. These companies have also been able to innovate to appeal to the intricacies of their market segments.

Pet food in China: historical company retail market share in US$ millions
Market player 2013 2014 2015 2016 2017 CAGR* % 2013-2017
Mars Inc. 191.0 249.3 318.1 406.0 511.5 27.9
Shanghai Bridge Petcare Co Ltd 57.8 86.6 124.6 180.8 225.6 40.6
Nestlé SA 76.4 71.7 66.8 75.1 90.4 4.3
Rongxi Pet Food Co Ltd 5.7 14.0 26.7 50.9 71.9 88.5
Huaxing Pet Food Co Ltd 5.5 10.6 22.0 37.4 52.1 75.4

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

Market segmentation

With the Chinese consumers' rising incomes, many are seeking pets as their companions. With greater knowledge in animal care, consumers are seeking more nutritionally dense foods for their pets. Many of the premium products offer health benefits, leading to their faster growth from 2013 and 2017 and into the forecasted 2018 to 2022 period.

Dog food

From 2013 to 2017, dog food sales have seen a significant increase, from US$345.5 million to US$1.1 billion, with a CAGR of 34.1%. Dry dog food represented 74.0% of total dog food sales in 2017; however, wet dog food was the fastest growing category from 2013 to 2017. All categories are forecasted to continue their strong growth from 2018 to 2022; however, only dog treats and mixers will grow at a faster rate.

As a subcategory, premium products had the strongest growth from 2013 and 2017 and are expected to continue this trend from 2018 to 2022. As a result, premium dry and wet dog foods will increase from 52.8% of the dog market in 2013 to a forecasted 56.6% in 2022. Dog treats will also experience major growth between 2013 and 2022, from 9.0% of the sales in 2013 to 12.7% in 2022.

The leading dog food companies, such as Royal Canin China, are beginning to target toward certain age groups and dog types, as well as introducing therapeutic dog foods. Smaller and domestic companies started taking advantage of the increased internet purchases, with larger companies following suit. Companies, such as Huaxing Pet Food, that are known for their economic/mid-priced products, are beginning to introduce premium products that align with the premiumization trend.

Dog food in China: historical and forecasted market segmentation in US$ millions
Category 2013 2017 CAGR* % 2013-2017 2018 2022 CAGR* % 2018-2022
Total dog food 345.5 1,118.9 34.1 1,485.3 4,102.7 28.9
Dry dog food 258.1 828.4 33.8 1,086.1 2,739.8 26.0
Premium dry dog food 137.4 457.7 35.1 603.5 1,566.2 26.9
Mid-priced dry dog food 103.5 321.0 32.7 418.9 1,029.9 25.2
Economy dry dog food 17.2 49.7 30.4 63.7 143.6 22.5
Wet dog food 56.2 199.5 37.3 270.6 841.2 32.8
Premium wet dog food 28.4 103.5 38.2 141.9 459.3 34.1
Mid-priced wet dog food 26.8 92.8 36.4 124.6 371.2 31.4
Economy wet dog food 1.0 3.2 33.7 4.1 10.7 27.1
Dog treats and mixers 31.1 91.0 30.8 128.6 521.7 41.9
Dog treats 31.1 91.0 128.6 521.7 30.8 41.9
Dog mixers N/A N/A N/C NA N/A N/C

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

N/A: Data not available

N/C: Not calculable

Dog food in China: historical company retail market share in US$ millions
Market player 2013 2014 2015 2016 2017 CAGR* % 2013-2017
Mars Inc. 123.1 161.4 201.2 248.3 303.9 25.3
Shanghai Bridge Petcare Co Ltd 44.3 66.2 94.2 137.1 171.7 40.3
Nestlé SA 56.3 51.0 46.5 51.9 62.8 2.8
Huaxing Pet Food Co Ltd 5.5 10.6 22.0 37.4 52.1 75.4
Shanghai Enova Pet Products Co Ltd N/A N/A 6.5 26.4 44.2 61.5

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

N/A: Data not available

Cat food

Cat food grew sharply from 2013 to 2017 at a 38.1% CAGR and is forecasted to grow slightly slower at 29.2% CAGR between 2018 and 2022. Dry cat food represented 70.4% of the cat food sales in 2017 and showed the largest growth from 2013 to 2017. Premium wet and dry cat foods will continue as the fastest growing subcategories; however, mid-priced cat food will continue to make up a larger portion of the main categories, especially in wet cat foods. The dry and wet cat food is forecasted to have a more equal distribution by 2022. Wet cat foods represented 28.2% of the cat food sales in 2013 and are forecasted to reach 35.2% in 2022.

Cats have become increasingly popular because of an Otaku culture, where the younger Chinese generation stays at home more often and identifies with the more relaxed and independent nature of cats. According to surveys by the Chinese news website Xinhua, cat owners are more willing to buy premium products and food for their cats than they are for themselves, with some spending up to 20% of their salary on their pet. In addition, many cities restrict or ban dogs, leading to significant growth in the cat population and the resulting boom in cat food sales.

As the competitive landscape develops rapidly, companies are differentiating themselves to gain or maintain popularity. Domestic producers are distributing primarily through the internet for the lower costs that can be passed on to the consumer, as well as the more relaxed regulation on internet purchases. Established brands, such as Royal Canin China and Rongxi Pet Food, have strengthened their popularity through introducing therapeutic cat foods. Shanghai Bridge Petcare found success in advertising its products on pet-based television shows.

Cat food in China: historical and forecasted market segmentation in US$ millions
Category 2013 2017 CAGR* % 2013-2017 2018 2022 CAGR* % 2018-2022
Total cat food 147.7 537.8 38.1 718.7 2,005.3 29.2
Dry cat food 106.0 378.6 37.5 500.2 1,299.9 27.0
Mid-priced dry cat food 57.9 198.2 36.0 260.5 662.0 26.3
Premium dry cat food 46.6 175.7 39.3 233.6 623.0 27.8
Economy dry cat food 1.5 4.7 33.0 6.1 15.0 25.2
Wet cat food 41.7 159.1 39.8 218.5 705.3 34.0
Mid-priced wet cat food 31.9 120.6 39.4 164.9 524.8 33.6
Premium wet cat food 9.1 36.1 41.1 50.2 169.9 35.6
Economy wet cat food 0.7 2.4 36.1 3.4 10.6 32.9
Cat treats and mixers N/A N/A N/C N/A N/A N/C

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

N/A: Data not available

N/C: Not calculable

Cat food in China: historical company retail market share in US$ millions
Market player 2013 2014 2015 2016 2017 CAGR* % 2013-2017
Mars Inc 67.9 87.9 116.8 157.7 207.6 32.2
Rongxi Pet Food Co Ltd 4.3 9.6 20.2 37.6 56.0 90.0
Shanghai Bridge Petcare Co Ltd 13.6 20.4 30.4 43.7 54.0 41.2
Nestlé SA 20.1 20.7 20.3 23.3 27.6 8.3
Yantai China Pet Foods Co Ltd 2.0 3.1 4.7 6.8 9.2 46.5

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

Other pet food

The other pet food market did not have as significant growth as dog and cat food; however, each market outpaced their respective pet population growth. Fish food made up a drastic majority of the other pet food sales and will continue to do so in the next five years. Fish food has been rising in popularity as it is increasingly used for decoration and to symbolize wealth. Owners are also taking their fish to aesthetic competitions, where specialized food can help their pet look more shiny and colourful. However, growth for fish food could slow down as more carnivorous fish are purchased, such as the arowana and guppy.

Birds were the only pet to have a population decrease from 2013 to 2017, at a −0.2% CAGR. This is attributed to the Chinese government's new laws prohibiting birds as pets due to the bird flu epidemic. This resulted in the low 0.2% CAGR for bird food market from 2013 to 2017. However, as the threat of the bird flu has passed, the population is set to increase, although slowly, at a 0.9% CAGR and the bird food market size will increase at a 3.6% CAGR from 2018 to 2022.

Companies such as Fwusow Industry and Hai Feng Feeds are well-established in the other pet food market. As a result, they are able to offer a wider variety of foods that target more specific pet segments than newer or smaller competitors. Kyorin Food, the third largest company for fish food, goes beyond internet retailing and is actively promoting their products on fish-based internet forums. Between the 2013 and 2017 period, smaller companies struggled with price hikes in fishmeal, the raw material for fish food. Thus, many reduced or shut down their production.

Other pet food in China: historical and forecasted market segmentation in US$ thousands
Category 2013 2017 CAGR* % 2013-2017 2018 2022 CAGR* % 2018-2022
Total other pet food 9,064.6 11,694.0 6.6 12,582.0 17,470.3 8.6
Fish food 8,684.7 11,310.4 6.8 12,190.9 17,018.1 8.7
Bird food 375.2 377.7 0.2 384.8 444.1 3.6
Small mammal/reptile food 4.7 5.9 5.8 6.2 8.1 6.9

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

Other pet food in China: historical company retail market share in US$ thousands
Market player 2013 2014 2015 2016 2017 CAGR* % 2013-2017
Fwusow Industry Co Ltd 1,303.8 1,499.9 1,634.3 1,771.8 1,909.2 10.0
Hai Feng Feeds Co Ltd 1,346.3 1,493.9 1,628.3 1,758.2 1,891.1 8.9
Porpoise Aquarium Co Ltd 1,022.6 1,123.8 1,232.6 1,351.9 1,483.3 9.7
Kamihata Fish Ind Ltd 847.6 915.3 1,012.0 1,108.7 1,211.4 9.3
Spectrum Brands Holdings Inc 376.4 433.5 512.1 626.8 788.5 20.3

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

Distribution channels

The distribution of pet products has seen major changes over the 2013 and 2017 period. In 2013, non-grocery specialists, such as pet shops and superstores, sold most of the pet products in China. Pet shops in particular had 46.3% of the market share, while internet retailing was at a relatively small 10.1% of the distribution. However, in 2017, internet retailing was 42.2% of the distribution and pet shops had dropped to 33.2%. Only internet retailing and veterinary clinics gained market share, with a 43.0% and 3.8% CAGR, respectively. Modern grocery retailers, such as hypermarkets and supermarkets, had the largest categorical loss, with an overall −19.2% CAGR over the period.

Both producers and especially consumers are benefitting from internet retailing. Consumers have a greater selection of products and usually at a lower cost that companies have to compete with. However, companies benefit from fewer barriers to entry and can interact and build a stronger relationship with their consumers. Companies that do not incorporate internet distribution or interaction can expect difficulties in the upcoming years, especially with the popularity of internet retailing. For example, Mars Inc. lost market share over the period due to an overreliance on hypermarkets and supermarkets. In 2016, they partnered with Alibaba, the largest online and mobile commerce company in the world, to reach a wider audience.

Pet food in China: historical distribution by channels in % share
Channels 2013 2014 2015 2016 2017 CAGR* % 2013-2017
Modern grocery retailers 26.9 22.1 18.4 14.5 11.5 −19.2
Hypermarkets 18.8 15.4 13.1 10.3 8.2 −18.7
Supermarkets 8.1 6.6 5.3 4.2 3.3 −20.1
Other grocery retailers 0.2 0.1 0.1 0.1 0.1 −15.9
Non-grocery specialists 55.4 49.0 45.3 41.0 37.5 -9.3
Pet shops 46.3 41.3 38.3 35.4 33.2 −8.0
Pet superstores 6.4 5.4 4.9 3.6 2.7 −19.4
Other non-grocery specialists 2.7 2.3 2.0 2.0 1.6 −12.3
Internet retailing 10.1 22.5 31.2 37.3 42.2 43.0
Veterinary clinic 7.5 6.3 5.0 7.1 8.7 3.8

Source: Euromonitor international, 2018

*CAGR: Compound annual growth rate

Chinese imports

Imports of pet products have been minor relative to the total pet food market. In 2013, China imported less than 2.0% of their total pet food market size, but increased to approximately 7.0% in 2017. Nevertheless, in terms of value, each of the top exporting countries have had booms in their exports to China, with each having CAGRs well into 100% or more. This coincides with the increase in internet retailing, which provides greater access to foreign products; something not possible in most of China until recently. Chinese consumers also view the top exporters as high-quality producers.

Currently, Canada has access for dry pet food to China, with eight establishments eligible to export to China. As part of Canada and China's 2017-2018 Annual Cooperation Arrangement, both countries agreed to resuming discussions and reaching an understanding of the approval process for pet food and pet treats manufacturing facilities in both countries, and requesting the approval of facilities with pending status.

Moreover, Canada is seeking to gain market access for canned pet food to China. No progress will be made on this market access issue until the protocol on the reciprocal process for pet food/treat facilities is signed between Canada and China.

Canada has significantly increased pet food exports, with a 353.3% increase from 2014 to 2015 and an increase of 527.2% between 2016 and 2017. The significant increase from 2015 to 2017 was a result of restrictions placed on Canadian pet food that contained poultry. In 2015, China banned all Canadian poultry products due to an Avian Influenza outbreak in 2015. Since the lifting of the ban in April 2017, Canada has been working closely with China to develop new facilities to consistently meet Chinese regulations in the future. However, Canadian pet food exports only represented 0.7% of the total Chinese pet food market in 2017. According to an Export Development Canada Trade Confidence Index survey 2018, there are five main challenges Canadian exporters experience in the Chinese market:

Pet food in China: historical import statistics from top five countries in Can$ thousands (Harmonized System codes: 230910, 100830)
Country 2013 2014 2015 2016 2017 CAGR* % 2013-2017
Total 9,493.1 9,972.8 20,955.7 42,377.1 115,605.3 86.8
United States 836.2 65.3 638.1 8,421.3 35,596.3 155.4
Thailand 2,078.7 3,332.8 15,319.8 21,689.8 34,768.0 102.2
Canada N/A 268.9 1,218.8 3,405.9 21,361.5 329.9
New Zealand 5.7 N/A 132.1 2,417.1 10,157.0 N/C
Germany N/A N/A 63.4 1,134.8 5,629.1 842.6

Source: Global Trade Tracker, 2018

*CAGR: Compound annual growth rate

N/A: Not available

N/C: Not calculable

Canadian pet food: historical export statistics to China in Can$ thousands (Harmonized System codes: 230910, 100830)
Province 2013 2014 2015 2016 2017 CAGR* % 2013-2017
Total 108.5 1,017.6 627.2 3,670.6 11,455.4 220.5
Alberta N/A 187.8 N/A 2,721.2 6,443.2 N/C
Ontario N/A 432.3 163.8 220.0 4,034.6 110.5
British Columbia 45.4 N/A 3.4 352.0 541.8 N/C
Saskatchewan N/A 99.4 305.2 377.5 426.6 62.5
Quebec 63.1 298.1 153.2 N/A 7.4 N/C
Manitoba N/A N/A N/A N/A 1.9 N/C
Nova Scotia N/A N/A 1.6 N/A N/A N/C

Source: Global Trade Tracker, 2018

*CAGR: Compound annual growth rate

N/A: Not available

N/C: Not calculable

Pet food in China: historical Chinese provincial imports by port from Canada in Can$ thousands (Harmonized System codes: 230910, 100830)
City/province 2015 2016 2017 CAGR* % 2013-2017
Total 1,218.8 3,405.9 21,361.5 318.6
Zhejiang 137.1 194.5 13,893.8 906.8
Hangzhou 137.1 15.6 12,099.9 839.6
Ningbo N/A 178.9 1,793.9 902.7
Guangdong 507.6 2,644.2 6,172.5 248.7
Gongbei N/A 1,822.3 3,996.4 119.3
Shenzhen N/A 821.9 2,159.6 162.8
Guangzhou 507.6 N/A 5.1 N/C
Tianjin 444.9 529.7 847.0 38.0
Shanghai 125.2 36.3 251.2 36.9
Jiangsu N/A N/A 207.7 N/C
Liaoning N/A N/A 383.0 N/C
Shandong N/A N/A 0.2 N/C
Henan 4.1 N/A N/A N/C
Sichuan N/A 1.2 N/A N/C

Source: Global Trade Tracker, 2018

*CAGR: Compound annual growth rate

N/A: Not available

N/C: Not calculable

Pet food in China: historical provincial statistics for worldwide imports in Can$ thousands
(Harmonized System codes: 230910, 100830)
City/province 2013 2014 2015 2016 2017 CAGR* % 2013-2017
Guangdong 9,100.5 9,905.3 20,673.6 42,248.6 115,470.8 88.7
Zhejiang 3,810.2 4,320.5 3,165.2 15,792.1 55,787.6 95.6
Shanghai 63.7 108.7 751.0 692.9 17,505.6 307.1
Beijing 2,613.9 1,626.5 4,637.7 7,821.5 15,824.2 56.9
Shandong 277.6 709.3 4,738.8 7,795.1 11,064.5 151.3
Tianjin 151.1 709.3 3,812.5 5,336.5 10,488.4 188.6
Liaoning 2,095.1 2,301.7 3,123.6 3,703.2 3,669.6 15.0
Jiangsu 5.7 N/A 0.1 380.4 658.5 N/C
Fujian 67.1 113.9 429.9 28.7 263.6 40.8
Hebei N/A N/A 8.5 154.8 176.3 355.8
Chongqing N/A N/A N/A N/A 17.2 N/C
Anhui N/A N/A 1.6 406.0 9.4 138.6
Shaanxi N/A 14.2 N/A 81.2 6.2 N/C
Guangxi N/A N/A N/A 29.2 N/A N/C
Henan 16.2 N/A N/A N/A N/A N/C
Jiangxi 0.1 0.4 4.1 27.0 N/A N/C
Heilongjiang N/A N/A 0.4 N/A N/A N/C
Jilin N/A 0.9 N/A N/A N/A N/C

Source: Global Trade Tracker, 2018

*CAGR: Compound annual growth rate

N/A: Not available

N/C: Not calculable

Product launch analysis

Between January 2013 and December 2017, 955 pet products were launched in China. Most of the new launches were dog snacks and treats, with 335 releases over the period, and consistently the top category after 2014. However, wet cat food had the highest growth over the period. Functional pet claims, that provide general or specific benefits to the animals, were the most popular type of claims throughout the period. Asian pet products are more likely to list their functional benefits on the packaging. In addition, Chinese consumers prefer resealable packaging for their products.

Number of pet food product launches by claim in China, 2013-2017
Category Claim Number of products
Pet Other (functional pet) 446
Skin and coat (functional pet) 422
Digestion and urinary tract (functional pet) 395
Joints, bones and muscles (functional pet) 306
Teeth and tartar prevention (functional pet) 302
Natural No additives/preservatives 348
Other (functional pet) 203
Skin and coat (functional pet) 190
Digestion and urinary tract (functional pet) 169
Joints, bones and muscles (functional pet) 131
Positioning Other (functional pet) 226
Vitamin/mineral fortified 214
Skin and coat (functional pet) 200
Digestion and urinary tract (functional pet) 193
Joints, bones and muscles (functional pet) 165
Plus Low/no/reduced fat 173
Other (functional pet) 125
No additives/preservatives 124
Skin and coat (functional pet) 111
High/added protein 105
Ethical and environmental Social media 132
Other (functional pet) 100
Skin and coat (functional pet) 86
Digestion and urinary tract (functional pet) 74
No additives/preservatives 62
Total sample 955
Source: Mintel, 2018
Chinese top pet products sub categories, 2013-2017
Sub categories Period total 2013 2014 2015 2016 2017 CAGR* % 2013-2017
Dog snacks and treats 335 2 40 67 102 124 180.6
Dry dog food 201 12 35 27 44 83 62.2
Wet cat food 145 1 3 40 38 63 181.7
Wet dog food 110 6 4 36 35 29 48.3
Dry cat food 98 1 8 17 26 46 54.9
Cat snacks and treats 66 0 3 8 14 41 92.3

Source: Mintel, 2018

*CAGR: Compound annual growth rate

Chinese top pet product launch types, 2013-2017
Sub categories Period total 2013 2014 2015 2016 2017 CAGR* % 2013-2017
New variety/range extension 392 11 20 76 139 146 90.9
New product 354 8 54 77 60 155 109.8
New packaging 154 1 9 30 48 66 185.0
New formulation 31 2 7 9 5 8 41.4
Relaunch 24 0 3 3 7 11 54.2

Source: Mintel, 2018

*CAGR: Compound annual growth rate

Product examples

Lollipop Dog Treats
Company Luscious Foods
Brand Luscious Dog Treats
Category Pet food
Sub-category Dog snacks and treats
Country China
Launch type New packaging
Price in US dollars 2.87
Claims Breath-Freshening, High/Added Protein, Low/No/Reduced Fat, Other (Functional Pet), Skin and Coat (Functional Pet), Teeth and Tartar Prevention (Functional Pet)

Luscious Dog Treats Bang Bang Tang (Lollipop Dog Treats) have been repackaged and are now available in a newly designed 200 gram (g) pack. The fresh, delicious and nutritious dog snack contains the following: rich protein, which is easy to digest and absorb and aids in physical strength; rich collagen that promotes skin cell regeneration, makes skin resilient and shiny fur; vitamin E; oligosaccharide; and minerals. It is low in fat, high in protein, and is said to effectively clean teeth, reduce tartar and freshen breath.

Source: Mintel, 2018

Tuna + Catnip Cookies
Company Luscious Foods
Brand Luscious
Category Pet food
Sub-category Cat snacks and treats
Country China
Launch type New variety/Range extension
Price in US dollars 1.81
Claims Breath-Freshening, Ease of Use, High/Added, Fibre, No additives/Preservatives, Other (Functional Pet), Slimming (Functional Pet), Social Media

Luscious Tun Na Yu + Mao Bo He Qu Qi (Tuna + Catnip Cookies) are rich in plant fibre to help promote vitality, aid in weight management and strengthen body, and come in small fish shape that is easy to feed and chew and helps reduce tartar and freshen breath. This crispy, aromatic, nutritious and healthy product is free from additives, and retails in an 80g pack bearing two WeChat codes.

Source: Mintel, 2018

Pet Deodorising Biscuits
Company Luscious Foods
Brand Yufeng
Category Pet food
Sub-category Dog snacks and treats
Country China
Launch type New variety/Range extension
Price in US dollars 2.81
Claims Digestion and Urinary Tract (Functional Pet), Other (Functional Pet), Premium, Teeth and Tartar Prevention (Functional Pet)

Yufeng Chong Wu Xiao Chou Bing Gan (Pet Deodorising Biscuits) are made using premium raw materials and processed according to a new recipe created by nutritionists. They contain protein and various kinds of necessary vitamins, and are said to remove odour, strengthen stomach and promote strong teeth. The aromatic product retails in a 400g pack.

Source: Mintel, 2018

Mackerel Pot for Adult Cat
Company Bridge PetCare
Brand Kitchen Flavor Nory
Category Pet food
Sub-category Cat food wet
Country China
Launch type New packaging
Price in US dollars 0.57
Claims No Additives/Preservatives, Pet - Adult

Kitchen Flavor Nory Jing Yu Bao Cheng Mao Liang (Mackerel Pot for Adult Cat) is made using mackerel, chicken and carrot, and is designed for fussy eaters and provides complete nutrition. It is free from artificial flavouring and preservatives, and is suitable for adult cats from one year of age and above. This product retails in a 75g pack.

Source: Mintel, 2018

Tender Chicken Flavoured Wet Food for Adult Dogs
Company Mars
Brand Pedigree
Category Pet food
Sub-category Dog food wet
Country China
Launch type New variety/Range extension
Price in US dollars 6.44
Claims Digestion and Urinary Tract (Functional Pet), Economy, Immune System (Functional Pet), Joints, Bones and Muscles (Functional Pet), Pet - Adult, Skin and Coat (Functional Pet), Social Media, Teeth and Tartar Prevention (Functional Pet)

Pedigree Pouch Nen Hua Ji Rou Cheng Quan Miao Xian Bao (Tender Chicken Flavoured Wet Food for Adult Dogs) is said to promote a shiny coat, to help develop strong bones, to enhance teeth health, to improve digestive ability and strengthen immunity function. This product retails in a value pack containing 12 × 100g units and bearing the WeChat code.

Source: Mintel, 2018

Opportunities

Chinese imports of Canadian products, including pet foods, have experienced significant growth over the past few years. This was especially evident after the Canadian poultry ban was lifted in 2017. Chinese consumers have more disposable income, and China looks to import from countries known for high-quality products, including Canada. Canadian producers and exporters have taken advantage of the 86.8% CAGR increase in Chinese imports, with a 220.5% CAGR increase in exports to China. However, it is important that Canadian producers and exporters continue to maintain and establish high positioning in the market, while it continues to develop.

Richard Liu, founder and Chief Executive Officer of China's largest retailer, JD.com, believes that Canadian exporters need to work with Chinese partners who are familiar with the segments in the targeted markets to truly capitalize demand for Canadian products. According to Shirley Wu, Deputy General Manager of Shanghai Favour Business, Beijing and Shanghai are less price-sensitive and want the highest quality products, while in Guangzhou and Jiangsu, medium-range products are more popular.

For market segmentation, there are many emerging trends. Despite the higher costs associated with "natural food", consumers are willing to spend extra to keep their pet healthier. According to GfK Pet Ownership, a Chinese news show, "natural pet food" represented 24.0% of the pet food market share and has seen 55.0% growth year-over-year. Canadian producers must also align the popular organic, no-additives, and specialized foods with the current trends in pet food. According to Mintel, dog food that highlights high protein content, benefits, and source will be popular. Among Chinese pet owners aged 20 to 49, 40% buy pet food specifically designed for their pets, such as species, age and size.

Advertising towards the youth (15-24 years old), who currently spends the most money on their pets, could also yield positive results. This demographic is generally more educated about the specific needs of their pets. According to China Merchant Securities, 40% of spending on pets is for food. Younger consumers favour unique and novel products, as they believe pets are part of a trendy lifestyle.

As of 2014, most advertising was done through pet magazines and online pet shops. However, it is important for companies to start using emerging advertising platforms. For example, companies can reach hundreds of thousands of consumers by partnering with "cloud cats" that have massive followings on Chinese social media platforms. Some companies have opened profiles on the Chinese social media platform, WeChat, to provide tips and information for pet care, while also raising brand awareness.

As of April 2016, pet food was included in a "positive list" for cross border e-commerce. Pet food can easily be imported through China's 13 free trade zones or directly from business-to-consumer or consumer-to-consumer. In early 2018, China's leading e-commerce platform for pet products, Epnet.com, launched a "Canadian Pavilion" and made strategic agreements with Canadian pet food brands such as Orijen, Now Fresh, Nutram, Legacy, and Lotus. As a trusted website, products listed on the website will be favoured by the consumers in terms of quality, nutrition and benefits. The website has five million registered users, 100,000 daily active users, and 30,000 pet products.

However, the number of pet food manufacturers eligible to export to China is finite. Establishment operators must be approved by Biospecies Resource Supervision Section, Animal and Plant Quarantine Bureau, the General Administration of Customs of the People's Republic of China (GACC) in order to be eligible to export their products to China. The approval process has proven be arduous, and often requires an on-site inspection by Chinese officials.

For more information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

For additional intelligence on this and other markets, the complete library of Global Analysis reports can be found on the International agri-food market intelligence page, arranged by region.

Resources

Sector Trend Analysis – Pet food trends in China
Global Analysis Report

Prepared by: Jonathan Inada, Market Analyst Intern

© Her Majesty the Queen in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2018).

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