Overview of pet industry development at home and abroad and opportunities and challenges faced by pet products industry

With the continuous improvement of the material living standard, people increasingly attach importance to emotional needs, and seek companionship and emotional sustenance by raising pets. With the expansion of pet raising scale, people's consumption demand for pet products, pet food and various pet services continues to increase. The characteristics of diversified and personalized demand are increasingly obvious, driving the rapid development of the pet industry.

The pet industry has experienced more than 100 years of development history, and has now formed a relatively complete and mature industry chain, including pet trading, pet supplies, pet food, pet medical, pet beauty, pet training and other sub industries; Among them, the pet products industry is an important branch of the pet industry, and its main products include pet household and leisure products, sanitary cleaning products, etc.

1. Overview of the development of foreign pet industry

The global pet industry sprouted after the British Industrial Revolution, started earlier in developed countries, and all links of the industrial chain have developed more maturely. At present, the United States is the world's largest pet consumer market, and Europe and emerging Asian markets are also important pet markets.

(1) American pet market

The US pet industry has a long history of development. It has experienced the process of integration from traditional pet retail stores to comprehensive, large-scale and professional pet sales platforms. At present, the industry chain is quite mature. The US pet market is the largest pet market in the world at present, characterized by a large number of pets, high household penetration, high per capita pet consumption expenditure, and strong demand for pets.

In recent years, the size of the US pet market has continued to expand, and pet consumption expenditure has increased year by year at a relatively stable growth rate. According to the data of the American Pet Products Association (APPA), in 2020, the consumption expenditure of the American pet market will reach 103.6 billion US dollars, exceeding 100 billion US dollars for the first time, an increase of 6.7% over the same period of 2019. During the ten years from 2010 to 2020, the market size of the US pet industry increased from 48.35 billion US dollars to 103.6 billion US dollars, with a compound growth rate of 7.92%.

The prosperity of the US pet market is due to its economic development, material living standard, social culture and other comprehensive factors. Up to now, it has shown strong rigid demand and is little affected by the economic cycle. Influenced by the epidemic situation and other factors in 2020, the US GDP has experienced negative growth for the first time in a decade, down 2.32% year on year compared with 2019; However, in the case of poor macroeconomic performance, the US pet consumption expenditure still showed an upward trend and maintained a relatively stable growth rate, 6.69% higher than that in 2019.

The penetration rate of American pet families is high, and the number of pets is large. At present, pets have become an important part of American life. According to APPA data, in 2019, about 84.9 million households in the United States will have pets, accounting for 67% of the total number of households in the country, and this proportion will still rise. The proportion of American pet raising households is expected to increase to 70% in 2021. It can be seen that pet keeping culture has a high prevalence in the United States. Most American families will choose to keep pets as companions, and pets play an important role in American families. Under the influence of pet culture, the US pet market has a large number and scale base.

In addition to the high penetration rate of pet households, the per capita pet consumption expenditure in the United States also ranks first in the world. According to public information, in 2019, the per capita pet care consumption expenditure in the United States was the only country in the world that exceeded US $150, much higher than the UK, which ranked second. The per capita pet consumption expenditure is high, which reflects the leading concept of pet care and pet consumption habits in the American society.

Based on the comprehensive factors of strong demand for pets, high household penetration rate and high pet consumption expenditure per capita, the market size of the US pet industry ranks first in the world and can maintain a steady growth rate. Under the social soil of popular pet culture and strong demand for pets, the US pet market has continued to integrate and extend the industry, resulting in many large domestic or cross-border pet product sales platforms, such as Amazon and other comprehensive e-commerce platforms, Wal Mart and other comprehensive retailers, PETSMART, PETCO and other pet product retailers, CHEWY and other pet product e-commerce platforms, CENTRAL GARDEN and other pet product brands. The above large-scale sales platform has become an important sales channel for many pet brands or pet manufacturers, forming product collection and resource integration, and promoting the large-scale development of the pet industry.

(2) European pet market

At present, the scale of the European pet market is showing a steady growth trend, and the sales of pet products are expanding year by year. According to the data of the European Federation of Pet Food Industries (FEDIAF), the total consumption of the European pet market in 2020 will reach 43 billion euros, an increase of 5.65% compared with 2019; Among them, the sales of pet food, pet supplies and pet services in 2020 will reach 21.8 billion euros, 9.2 billion euros and 12 billion euros respectively, with an increase compared with 2019.

The household penetration rate of the European pet market is high. According to FEDIAF data, there will be about 88 million households with pets in Europe in 2020, and the penetration rate of pet households will be about 38%, a growth rate of 3.41% compared with 85 million households in 2019. Cats and dogs are still the mainstream of the European pet market. In 2020, Romania and Poland will have the highest penetration rate of pet families in Europe, with the penetration rate of cats and dogs reaching about 42%; In the Czech Republic, the penetration rate of cat and dog households also exceeded 40%.

2. Overview of the development of China's pet industry

(1) Economic growth drives the rapid development of pet industry, and the scale of pet consumption market expands year by year

Compared with the foreign pet market, China's pet industry developed late, starting in the early 1990s. In recent years, with the economic development and the change of consumption concept, China's pet industry has entered a rapid development stage. At present, China's pet industry has a certain scale, in which pet dogs and cats are still the mainstream. According to the data in the White Paper on China's Pet Industry, in 2020, the total number of pet dogs and cats in China's cities and towns will exceed 100 million, including 52.22 million pet dogs and 48.62 million pet cats. The number of pet dogs and cats will account for 51% and 46% of the total number of urban pet owners in China, respectively.

With the improvement of residents' income level and quality of life, the concept of nurturing pets has gradually changed from "home care" to "emotional companionship". Many pet breeders and pet families regard pets as close family members, and their demand for pet products and pet food is increasingly diversified. In addition to staple food, they also buy daily necessities, toys, snacks, travel supplies, etc. for pets. According to the data in the White Paper on China's Pet Industry, since 2018, the per capita annual consumption of a single pet in urban China has exceeded 5000 yuan, and in 2020, the per capita annual consumption of a single pet will reach 5172 yuan. With the change of people's consumption concept of pet products and food, the resources of the pet industry are gradually divided and integrated, forming a subdivided industry of pet products, pet food, pet medicine, etc.

The market scale of China's pet industry has been expanding constantly, driven by multiple factors such as the increase in pet ownership, the increase in pet ownership and the diversification of consumption. From 2010 to 2020, the scale of China's pet consumption market rapidly increased from 14 billion yuan to 206.5 billion yuan, with a compound growth rate of 30.88%.

(2) The rise of Chinese pet enterprises has gradually transformed from OEM mode to independent brand

Based on the early start of foreign pet industry and the limited space of domestic pet market, most of the early domestic pet industry manufacturers were OEM plants of foreign manufacturers. With the rapid development of the domestic pet industry, domestic pet industry manufacturers have gradually broken the traditional OEM model and directly faced consumers by creating their own brands. Many domestic enterprises, including Yiyi Shares, Petit Shares, Zhongchong Shares, Yuanfei Pets and Zhongheng Pets, have opened the product market through their own brands.

(3) China's pet family penetration rate is low, and the market has a large development space

As China's pet industry has gradually emerged since the 90s of the 20th century, it is relatively late for pets to change from the role of tools to the additional function of emotional companionship. At present, the concept of pet keeping in China is still in the process of establishment and popularization. The pet industry chain of developed countries that started earlier in the pet industry has reached a considerable scale. The penetration rate of pet families in the United States will reach 67% in 2019, and that in Europe will reach 38% in 2020. In contrast, the current penetration rate of pet families in China is still far lower than that in Europe, America and other countries and regions.

At present, the penetration rate of pet families is low, which brings huge growth space and development potential to the domestic pet market. In recent years, with the rise of pet raising concept in China, the domestic pet industry has entered a stage of rapid development. In 2019, the scale of pet consumption market has exceeded 200 billion yuan. In the future, with the popularization of pet raising concept, the penetration rate of pet families will further increase, and the scale of pet market will increase accordingly.

(4) Pet consumers are young, and the post-80s and 90s generation are the main consumers

With the rapid development of pet industry in China, the change of pet breeding concept has more influence on young people's lifestyle. According to the data in the White Paper of China's Pet Industry, in the pet group structure in 2020, single people accounted for 33.7%, love accounted for 17.3%, married children accounted for 29.4%, married children accounted for 19.6%. Pets have become the emotional companion of single people, the emotional catalyst of marriage and family, and play an increasingly important role in people's daily life.

Due to the differences in education background, lifestyle, growth environment and other aspects, young people have relatively high acceptance of the concept of pet care, have a higher emotional demand for pets, and pet care groups show a significantly younger distribution. According to the data in the White Paper on China's Pet Industry, the post-80s and post-90s generation are still the main force of pets. In 2020, the post-80s and post-90s generation will account for more than 74% of pet owners in total. It is expected that in the future, the post-00s will gradually become the main force of pet consumption.

3. Industry development opportunities

(1) The downstream market scale of the industry continues to expand

With the growing popularity of the concept of pet care, the market scale of the pet industry has shown a trend of gradual expansion, whether in foreign or domestic markets. According to the data of the American Pet Products Association (APPA), as the largest pet market at present, the market size of the pet industry in the United States increased from $48.35 billion to $103.6 billion in the ten years from 2010 to 2020, with a compound growth rate of 7.92%; According to the data of the European Federation of Pet Food Industries (FEDIAF), the total pet consumption of the European pet market will reach 43 billion euros in 2020, an increase of 5.65% compared with 2019; The relatively large Japanese pet market in Asia has shown a steady growth trend in recent years, with an annual growth rate of 1.5% - 2%; The domestic pet market has entered a stage of rapid development in recent years. From 2010 to 2020, the scale of pet consumption market has rapidly increased from 14 billion yuan to 206.5 billion yuan, with a compound growth rate of 30.88%.

For the pet industry in developed countries, due to its early start and relatively mature development, there is a strong rigid demand for pets and pet related food supplies. It is expected that the market size will remain stable and rising in the future; As an emerging market of the pet industry, China is expected to continue to maintain a rapid growth trend in the domestic pet industry in the future based on economic development, in-depth popularity of pet breeding concepts, changes in family structure and other factors.

To sum up, the deepening and popularization of the concept of pet care at home and abroad has driven the vigorous development of the pet and related pet food supplies industry, which will usher in greater business opportunities and development space in the future.

(2) Consumption concept and environmental awareness promote industrial upgrading

Early pet products only meet the basic functional requirements, with single design function and simple manufacturing process. With the provision of people's living standards, the concept of "humanization" of pets is becoming increasingly popular, and people pay more attention to the comfort of pets. Some European and American countries have issued laws and regulations to strengthen the protection of the basic rights of pets, improve their welfare, and strengthen the municipal cleaning supervision of pet keeping. Related multiple factors have prompted people to constantly improve their requirements for pet products and their willingness to consume them. With this, pet products have become multi-functional, humanized and fashionable, with accelerated upgrading and product added value increasing.

At present, compared with developed countries and regions such as Europe and the United States, pet products have not been widely used in China. With the increase of pet consumption willingness, the proportion of pet products purchased will also increase rapidly, and the resulting consumption demand will strongly promote the development of the industry.

4. Industry development challenges

In recent years, with the rapid development of China's pet industry, the domestic pet industry is also facing challenges while seizing opportunities.

In terms of industry development environment, pet products industry, as a sub industry of light industry, started late in China and has not formed an orderly industrial ecology. The domestic pet product market has not yet established a stable and large-scale sales channel. The cost of enterprises to develop new domestic markets is relatively high, which increases the difficulty for enterprises to expand the domestic market.

In terms of independent brand construction, a considerable number of domestic pet product enterprises have weak independent research and development capabilities, limited investment in independent brand construction, and low awareness of independent brands, which lead to vicious price competition in the low-end product market, which is not conducive to the healthy development of the industry.

In terms of the international trade environment, most of China's large-scale pet products manufacturers mainly sell to developed countries such as Europe and the United States. Changes in the trade policies of the destination countries have a greater impact on product exports. Under the influence of trade protectionism policies of some countries, the profit space of domestic pet enterprises may be reduced to a certain extent, which has brought some adverse effects to the development of the industry.