Pet race track investment and financing are hot, how to "shovel" a future?
The "pooping officials" are making this track hot.
According to data from Wande, the pet economy has risen by over 8% since the beginning of the year. As an important branch of the big consumer market, the market performance of the pet related industry is closely related to the rebound in consumption.
At the same time, many pet companies have made significant capital movements since the beginning of this year. Recently, the pet hospital "Ruipai Pet" has entered the 8th round of financing, and pet medical company Xin Ruipeng also submitted a prospectus to the Nasdaq Stock Exchange on January 24th. Domestic pet food brand Pat has won the B-round investment from L Catterton, the world's largest private equity fund for consumer goods.
With the rise of the demand side "cute pet economy", external policy support, capital favor, and changes in the business and service models of the pet industry caused by mobile internet technology, after 30 years of development, the market's supply side product and service capabilities will continue to improve, and the pet health industry is accelerating its development. According to multiple research reports, the pet industry is less affected by economic fluctuations. For pet owners, pet related consumption is a necessity, which promotes the industry's strong ability to cross cycles.
Pet consumption is released with the improvement of material living standards, and pet rations have a high repurchase rate
According to the research report of Bohai Securities, generally speaking, when the per capita GDP (Gross Domestic Product) is between $3000 and $8000, the pet industry will experience rapid development. At present, China's per capita GDP has exceeded 10000 US dollars, and with the improvement of residents' material living standards, the demand for pet consumption will continue to be released.
Pets have gradually become the emotional companions of young couples, elderly people, and single individuals, leading to an increase in pet ownership and single pet consumption. Meanwhile, referring to data from some overseas countries, the willingness of residents to keep pets has significantly increased after the epidemic. Bohai Securities believes that after the optimization and adjustment of China's epidemic prevention and control policies at the current stage, the domestic pet industry will usher in a good development opportunity or enter a high-speed development stage of both quantity and price.
Recently, domestic pet food brand Pat received a B-round investment from L Catterton, the world's largest private equity fund for consumer goods. This financing will be used for research and development investment, supply chain construction, brand building, and other aspects.
Brands in the pet industry that focus on pet rations can relatively receive more financing. Wang Minjun, Chief Marketing Officer of Shanghai Lianchong Intelligent Technology Co., Ltd. (CATLINK), told the Beijing News Shell Finance reporter that pet rations have a high repurchase rate, and once pets like them, pet owners are less likely to change them. Frequent pet food changes can also lead to gastrointestinal problems, as the size of pet rations can be very large.
But the pet economy goes far beyond the single category of pet rations. According to research data from iResearch Consulting, pet owners spend around 5200 yuan per year on a single pet, mainly on pet food and pet health care, accounting for over 90% of the total. Pet services are relatively scarce. Pet staple foods and snacks are essential and fundamental in pet feeding, and are a higher proportion of pet consumption. Pet owners have a more diverse range of consumer categories in pet health and medical care, with insecticides and vaccines being the main expenses. Pet products account for 84.4%, with pet daily necessities and toys being the main expenses. In terms of pet services, grooming and grooming are the main expenses.
The financing boom in the pet market will significantly enhance the service supply capacity of the pet health industry in the future
The pet industry covers multiple fields such as raising, eating, wearing, playing, and using. At present, the global market has developed relatively mature. According to data from the consulting firm Common Thread, the global pet industry reached $261 billion in 2022, a year-on-year increase of 12.5%. From 2022 to 2027, the global pet industry's CAGR (compound annual growth rate) will be 6.1% and reach a scale of $350 billion. According to the 2022 Global Pet Market White Paper, the US pet industry accounted for over 40% of the global market in 2021, making it the largest pet market.
Since the beginning of this year, many top pet companies have made significant capital movements, and recently, the pet hospital "Ruipai Pet" has entered the 8th round of financing. Prior to the D-round financing, Pets had obtained well-known domestic and foreign investment institutions and enterprises such as Cornerstone Capital, Mars (an international pet food brand), Yuexiu Industry Fund, Huatai Securities, and Ruipu Biology, with a total financing of over 700 million yuan.
Ruipai Pet Hospital was established in 2012 and is a professional enterprise engaged in pet medical services and operations. The latest data shows that the company has opened over 500 offline pet hospitals nationwide, with nearly 10 million level comprehensive referral center hospitals, covering nearly 70 cities nationwide, and receiving over 3 million cases annually.
Xinruipeng, a leading pet healthcare company, also submitted a prospectus to the Nasdaq Stock Exchange on January 24th. Xinruipeng is a leading enterprise in the pet medical industry. In 2020, its post investment valuation was as high as 30 billion yuan, which is about four times the market value of A-share pet leader Zhongchong Shares. It is also the most valuable pet track project in the domestic capital market to date. The capital behind it includes star capital such as Dachen Financial Intelligence, Gaoling, CICC, Tencent Investment, and Snow Lake Capital.
In recent years, the amount of financing in the pet market has become increasingly high, driving the further development of the pet market. According to research data from iResearch, there were a total of 35 financing events in the Chinese pet industry in 2022, and 20 financing events in foreign pet markets. Among them, there were a total of 5 domestic financing events with a level of over 100 million, and 6 financing events clearly disclosed the financing amount. From the perspective of financing capabilities in various tracks, the pet health industry is relatively better. Among them, the top three chain pet hospitals in China received financing in 2022. With the support of capital, the service supply capacity of the pet health industry will be significantly improved in the future.
During the rapid expansion period of the pet industry, the "lazy economy" catalyzes the development of intelligent pet products
After more than 20 years of development, the Chinese pet industry is in a period of rapid expansion. Shang Lin, the industry leader of Tmall Pet, Cat and Dog Products and Aquatic Pets, believes that intelligence is a highly deterministic trend in the development of the pet industry.
He said that currently, the top brands in the entire domestic pet intelligence track are Chinese brands. This is actually inseparable from the development of domestic industrial technology and the in-depth research of domestic businesses on the pet industry. The new generation of pet owners themselves is a generation that has grown up in the context of the internet, so they are more adept at using new technologies and are also willing to allocate their time to more interesting things. They need intelligent help to liberate their hands.
At present, there is still room for improvement in the quality of pet smart products and the market share is relatively low. Brands in the pet industry that focus on pet rations have received more financing. Wang Minjun stated that pet rations have a high repurchase rate, and once pets like them, pet owners are less likely to change them. Frequent pet food changes can also lead to gastrointestinal problems. Therefore, the volume of pet rations will be very large. In contrast, there is still great room for the development of pet smart products.
The penetration rate of intelligent pet products has increased, with water dispensers, cameras, and feeders as the main products. The rise of the "lazy economy" and the increase in the number of pet owners per pet have catalyzed the development of intelligent pet products. In 2021, the penetration rate of smart pet products in China reached 52.9%, an increase of 12.6% compared to 2019. From a specific product perspective, pet owners' preference for pet smart products mainly focuses on pet food, housing, entertainment, and other aspects, with intelligent water dispensers accounting for the highest proportion of 63%. At the same time, pet training and health monitoring products have begun to receive consumer attention, and consumers' demand for pet smart products has shifted from simple food security to health monitoring.
According to JD data, from January to May 2022, the purchase volume of JD's smart pet toys increased by 80% year-on-year, the purchase volume of smart water dispensers increased by 84% year-on-year, the purchase volume of smart feeders increased by 115% year-on-year, and the search volume of smart cat litter pots increased by 267% year-on-year.
According to the research report of Bohai Securities, the future scale of the intelligent pet products industry will directly reach tens of billions. Digitalization and intelligent upgrading have become the future development trend of China's pet products industry, and have attracted cross-border entry from technology and home appliance giants such as Xiaomi, Midea, and Haier. Bohai Securities claims that the cross-border entry of large enterprises can not only improve the quality and functionality of intelligent products, but also bring new growth points to the overall intelligent product industry.