China’s pet industry began to take formal shape in 1990s, when the Ministry of Agriculture approved the establishment of the China Small Animal Protection Association (CSAPA). Since then, pets have started to take on a significantly higher profile. They were once no more than an animal in the backyard; starting about a decade ago, they began to become part of the family. The establishment of pet stores with professional pet supplies sales and services represented by the Shanghai Naughty Family further fueled the rise of pet-centered consumption.
At the beginning of the 2000s, the market saw a new era of competition. A bunch of foreign pet brands entered the Chinese market, one after another, all carrying expectations for the huge upside space of the Chinese pet industry. This not only put pressure on domestic pet brands but also served as a motivator for the development of China's pet industry.
As Chinese consumers' disposable incomes and consumption levels continued to rise at a stable pace, the number of pet owners also showed an upward trend – it reached 68.44 million in 2021, according to a Chinese Pet Industry White Paper. The trend towards living alone – partly due to the younger generations marrying later and later – and an ageing population are further boosting the growth of this furry bonanza.
All in all, the last 30 years have witnessed the soaring development of the pet industry. Among which, the pet food market is currently the largest segment as well as the most important competitive market within the industry due to its high-frequency and high-need consumption attributes.
A diversified pet food market
With the continuous improvement of consumer awareness of science-based pet ownership, pet food is not limited to the traditional concept, but it is composed of a variety of elements such as staple food, nutrition, snacks, among which there are also diversified components. Driven by the pursuit of high-quality functional and refined products, better ingredients are coming to the fore: baked food, raw bone meat, freeze-dried meat and other attractive products are all new trends for pet lovers.
In addition, when it comes to meeting the diversified needs of pets, specialized pet food pet has been making its presence felt in recent years. Mr. Himi (Chinese: 黑米先生), an up-and-coming local pet food brand, is one of the leading players. It focuses on steamed fresh food without the addition of any preservatives or food attractants, and advocates a customized nutritional program to provide complete-nutrition food. Its co-founder and Chief Operating Officer Sarah Zhou told EqualOcean that more and more people are now making pet staples on their own, which not only aids pet health, but also promotes human-pet interaction and deepens their mutual bond. This is a round proof of pet owners' fine and scientific feeding philosophy. "Those pet lovers are also our target consumers," she added.
Causes of pet food consumption upgrade
First, the youth group is becoming the main consumers of the pet market, and their consumption patterns have a positive impact on pet consumption. In terms of the consumer demographics, 70% of pet owners are women - a far higher proportion than men - and the majority of them live in Tier 1 and Tier 2 cities. As white-collar workers, they are often willing to spend and doting) on pets, which hence drives the upgrading of pet food consumption and the development of various pet industries.
Second, the role of pets has evolved. According to[sl1] third-party research, in the first quarter of 2021, 37.1% of Chinese pet owners considered their pets as their best friends, 23.5% as their children and 17.1% as their relatives; that is to say, nearly 80% of pet parents regard them as part of their family members and have a closer emotional connection with them. Only around 20% of owners perceive that "a pet is just a pet". From this perspective, it is natural for people to provide the best quality products —various kinds of nutritional and innovative food for example — for their family members, and they are often reluctant to make major changes if their animal is thriving and feels good, unless there's a significant economic hardship.
Third, there has been a shift in consumer psychology. In the past, when the pet industry was in its infancy, consumers didn’t pay that much attention to the ingredients of the pet food they purchased or whether the nutritional contents met high standards; however, this is not the case nowadays. Pet owners are more inclined to feed their pets in a more scientific way to further improve their physiological and psychological state and extend the life of their pets.
Trinity of pet food ‘Health economics’
Health economics, in the broadest sense of the word, sees health first and foremost as a form of wealth. In the pet industry, while the high cost of pet medical care is still a major stress to pet owners, most young people believe that the upgrading of pet food consumption can, to a certain extent, avoid the occurrence of serious pet diseases. After all, the expenditure on high-quality pet food and nutrition is just a drop in the bucket compared with the high cost of medical treatment.
Based on this, a growing number of pet food enterprises are scrambling to launch food products for pets that can satisfy their physiological needs, healthy needs and emotional needs — a kind of trinity in the pet food industry.
Firstly, pet consumers' concern about the physiological needs of their pets is the lowest but the most significant factor in the pyramid chart – e.g. simple staple foods which help pets grow. As a necessity for pet feeding, pet staple foods are occupying and will always occupy a major share of the pet food market. However, despite some companies presenting an up-to-standard table of ingredients, consumers still worry about quality, as ‘puffy’ staple foods make it impossible for consumers to see the details of the products. "They (consumers) only want to believe in what they see, and our products exactly fulfill their demands," Sarah told EqualOcean in an interview.
Secondly, when basic needs are met, pet owners generally turn to focus more on their pets' health by providing them with pet nutrition products such as fish oil and vitamins, as a supplement to the staple diets. It is no longer limited to simple satiety, but also features in the pet's immune system, bones and joints, brain, heart, dental care and others. In other words, pet nutritional food is gradually approaching the standard of human health care products, becoming more and more refined and diversified. Under the influence of the expansion of the pet market and the change in the concept of pet ownership, there is a huge value in the pet nutrition industry.
Lastly, pet ownership has entered the level of Maslow's emotional needs, a higher order of needs above physiological and healthy needs in this article. Owners buy snacks to please their pets, choose the right food for their pets, such as individualized food, or give their pets raw meat and bone food in line with animal nature. Mr.Himi's co-founder Sarah also told EqualOcean that pet consumption, especially pet food, must primarily take into account the emotional needs of pets rather than the preferences of consumers, for a pet is the real receiver of food. The relationship between pets and owners is no longer one of absolute superiority, but one of care, love and respect. Compared with material consumption in the past, emotional consumption of pets is more elastic and continuous consumption behavior, with huge prospects.
Looking ahead
China pet ownership shows little signs of slowing down as the trend of valuing pets as family members is already well entrenched, along with people's improved living standards and the rise of millennials. As the core component in the pet industry, the pet food sector is deemed to have a lot of room for growth in the future, and greater success amid fierce competition lies in specialized, novel and purer food products.