Domestic Players Create Opportunity and Change in China Pet Food
Changing attitudes towards pets in China shifts focus to mid-priced pet food
The Coronavirus (COVID-19) pandemic saw an increase in pet ownership globally. China has gone against this trend – the dog population in China has decreased, down 2% in 2020 and 1% in 2021. In 2020 only China, Mexico and Japan recorded negative growth rate in the dog population. Furthermore, according to Euromonitor International’s Consumer Lifestyles Survey, respondents who agreed that “Pets are beloved members or the family” has actually decreased from 72% in 2019 to 69% in both 2020 and 2021.
Why then are Chinese consumers bucking a global trend of increased pet ownership as prompted by the global pandemic? And how is this attitude impacting the pet food market in China?
While in many countries, home seclusion left people isolated – and accordingly focussed on their pets or wanting the companionship of a new pet – China has moved in the other direction, forced by economic realities and the negative influence of misinformation, where some consumers see a link between animals and COVID-19, prompting a clear increase in pets being abandoned.
Against this negative backdrop, premium dry cat and dog food recorded a slowdown in growth in 2021. Mid-priced food also dropped in value growth, but is recovering faster than other price segments, led by domestic companies. Local players have recognised a diminishing preference for premium dog food, for example, in the wake of economic pressures following the pandemic, and have focussed on pricing to stimulate sales.
Source: Euromonitor International
In China, the culture of companion animals has typically centred around high-income consumers, with an accordant preference for imported premium brands, which have typically been considered the best alternative for their pets. But this is changing, spearheaded by the strong performance and increasing prominence of domestic players.
In addition, consumers – unsurprisingly – are inclined to opt for value for money when selecting brands if local brands are increasingly perceived as having quality comparable to higher-priced imports. In recent years, this perception of local brands is becoming more positive.
For example, domestic brand NetEase has launched dry cat food that has a similar ingredients list to imported brand Go! Solution by Petcurean Pet Nutrition and provides detailed information of recipes and raw material suppliers to guarantee the utmost transparency to consumers, while its unit price is only around 70% of Go! Solution. Subsequently, it is now widely recognised by Chinese consumers and has the potential to become an important player in mid-priced dry cat food.
Strong performance of local players reshapes competitive environment in China
Leading domestic players currently occupy over half the top 10 places in dog food by value, and their shares are increasing. Growing innovation and public exposure are likely to foster further expansion in the future. For example, one leading local player, Shanghai Bridge, has launched a herbal functional dog food by applying traditional Chinese herbs. In addition, domestic players have focused on localised marketing campaigns to build rapport with consumers. During lockdown, in the initial stage of the pandemic, Xuzhou Suchong issued a short video stating that pets and Myfoodie pet food could accompany people through the difficult, lonely times, which created a social buzz, particularly among young people, providing notable exposure for the company’s brand Crazydog.
The progress of domestic players in Chinese pet food is testament to the importance of understanding local culture and environment in this unique and varied market. Local knowledge to appeal to Chinese consumers is clearly more important than ever, as the unexpected crisis of the pandemic has illustrated.