An industry that can maintain resilience to economic challenges not only bodes well for existing players but appeals to outsiders as well. Such is the case with the global pet care industry. While the pandemic may have boosted pet ownership, the underlying trends towards pet humanisation and premiumisation continue to drive growth. Pet care divisions of major companies are also driving strong organic growth. Nestlé Purina, for instance, which is the second largest pet care player globally, continued to be the largest contributor to organic growth for Nestlé in the first half of 2023. With the pet care industry expected to grow at a CAGR of 3.2% to reach a market size of USD216 billion by 2028, one can understand the appeal this presents not only for players to expand existing facilities and offerings but for new players to enter this space as well.
Product portfolio: A diverse mix or a concentrated approach?
Leading pet care players have been observed to have varying approaches when it comes to their portfolio of offerings. Industry leaders Mars and Nestlé each have a diverse portfolio of brands spanning price segments, categories and geographies. On the other hand, leading players like Colgate-Palmolive (Hill’s) and General Mills (Blue Buffalo) have a more focused approach on premium pet food. General Mills, for instance, has grown at a CAGR of 17% from 2018 to 2022 within pet food, while gaining ranks and closing the gap with Colgate-Palmolive. JM Smucker divested several of its pet food brands to Post Holdings in early 2023 to focus on its dog snacks and cat food brands. While a diverse portfolio can mitigate risks and compensate for shifting trends, a focused approach can help players develop their image as that of an expert.
Taking a closer look at Mars and Nestlé, Nestlé’s portfolio sees a stronger presence in the cat food space while Mars has a higher share in dog food. Over the historic period 2018-2022, Nestlé recorded stronger growth in the wet cat food segment compared to Mars, while Mars saw better growth in the dry cat food space. Both players have also been investing in expanding their production capabilities of pet food, including wet cat food. With an ongoing shift in pet demographics and a growing preference for cats as pets, both industry leaders seem to be well positioned to capitalise on this growth opportunity.
Geographic presence: Emerging economies offer strong growth prospects
With a market size of USD77 billion, the US remains the biggest market and principal battleground for pet care globally. However, strong growth prospects continue to come from emerging economies, with Asia Pacific projected to record the strongest CAGR of 7% from 2023 to 2028 for pet care.
Developing regions also offer good growth prospects on the back of an evolving pet demographic. While, typically, dogs have been the preferred pet companion, lifestyle factors such as rapid urbanisation, smaller living spaces and time constraints are driving a growing preference for cats as pets. In China, for instance, the cat population posted a CAGR of 5% over 2018-2023 surpassing the dog population in 2021.
Asia Pacific is expected to record the highest retail value and volume growth of 8% and 7%, respectively, in cat food over the forecast period
Source: Euromonitor International
A closer look into the region shows both global and local players having a strong hold on the cat food segment. While Mars retains a leading position in the region, Inaba Pet Food from Japan benefits from a strong presence in treats and mixers and wet cat food. Unicharm also benefits from a good position in the Japanese market and a wider presence in Asia Pacific as well.
Having a diverse geographical presence, particularly in high-growth economies, can help boost brand performance and limit the impact of maturing economies.
Retailing: Evolving retail landscape drives need to align retail and brand strategy
The rapid rise of e-commerce and the subsequent evolution of omnichannel retailing are creating opportunities for pet care players to strategise and grow. Beyond the pandemic push, online retailing continues to grow on the back of proliferation of e-commerce platforms, revamped retail strategies and the adoption of an omnichannel approach.
In 2023, retail e-commerce accounted for 29% of pet care’s channel distribution, up from 15% in 2018
Source: Euromonitor International
Today, beyond traditional e-commerce platforms, online retail is evolving to include newer business models and platforms. Alternate business models like subscription boxes provide a customised experience for pet parents. Emerging forms of e-commerce like social commerce and innovative approaches to digital engagement like livestreaming are also garnering consumer attention.
Despite the rapid expansion of e-commerce, retail offline still occupies a significant share of pet care distribution, with degrees varying across regions. Pet shops and superstores have been active in expanding their physical presence. A diverse range of products, advice from trained retail staff and a 360-degree experience encompassing products and services contribute to the growing popularity of this channel.
Retailing strategy today can no longer be an either-or approach. Retailers and brands need to leverage the advantages of an omnichannel presence. For this, innovation and strategies around pricing, place and promotion need to be aligned with brand strategy and what consumers seek across online versus offline.
To learn more about competitor strategies, read our report on Competitor Strategies in Pet Care. And for a deeper look into the pet retailing landscape, read our report on Where Consumers Shop for Pet Care.