A swelling urban middle class has proven to be fertile soil for pet care sales in emerging markets over recent years, with pet ownership increasingly as local consumers become more Westernised. While an economic slowdown in Brazil and Russia and unrest in Ukraine threatens to hamper pet care sales, there is still considerable scope for growth in markets such as China and India, or smaller ones like Peru and Poland.
Strong income growth has helped to fuel the development of a much broader middle class in emerging markets, with Brazil now the world’s third-largest pet care market, behind the USA and the UK.
Pet ownership rates are among the highest in the world in some Latin American and Eastern European markets. On the other hand, cultural factors have helped to keep rates of dog ownership very low in many Muslim markets.
Emerging markets are urbanising and westernising, shifting attitudes towards pets. More owners are now willing to indulge their pets, boosting value sales in the pet care market, particularly in the dog and cat food segment.
Demand for other pet products (such as pet toys and clothing) remains very limited in many emerging markets, with the notable exceptions of China and, to a lesser extent, Brazil.
The spread of modern retail formats like supermarkets and hypermarkets beyond tier-one cities like Beijing and St. Petersburg to tier-two and tier-three cities is helping to make prepared pet food more accessible to consumers.
Among the BRIC markets (Brazil, Russia, India and China), the relatively underdeveloped Indian market offers the brightest growth prospects. Such markets as Peru, Kenya and Pakistan also have longer-term growth potential.
The major downside risks to future growth in pet care sales in emerging markets are a slowdown in economic growth (especially in Russia) and, to a lesser extent, inflationary pressure (particularly in Latin America).
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