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Collaring a thriving market

By Liu Jie (China Daily)
Updated: 2009-08-17 08:02

The Euromonitor survey showed that US-headquartered Mars Inc and Switzerland-based Nestle SA held 21 percent and 6.8 percent of China's pet food and care products market last year, respectively. The third largest - the Sino-UK joint venture Chengdu Care Pet Food Co Ltd - commands 1.2 percent of the market.

Nestle established its first pet food manufacturing facility in China in Tianjin in February 2007, with an initial investment of 80 million yuan.

The company's Purina subsidiary holds 24.5 percent of the global pet food market. The company started selling pet food in China in 2003 and the Tianjin plant, producing dog food under the Pro Plan and Dog Chow brands and Friskies cat food, enabled Nestle to meet market demand in China more efficiently and with lower costs.

The company estimated there are more than 100 million pets in China, and the number is expected to reach 150 million by 2010.

Ownership boom forecast

The potential in China is still huge, considering that Americans own 80 million dogs, and Japanese 20 million.

Only 5 percent of owners in key cities feed their pets packaged food, while the figure is 80 percent in the US.

Chinese consumers spent 5.73 billion yuan on pet food and pet-care products in 2008, a 6.9 percent increase over the previous year. [China Daily]

In previous years, most Chinese pet owners fed their pets non-industrially prepared pet food. However, a marketing and consumer education push is paying off for manufacturers, as more pet owners appreciate the benefits of nutritionally balanced pet food.

More pet owners are also giving their animals dietary supplements such as calcium and multivitamins.

Differentiating their products has been a challenge for manufacturers, especially in midpriced and economy-brand pet foods, where differences in quality and in unit prices tend to be small.

Manufacturers are striving to distinguish their products in terms of ingredients and added-value features.

Milk formula, for example, is being introduced into dog and cat food. In early 2008, Effem, a snack and pet food subsidiary of Mars Inc, updated its dry dog and cat food formula under its core brands Pedigree and Whiskas. Both Pedigree Puppy Bites and Whiskas Dry Kitten Food include milk formula, which the company says provides the supplementary calcium necessary for the healthy growth of puppies and kittens.

The company has marketed the two products as balanced nutritional meals for dogs and cats, backed by in-store promotions in key cities such as Shanghai and Beijing.

French pet food and care expert Royal Canin reclassified its product portfolio, developing a line of cat food it says is beneficial for health and fur.

Its Royal Canin Hair & Skin 33 has added soybean oil and omega-3 fatty acid, ingredients the company says improve skin health for humans.

The trend of incorporating human-use ingredients is expected to continue in pet foods. Concepts such as enhancing a pet's immune system or beautifying its skin have already been recognized by many Chinese consumers, and will increasingly be applied in pet food products over the forecast period, the Euromonitor report said.

Fang is a loyal consumer of Royal Canin. She has chosen various brands for Chouchou, since the cat came to her home five years ago.

"Chouchou prefers the French brand," she said. "Though Royal Canin is a little more expensive than others, I don't care, as long as Chouchou likes it."

The rising cost of raw materials, labor, production and transportation drove up pet food prices in 2008. Foreign companies, in particular, have increased the price of their products.

According to trade sources, the average monthly spending on pet food will increase by 20 yuan as a result. 

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