26 May 2014
Pet products in China: diversifying demand for pet products
In tandem with the steady economic development and rise of income levels in China, pet ownership on the mainland is also increasing in recent years. Owners pamper and even treat their pets like family members. According to Euromonitor International, pet population in China reached 290 million in 2013, among which fish and birds are the two largest groups, accounting for 57.5% and 26.7% respectively. While the shares of dogs (9.4%) and cats (3.9%) seem relatively small, more accessories such as carriers, outfits and toys are required to bring up these furry friends. Currently, the mainland pet market is dominated by products for canines and felines. The retail sales of pet products in China totalled Rmb8.6 billion in 2013, and the figure is expected to reach Rmb14.3 billion by 2018 at an average annual growth rate of 11%. Chinese pet owners are increasingly demanding on quality and design of pet products, thus shoring up demand for imports. According to Chen Xiuqiang, sales manager of Guangzhou Mudi Trading Co Ltd, specialisation and human-like approach are the two major trends in China’s pet products market.
Increased demand for imported pet food
Mudi is a distributor and wholesaler established in 2004. The company has two major divisions, namely the large animal products division which deals in fodder additives and nutritional products used in animal husbandry, and the small animal products division that handles the importation of the original Total brand pet food from Brazil. Mudi mainly oversees the markets of Guangdong and Guangxi, while localities like Shenzhen and Dongguan are taken care of by local agents. Product importation is managed by the headquarters in Beijing.
Chen said China’s pet food market had seen significant growth over the past few years, particularly in Beijing and Shanghai. Premium imported pet food now accounts for about 70% of total sales and Guangzhou city alone accounts for 60%. However, the consumption pattern varies with different districts in the city. Pet markets in Huadu, Zengcheng and Huangpu districts, for example, are more mass-oriented. The demand for domestic brands or pet food produced on the mainland for foreign brands is stronger. On the other hand, in core districts such as Tianhe, Haizhu, Liwan, Yuexiu and Panyu in Guangzhou, consumers obviously opt for high-end pet food from abroad. In the past, pets in second- and third-tier cities were often fed with leftovers. Nowadays, as specialised pet food becomes popular, the demand for these products in second- and third-tier cities is also expanding.
Physical stores help raise brand awareness
The importation of pet food must go through a strict approval and inspection process administered by the Ministry of Agriculture of China. Chen said it took them two years to complete the approval process for Total to enter the mainland market in 2008. Since Total’s products are imported from Brazil, their retail prices are often one to two times higher than those of domestic brands or foreign brand products produced in China. Therefore, Total targets the mid-to-high-end market and its products are mainly sold through physical stores like pet shops, as well as pet hospitals, training centres and hotels, in which staff can explain product features and effects and help pet owners further understand the brand. As an agent, Mudi primarily considers the sales volume of a dealer when seeking business partners. If it is a small-scale dealer, such as a single shop operator, it has to buy outright. For chain or larger operators, Mudi would settle the bill on a monthly basis.
Impact of online suppliers on traditional sales channels
There are other sales channels for pet food, such as supermarkets and pet grooming centres which usually sell the products at more affordable prices. In pet products wholesale markets like the ones in Fangcun and on Qingping Road, lower-end pet food is often sold in bulk. Pet supplies stores are facing keen competition from online vendors in recent years, especially in the food sector. This is because most pet owners tend to stick with the same brands and would not casually change the staple food of their pets for fear of non-adaptability. The advantages of virtual shops are that buyers can compare prices easily, and need not carry home large packages of pet food from physical stores themselves as many online sellers now offer efficient home delivery service. However, shoppers should pay attention to the expiry date of the products before placing orders online, as some e-vendors might promote soon-to-expire products at very low prices, said Chen.
Joint promotions with dealers
Total brand products are mainly sold through dealers or distributors. Mudi as an agent has been maintaining close ties with them and actively participating in promotional events organised by these players. For example, some pet shops in Guangzhou have held pet carnivals which included animal talent shows or contests. Apart from sponsoring them with Total’s products as prizes, Mudi has also set up booths to showcase Total’s products and offer small gifts to achieve advertising effects. Some dealers have run countryside trips for pet owners and their pets, and Mudi as a sponsor has supplied Total brand snacks to raise brand awareness. Due to manpower and cost factors, Mudi mainly sponsors medium-scale activities which usually attract over 100 pet owners. While Mudi in Guangzhou carries out advertising programmes in Guangdong and Guangxi, the Beijing headquarters coordinates nationwide promotional activities for Total, mainly through sponsoring dog shows and participating in pet fairs.
Diversifying demand for pet products
Pets are increasingly pampered by their masters in a human-like way. The demand for snacks, toys, clothes and outing gears designed for animals is also trending upward. Besides, people now have greater awareness of the well-being of their pets, hence bolstering the demand for cleansing, nutritional and healthcare products such as ear wash, eye drops, absorbent pads, joint supplements, parasite cures and hairball gels for animals. Notably, more mainland households have chosen cats and other small animals like guinea pigs and chinchillas as their pets in recent years. As a result, the demand for related products (e.g. cages and deodorising sawdust) has been mounting and diversifying. As a whole, the mainland pet market has just taken off and the potential for further development is huge.