The 500 billion pet market is on the rise

21st Century Business Herald trainee reporter Li Qiang reports from Beijing

Although the Double Eleven carnival has cooled down, it has not affected the pet economy from becoming a hot track. Judging from the activity data of various e-commerce companies during this year’s Double Eleven, pet consumption is experiencing an all-round explosive growth.

According to JD.com data, in the first 10 minutes of the relevant event, the cutting-edge domestic brand of pet freeze-dried food Shengshengjiexiu increased by more than 5 times year-on-year, and the transaction volume of the flagship store of pet medicine brand Pointe increased by more than 6 times year-on-year; Vipshop data shows that the sales volume of pet staple food A year-on-year increase of 94%, sales of pet immune-enhancing products increased by 115% year-on-year, and sales of pet deworming and pet medical care increased by more than 80% year-on-year; Tmall Battle Report calls the pet category together with trendy toys, sports and outdoor, and jewelry categories as "new products". "Four King Kongs" corresponds to the "old four King Kongs" of beauty, FMCG, consumer electronics and apparel.

The popularity of the "hairy boy" track has also spawned listed companies. On November 16, Tianyuan Pets announced that the company will be listed on the Shenzhen Stock Exchange GEM on November 18. This is already the third pet economy concept stock to be listed this year, after Luce Holdings and Yuanfei Pets. In addition, the pet food company Guobao Pets has also launched in July this year, and pet track players have begun a wave of listings.

“Many single people just keep their pets as family members. In addition, the elderly need companionship and their children’s time is limited, so they find cats and dogs to raise so that they can enjoy themselves as they age. From the historical and cultural laws and the laws of developed countries, Judging from experience, the pet market will not encounter a bottleneck in the short term and will continue to be hot in the future." Cao Lei, director of the e-commerce research center of NetEase, told a reporter from the 21st Century Business Herald.

loneliness economy

Pets essentially solve the need for loneliness.

With the dispersion of loneliness due to "aging, declining birthrates, and singleness", coupled with the rapid growth in the living standards of Chinese residents in the past few years, from 2012 to 2021, the per capita disposable income of national residents increased from 16,510 yuan to 35,128 yuan, which together blew the The trend of pet economy has started.

The "2021 National Bulletin on the Development of Aging Care" shows that as of the end of 2021, the country's elderly population aged 60 and above was 267 million, accounting for 18.9% of the total population. Wang Haidong, director of the Department of Aging of the National Health Commission, pointed out that according to estimates, the number of people aged 60 and above will exceed 400 million around 2035, accounting for more than 30% of the total population, entering the stage of severe aging.

Parallel to aging are changes in family demographics. According to census data, in the ten years from 2010 to 2020, the average household size dropped from 3.10 people to 2.62 people, which also means that the social structure of the traditional "family of three" is changing.

According to data from the Ministry of Civil Affairs, the number of marriage registrations in China has begun to decline year by year since 2013. In 2021, the number of marriage registrations nationwide was 7.643 million, and the marriage rate has also declined for five consecutive years, from 7.7‰ in 2017 to 5.4 in 2021. ‰. According to earlier data, as early as 2018, more than 200 million people in China were single, of which more than 77 million adults lived alone.

iiMedia Consulting analysts believe that the fast-paced work and life indirectly affects the single ratio of urban men and women. Relative to married people, single people have stronger spending power. Pets have the attribute of companionship, and the single economy is an important factor promoting the development of the pet industry.

The "White Paper on China's Pet Industry Trend Insights in 2022" released by JD.com shows that the number of pet-raising households in my country will reach 91.47 million in 2021, and it is expected that there will be more than 100 million pet-raising households in my country this year. A report from Crowley shows that among urban pet owners, the "post-90s" and "post-95s" are growing the fastest, accounting for 46% in 2021.

"With the improvement of domestic residents' living standards in recent years, it can be said that basic material needs have been met, and then there are spiritual needs. Pets are a manifestation of spiritual sustenance. In the large-scale single group and the aging population, In the context of the epidemic, the demand for emotions is getting higher and higher. Therefore, although the epidemic has brought about weak consumption, the demand for the pet track has been amplified, so the entire pet economy has shown counter-cyclical growth." iiMedia Consulting CEO Zhang Yi told the 21st Century Business Herald reporter.

Marketization starts

At present, the entire pet market is still in the initial stage of standardization.

iiMedia Research data shows that the scale of China’s pet economy industry has nearly tripled from 2017 to 2021, approaching the 400 billion yuan mark.

However, despite rapid growth, the current penetration rate of pet-raising households (dogs and cats) in urban areas in my country is still far lower than that in mature markets such as Europe and the United States. Data shows that the current penetration rate of pets in Chinese households is about 20%, while in the United States, Australia, the United Kingdom, and Japan As high as 68%, 62%, 45%, and 38% respectively.

According to iiMedia Consulting data, the scale of China's pet economy industry will reach 493.6 billion yuan in 2022, a year-on-year increase of 25.2%, of which pet food will account for the majority, and the industry scale will reach 267 billion yuan. The demand side, supply side and capital will jointly promote Next, the domestic pet economy will usher in a spiral upward, with the market size expected to reach 811.4 billion yuan in 2025.

From the perspective of the supply chain, the upstream is the pet breeding and sales market, and currently there are no representative players. The midstream is densely populated with various pet products, including pet food and appliances, while in the downstream of pet services, Xinruipeng, Ruipu and Ruipai constitute the leading "Three Rui" in China's pet hospital circuit.

Specifically, among the three main segments of pet food, pet appliances, and pet medical services, in addition to medical services, companies in other segments have already been listed on the market, such as Tianyuan, which specializes in pet nest mats and cat climbing frames. Pets was listed on the GEM of the Shenzhen Stock Exchange on November 18, including previously listed Yuanfei Pets, Yiyi Shares, China Pet Shares, Petty Shares, etc.

It is worth noting that in the process of creating differentiation, brands have also dazzled the specific categories of pet consumption. For example, cat food is divided into dry food and wet food by nature, and it is divided into kitten food, adult cat food and senior cat food by age. Food, corresponding to the cat's physical condition, is divided into hair removal cat food, hairy cat food, sensitive gastrointestinal cat food, etc. In addition to cat food, there are various snacks and supplements such as canned snacks, freeze-dried snacks, cat strips, nutritional pastes, vitamins, calcium tablets, etc., and pet supplies such as automatic cat litter boxes, automatic water dispensers, automatic feeding machines, etc. are also on the market. Developing in the high-tech direction of intelligence and Internet of things.

In addition, due to factors such as the decentralization of veterinary resources, although the marketization of pet medical care is slower than the previous two, pet medical care is also developing towards regional chaining and standardization driven by capital.

For example, Ruipeng Pets, which was previously delisted from the New Third Board, was reorganized with Hillhouse Pet Hospital. Ruipeng, as the “number one pet hospital” in China, has a valuation of 30 billion yuan and has thousands of pet hospitals in hundreds of cities in China. . Ruipai Pet, the “number two in the industry” that has been aggressively pursuing mergers and acquisitions, also announced on October 28 that it had received new financing from Cornerstone Capital. Ruichen Pet, which was founded just one year ago, ranks among the top three with 130 pet hospitals, and completed a new round of new financing on September 13. A funding round.

Xingkuang data shows that from 2022 to now, there are a total of 32 domestic pet-related companies that have received investment, involving pet food, supplies, services, medical care and other aspects. Monitoring data from Dianshubao, a subsidiary of the Internet Economic Society, shows that from October 2019 to 2022 In October 2020, a total of 15 investment and financing events occurred in the domestic pet e-commerce field, with the total financing exceeding 1.39 billion yuan.

Urgent need for brand building

The pet track is hot, but it doesn’t mean that all players are “picking up money”. Taking pet food, which has the widest market, as an example, companies have used a large amount of financing to expand production, letting the cloud of short-term overcapacity hang over the entire industry.

According to the convertible bond issuance plan released by the company, Zhongpet Co., Ltd. plans to use financing to expand its production capacity of 60,000 tons of dry food, 40,000 tons of wet food and 2,000 tons of freeze-dried food. Petty Co., Ltd. also plans to invest funds in New Zealand's 30,000 tons of high-quality wet food. The expansion of grain project, as well as the expansion of dry grain production of Jiangsu Kangbei production base by a total of 50,000 tons including air-dried grain, freeze-dried grain and mixed grain.

Previously, the first-phase production line of Luce's 30,000-ton staple grain project has entered the trial production stage in June this year. In addition, Guabao Pets, which is in the IPO stage, also plans to use the raised funds to expand production, including 58,500 tons of staple grain. , 3,100 tons of snacks, and 1,200 tons of health products. Fubei Pet also plans to use the raised funds to expand its dry food production capacity by 33,600 tons.

According to the above incomplete statistics alone, the expansion of pet food production has exceeded 300,000 tons. According to data from the Feed Industry Association, my country's pet feed production last year was 1.13 million tons.

On the other hand, in the current pet food industry, the high-end market is mostly foreign brands with long histories and high brand recognition, while domestic pet food companies are basically still in the low-end field. According to statistics from Changjiang Securities, foreign high-end imported brands are all in the price range above 100 yuan, while most domestic brands are in the price range below 50 yuan, of which 73% of domestic brands have a unit price of less than 30 yuan per kilogram.

According to data provided by the "China Pet Industry White Paper", in 2021, the proportion of pet owners in first-tier cities will be 33.5%, and the proportion of pet owners in second-tier cities will be 43.9%, accounting for nearly 80% in total. With higher income levels and brand awareness, In the face of stronger consumer portraits, low-end market players without brand building are doomed to struggle in involution.

Public data shows that in 2021, China Chongqing, Guabao Pet, and Petty will invest 240 million yuan, 360 million yuan, and 54.68 million yuan in sales expenses respectively. Correspondingly, the "Mai" of Guabao Pet, which has the highest brand investment "Fudi" won the first place in the industry on the MAT2021 dog and cat food brand Tmall sales list, and won the first domestic pet snack brand with a market share of 32% in 2021.

“In the pet food industry, in the past, like some imported products, even though the price was high, the market was still very fond of it, because pet ownership has evolved into a social attribute, and pet owners will compare whose pets are more beautiful and who take better care of them. In this Under this consumer psychology, in addition to ensuring quality, brands must also do a good job in brand marketing." Zhang Yi told a reporter from the 21st Century Business Herald.

Liu Lang, president of the Pet Industry Branch of the China Animal Husbandry Association and secretary-general of the Beijing Small Animal Diagnosis and Treatment Industry Association, said that my country's pet industry is developing rapidly, and topics related to pets have increasingly become a popular topic in people's daily lives. However, behind the rapid development, investment in the pet industry is relatively concentrated. Perhaps, like other domestic industries, the domestic pet industry will develop more steadily after experiencing a period of pain and achieving a high degree of industry integration.