China’s pet food industry has developed rapidly in the past five years, with a compound annual growth rate of nearly 20%. In 2021, pet food consumption expenditures, which was about CNY 100 billion, accounted for more than 50% of the whole spending on pet raising. Pet food is a must-have product for families with pets, and it still shows strong growth during the pandemic. The revenue of domestic pet food companies in China, such as Gambol Pet, Yantai China Pet Foods, and Petty Group, all have achieved continuous growth against the economy downtrend in the first three quarters of 2022. From the perspective of e-commerce platform sales, such as JD.com, a Chinese e-commerce platform giant, its purchase amount of baked food, raw food diet, and freeze-dried food had a year-on-year growth over 8 times, 184 times, and 5 times respectively from January to May in 2022.
The competitive landscape of China’s pet food industry will change due to the leading manufacturers’ production expansion, the establishment and improvement of laws, regulations, and relevant standards on pet food production, and the ebb of tier-one capital. Leading manufacturers keep outputting high-quality capacities and more strict regulations are on pet food production, which will “terminate” the week and drive up the entry threshold. Meanwhile, due to the trend of industrial structure upgrading and online traffic and marketing differentiation, the return on investment of new brands is reducing, which leads to decreasing interest in the primary market for pet food startups. So, there will be tense competition among current lasting brands.
China’s local pet food brands are expected to achieve a curve overtaking by strengthening their branding. Compared to developed countries, there is a considerable potential in China’s pet food industry, which has a favorable market size and growth rate. Besides competing with global brands, Chinese pet food manufacturers have tensive competition among domestic players. E-commerce platforms, such as JD and Taobao, are the critical battlefield of the pet food business.
In China’s pet food market, some of the foreign brands, which currently adopt the dealer model to enter the market, missed the business opportunity of China’s domestic e-commerce due to the lack of local marketing experience. In addition, the postponed delivery of imported products and even shortage triggered by the pandemic led to the decline of foreign brands’ market share. However, domestic leading brands show more advantages than foreign brands, such as R&D, sales channels, cost, etc.
