This Will Be The Biggest Pet Market Of The Future

Issue #91

August 13th, 2024

Quick Hits:

☀️ It’s going to be a hot summer, for the love of god, don’t leave your dogs in the car

🐶 Ace needs a loving home

❤️ The internet just fell in love with this adorable dog

🧪 Have you ever wanted to understand cats better? Well, this online class might be right up your alley

💩 Why are you picking that up, why?

🌏 Plan on traveling with your dog? you might want to rethink your budget

The Rising Pet Market in China

Sorry kids but pets are becoming more popular than you. This new trend seems to be true, not only in Western countries but in China as well. Recently, Goldman Sachs released a report that by 2030, China's urban areas will host nearly 70 million pets, while the number of children aged four and below will drop to less than 40 million. This marks a significant change from 2017 when there were 90 million children under 4 compared to about 40 million urban pets. The report also predicts that cats will become more popular than dogs due to their lower space requirements.

For China, the declining birth rates are a cause for major concern. The country's population was 1.409 billion at the end of last year, down by 2.08 million from 2022. In 2023, only 9.02 million births were recorded—the lowest ever.

All this to say, China is on track to become the world's largest pet market.

Cultural and Social Factors Driving Pet Ownership

The tide is changing. The country's rapidly growing urban population and rising disposable incomes are creating a fertile ground for the pet care market. Pets are increasingly viewed as family members, In cities like Beijing, Shanghai, and Shenzhen. Leading to higher spending on pet food, healthcare, grooming, and other services. This cultural shift is accompanied by a demographic transition, with the younger generation leading the charge with pet adoptions. No surprise here, millennials and Gen Z are more inclined to adopt pets and treat them with the same care and attention as human family members.

Social media also plays a crucial role in this cultural shift. The popularity of pet-related content on platforms like Weibo and Douyin (China's version of TikTok) has helped normalize and even glamorize pet ownership. Influencers and celebrities who share their lives with pets contribute to this trend, further driving the demand for pet-related products and services.

More Pets Than Toddlers

According to the Goldman Sachs report, urban Chinese families are increasingly choosing to have pets instead of children. This trend is driven by several factors, including the high cost of raising children, government policies such as the one-child policy (now relaxed but still culturally impactful), and the growing preference for smaller, more manageable family units.

Many in China seem to be deterred by the cost of starting a family, or as Bihan Chen, a venture capital analyst said:

"Let's face it, having a child is like owning an investment with no guaranteed return for at least 18 years"

According to Goldman Sachs, the pet care industry in China is expected to reach $66.5 billion by 2024, making it one of the most lucrative markets globally. By the end of the year, China should reach the highest sales in the region, with a market size of $13.2 billion.

The average annual spending per pet in “well-developed” nations is expected to exceed $100 this year. Pet parents in Hong Kong are expected to spend the most ($1,100), followed by South Koreans ($360), Singaporeans ($195), and Japanese ($101).

3 Booming Sub-Sectors

Pet food remains the largest segment, driven by the increasing demand for premium, organic, and specialized diets tailored to different breeds and life stages. International brands are expanding their presence in the Chinese market, while local companies are also innovating to cater to the specific needs and preferences of Chinese pet owners.

Pet healthcare is another rapidly growing sector, with veterinary services, insurance, and wellness products in high demand. As pets are increasingly seen as family members, owners are willing to invest in their health and well-being. This has led to the proliferation of pet clinics, hospitals, and wellness centers across major cities.

Pet grooming and boarding services are also on the rise, reflecting the growing trend of pet pampering. Urban professionals, who often have busy lifestyles, are turning to these services to ensure their pets are well cared for, even in their absence.

The Future?

While the future of China's pet market looks promising, some challenges need to be addressed. Regulatory hurdles, particularly in the areas of pet food safety and veterinary standards, could pose risks to the market's growth. Additionally, as the market becomes more saturated, competition will intensify, leading to potential consolidation within the industry.

However, these challenges also present opportunities for innovation and differentiation. Companies that can navigate the regulatory landscape and offer high-quality, unique products will have a competitive edge.

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