As a necessity for pets' daily life, pet food has become an important track in global development. As pet owners gradually increase their requirements for the quality of life of their pets, the pet food market is undergoing some new changes. For example, more and more pet owners are beginning to pay attention to the health and nutritional needs of their pets. Therefore, when purchasing pet food, they will pay more attention to its ingredient list and nutritional content.
Over the years, the pet food track has maintained steady growth, attracting more and more companies and investors. From the current point of view, under the concept of scientific pet raising, pet food consumption demand will continue to grow and will develop in the direction of refinement, diversification and specialization. These trends will also have a positive impact on the development of the entire pet industry.
Current status of global pet food market
1.1 Pet food types/raw materials
According to pet type, pet food can be divided into dog food, cat food, other pet staple food, snacks and other nutritional and health pet food. At present, dogs and cats are the main pets in the world, so the proportion of dog food and cat food far exceeds that of other pet foods. According to data from the "2022 China Pet Industry White Paper", dog food will account for 60% of the global pet food retail market in 2022, and cat food will account for 36%.
By functional type, pet food mainly includes three categories: pet staple food, pet snacks and pet nutrition products.
Divided by raw materials, they are mainly derived from animals, plants, grains, and other ingredient types.
1.2 Pet food consumption trends
Pet food consumption varies among pet owners in different countries and regions.
Purchasing preferences: There is a common trend that pet owners are paying more and more attention to the health and nutrition of their pets, and high-quality, natural and organic pet foods have become their first choice. Not only that, pet owners also like to feed their pets snacks and supplements to keep their pets healthy and energetic.
Pet owners prefer functional treats over other treats because they provide additional health benefits to their pets. Due to this trend, major players in the market are developing new functional treats to meet the needs of pet owners. For example, in 2019, Hill's, a subsidiary of Colgate-Palmolive, launched a new line of functional dog foods specifically designed to help dogs manage weight, mobility, and address food allergies and dental problems.
Expenditure: A survey shows that despite rising inflation, pet consumption continues to rise. More than 40% of people spend between US$100 and US$299 on pets per month, and 22% spend at least US$299 per month. Spend $300, with food and medical expenses at the top of the list.
Price trends: Research by Consumer Insights and Analysis found that due to inflation, pet food prices have increased by more than 24% as of the fourth quarter of 2022, which has changed the way pet owners purchase pet food. Four in 10 pet owners say they will seek deals and plan to buy more food and pet care supplies online in 2023, which may force some brands to make significant investments in direct-to-pet owner and other new sales channels.
1.3 Pet food distribution channels
The development history of pet food in different countries is different, and the distribution channel structure is also significantly different. For example, the main sales channel of China's pet food industry is online, while European and American pet food distribution channels are more diversified. The following are some of the major distribution channels for global pet food:
Stores/Supermarkets: Distribution through common retail stores and supermarkets, such as pet stores, pet food specialty stores, pet supply stores, large supermarket chains, etc. This channel often provides great presentation and sales support.
Online retailers: With the development of e-commerce, more and more people choose to buy pet food online. Online retailers offer a convenient shopping experience, such as a large product selection, the ability to view and compare different brands and models of pet food, and complete purchases quickly.
Professional channels: In addition to traditional retail channels, some pet food companies choose to distribute through professional channels, such as veterinary clinics, wholesalers, farmers' markets, etc. These channels can effectively increase product visibility and reliability.
Direct sales: Some pet food companies choose to sell their products through direct sales, which means they can better control the quality of their products, provide more personalized service, and build long-term relationships with their customers.
Three insights into new categories in the pet food industry
2.1 Market Insight Perspective
Market insight mainly refers to discovering potential needs or blank markets in the market. It mainly combines observations of new trends, the development history of high-level markets, changes in consumers and changes in channel costs to discover opportunities for innovation.
Take the “focus on the development history of high-level markets” approach as an example. When we look at the development of the pet food market in Europe and the United States, we will find that they have also experienced the evolution from being full to eating well, and finally entering the healthy and natural era.
For example, Lanjue has created a new category of "natural food", and the value it brings is to promote the pursuit of healthy pet food in the US market. Under this trend, the “natural food” category is rapidly emerging in the US pet food market. Lanjue quickly opened up the market after its launch in 2012, became the market leader around 2015, and continues to be ahead of the second brand.
One enlightenment this brings us is that for pet food, natural, health and science are the three directions of innovation.
2.2 Technical Insight Perspective
New technology often solves some problems of old categories, so it is a very good entry point for category innovation. The combination of new technologies and old categories often creates many new categories.
For example, the combination of ordinary pure meat and freeze-drying technology creates freeze-dried pet food, which is more nutritious, healthier, more palatable, and contains fewer additives. In addition, ordinary pure meat is combined with freshness-locking technology to create a new category of fresh pet food. Its value is that it can be stored at room temperature for a longer time without preservatives, which is also more beneficial to the health of pets.
With nutrition and freshness, we can create categories such as fresh grains. This is to discover new category opportunities through technological innovation.
2.3 Mental Insight Perspective
Mental insight mainly refers to discovering vacant opportunities in consumers’ minds and seizing them to create new categories. In the pet industry, it is important to understand the mind of pet owners before seizing their minds. What pet owners pay attention to will benefit their pets.
What is the consumption pattern of current pet owners? Driven by the current rise in both volume and price, it is first judged that the cat economy will be stronger than the dog economy.
First of all, from a data perspective, the market size of pet cats has now exceeded that of dogs, and the growth rate is much higher than that of pet dogs.
Secondly, from the perspective of demand adaptation, the improvement of cat economy mainly comes from the different needs of cats and dogs for their owners. The growing environment that cats need is actually more suitable for today's young people, because today's young people have small living spaces and high work pressure, so they are not suitable for raising dogs.
In addition, compared to dogs, there is more room for high-end diets in cats. For example, cats require higher levels of protein and fat than dogs due to differences in diet. Cat wet food, which is higher-end than ordinary dry food, has become the choice of more people because it contains more meat and can solve the problem of cats not liking to drink water. This trend has been verified by the high-end American market. Health and cat economy have given rise to category innovation opportunities such as cat wet food. This is to discover new category opportunities through the perspective of mental insight.
Category opportunities in China’s pet food industry
Based on the above three major insights into new categories, we can determine where the opportunities are for categories with greater growth and explosive potential.
3.1 Baking staple food
With the popularization of concepts such as pure nature and staple food technology, it is inevitable to upgrade the awareness of high-quality food. Specifically, baking staple foods are in line with this trend.
First of all, from a market perspective, baking staple foods are growing very fast, and the number of new products is also increasing day by day. On the other hand, from a technical point of view, it is produced through low-temperature cold pressing technology and does not need to be processed in a high-temperature environment, so it can retain more nutrients. From a mental point of view, although this is not a new thing in the industry, its industry standard has not been formed, and no leading brand has been born in the minds of consumers, so this is an important category innovation. Chance.
3.2 Raw cuts of meat
With the popularization of the concept of fresher and higher meat content, the cognitive upgrade of fresh food has become inevitable. A new category opportunity born here is raw meat.
From a market perspective, scientific feeding is sought after, and cats’ dietary structure requires higher meat content and sufficient moisture. On the other hand, from a technical perspective, freshness locking technology is constantly being upgraded. From a mental perspective, cats are more in line with the preferences of young pet owners than dogs.
Therefore, based on these three perspectives, raw cut meat has great market development prospects and is also an important category innovation opportunity.
3.3 Alternative protein foods
With the changes in pet owners' cognition, concepts such as low-carbon, environmental protection, and vegetarianism are deeply rooted in the hearts of the people, and the cognitive upgrade of protein food has become inevitable, and some important categories will also be born. Opportunities for innovation first arise from insecticide proteins.
From a market perspective, alternative protein foods in the pet market are heating up, which is a manifestation of the trend.
From a technical point of view, the protein content in many insects is between 40% and 70%, which is much higher than fish protein and rich in trace elements. It can also enhance the immunity of pets.
From a mental standpoint, pet owners are also increasingly concerned about their impact on the planet, and are increasingly enthusiastic about flexitarian vegetarianism. Based on this trend, insecticide proteins will also have more development prospects.
In addition, another category innovation opportunity comes from plant protein.
From a market perspective, these plant-based ingredients are starting to be used more frequently in pet foods. From a technical point of view, the appropriate introduction of plant proportions can reduce allergic reactions in animals. Plant protein also supplements dietary fiber, aids your dog’s digestion, and strengthens the immune system and intestinal health. From a mental point of view, plant-based foods are now constantly educating consumers, so they have also left a healthier and more advanced mental imprint in the minds of pet owners.
