pet industry in india

A Euromonitor International Report

Changing lifestyles in the form of the rise innuclear families and double incomehouseholds have encouraged the growth

of pet ownership in urban areas of India.Increasingly, pets are being looked upon ascompanions and members of the family ratherthan as guard dogs for example. Pet ownershave started to take an interest in their pet’sdiet, health and grooming. A gradual shifttowards prepared pet food has been observed.Pet owners are more willing to spend on petfood and pet care products than ever before.This trend has spawned an entire industry, witha growing emphasis on pet care.

Most of the branded pet food is imported. Thegovernment’s reduction of the import duties onpet food in 2007 provides a boost to bothmanufacturers and importers.

But the ban on imported pet food due to theoutbreak of Avian Flu in year 2006, whichcontinued through 2007, resulted in thereduced availability of pet food. A few foreignbrands such as Royal Canin and Bento Kronenescaped the ban, but others like US brands ProPac and Purina were impacted. On the otherhand, locally manufacturing looked up.

According to Euromonitor International,veterinary clinics and pet shops remained aleading distribution channels for pet food andpet care products in 2007. But more and moreretail outlets and supermarkets startedemerging as viable distribution channels. Thishas reduced the influence of vets on consumerpurchasing decisions.

In the days to come, with pets increasingly beingtreated as companions and fashionaccessories, pet owners, especially in the urbanareas, are expected to spend more on theirpets.

Key Trends and DevelopmentsPet owners in India have traditionally relied onvets to provide them with guidance on takingcare of their pets. The influence of vets

stretches beyond the realm of vaccines andextends to advice on pet food. Thus, over theyears, manufacturers have pitched theirproducts to vets, and focused on getting them torecommend products to pet owners. Most vetsin India sell pet food and pet owners traditionallypurchased pet food from vets. However, as petowners become more familiar with differentbrands of pet food and pet care, they areincreasingly becoming the decision makers andmaking their purchases elsewhere. This trendwas shown by veterinary clinics’ decreasingshare of retail value sales of pet food and petcare products; its share decreased by slightlyover four percentage points between 2002 and2007. This gradual decline in share indicates

Pet IndustryIn India and China

MOST OF THEBRANDED PET

FOOD ISIMPORTED. THEGOVERNMENT’SREDUCTION OF

THE IMPORTDUTIES ON PETFOOD IN 2007PROVIDES A

BOOST TO BOTHMANUFACTURERS

ANDIMPORTERS.

Creature Companion • March-April 2008 29

that pet owners are slowly, but surely, becomingempowered in making their own decisionsabout pet food and pet food products and petwelfare in general.

As the central advisory role of the vet ineveryday decisions regarding the pet welfaredeclines, over the forecast period,manufacturers will need to communicatedirectly with pet owners. Whilst it is difficult totarget pet healthcare products and dietarysupplements directly to pet owners,manufacturers can start this process bypromoting their pet food brands through themedia and by increasing their distribution reachto pet shops, supermarkets/hypermarkets,other food stores and other non-food stores.Manufacturers should ensure that retail outletsselling pet food also offer pet accessories andgrooming products or services.

The increasing number of pet shops andadvertisements for pet food brands, combinedwith the greater concerns about pet health andwelfare, are driving the shift towards preparedpet food. The number of advertising campaignsdirectly targeting pet owners is rising and mostadvertisements strive to communicate thebenefits of prepared pet food and its nutritionalvalue over homemade alternatives. The supportof vets for these campaigns has led pet ownersto purchase prepared food for their pets.

Indian consumers traditionally favoured freshlycooked over prepared pet food. Most petowners continue to give their pets homemadefood, while offering prepared food as a snack.Thus, the diet of pets in India is a combinationof prepared and non-prepared pet food.However, the perception that freshly prepared,homemade pet food is healthier and morenutritious is changing, as manufacturers andvets advocate the benefits of prepared petfood. Manufacturers have aggressively targeted

vets with their products and many are using theprofessionals to recommend prepared petfood to pet owners. Effem India Pvt Ltd wasone of the first manufacturers to target petowners directly through media advertisementsand direct communications. Othermanufacturers are increasingly usingadvertisements in pet magazines and leavingpromotional literature in veterinary clinics.These marketing strategies have increasedthe consumers’ general awareness andacceptance of prepared pet food.

The frequent bans on imports of pet food haveaffected its availability in India. There are veryfew domestic manufacturers of pet food in Indiaand their main focus tends to be on dog treatsand mixers such as biscuits. Apart from Venky’sIndia Ltd and Tetragon Chemie Pvt Ltd, there areno other domestic manufacturers with a pan-India distribution. Moreover, Effem India is theonly multinational that has domestic productionfacilities. Thus, economy brands tend to beavailable during the bans but premium and mid-priced pet food tends to suffer as these arelargely imported. Since the development of petfood is at an embryonic stage in India, theirregular availability of brands has hampered thecreation of brand loyalty among pet owners.

Pet Food and Pet Care Products:Forecast Value Sales % Growth by Region 2005/2010

From 2004, imported pet food was negativelyaffected by legislation in the form of bans onimports from certain countries. In 2006-2007,the import ban due to the rise of Avian Fluaffected US-based manufacturers severely.There was a breakdown in the supply chain formajor brands such as Eukanuba, Purina, and ProPac, as these are imported from the US. On theother hand, brands such as Bento Kronen andRoyal Canin, which are imported from Belgiumand France, respectively, escaped the ban andtheir availability was not affected. Thus, theirregular availability of major imported brandshas clearly affected the development of petfood in India.

THE FREQUENTBANS ON

IMPORTS OF PETFOOD HAVE

AFFECTED ITSAVAILABILITY IN

INDIA. THEREARE VERY FEW

DOMESTICMANUFACTURERS

OF PET FOOD ININDIA AND THEIR

MAIN FOCUSTENDS TO BE ONDOG TREATS ANDMIXERS SUCH AS

BISCUITS.

30 Creature Companion • March-April 2008

The import ban on pet food continued in 2007and shows no sign of letting up. The availability ofmajor brands such as Purina, Pro Pac, Sportmix,and Iams remained in doubt throughout the firsthalf of 2007, with imports stuck at Indian portsdue to the blanket ban on stocks from countriesaffected by Avian Flu. The cost pressures areexpected to mount on importers over the forecastperiod, as they suffer from the loss of sales andby having to pay for the stock that is held at theports. Whilst the major manufacturers andimporters formed an association in order tolobby the government on the import ban, theindustry is hopeful that a positive outcome willbe achieved in the short term.

Import restrictions leading to the irregularavailability of pet food will hamper thedevelopment of pet food in India. The irregularavailability of pet food is also expected toprevent the major manufacturers from creatingbrand loyalty for their brands. In order togenerate brand loyalty and drive expansion, theregular availability of pet food and gooddistribution networks are key issues formanufacturers. In order to overcome the importrestrictions, manufacturers such as Purina PetCare India Pvt Ltd would do well to shift theproduction of their brands to India, as Mars Inchas done in the past by establishing Effem Indiain the country. In addition, manufacturers shouldcontinue to lobby the government, but given thelatter’s position this strategy is unlikely to createa long-term solution to the import restrictions.

Indian Market: Waiting to be TappedThe Indian pet foods market is a young, growingmarket and there are a few major players that

are active in it. Imports currently constitute 40percent of the total pet foods market in India,with the US being one of the dominantsuppliers. The pet foods market has beengrowing at an average annual rate of 10-15percent for the last few years. Consumption ofbranded pet foods is currently concentrated inurban towns and major cities and much of thedemand for branded dog food is generatedalmost wholly from the urban population, whichis the key target segment for marketing andpromotional initiatives.

India has a large number of pet dogs and cats.In fact, a recent survey concluded that there are3.6 million pet dogs in the six major cities alone.

Pet Food and Pet Care Products:Forecast Value Sales % Growth by Region 2005/2010

IMPORTRESTRICTIONSLEADING TO THE

IRREGULARAVAILABILITY OFPET FOOD WILLHAMPER THE

DEVELOPMENTOF PET FOOD IN

INDIA. THEIRREGULAR

AVAILABILITY OFPET FOOD IS

ALSO EXPECTEDTO PREVENT THE

MAJORMANUFACTURERSFROM CREATINGBRAND LOYALTY

FOR THEIRBRANDS.


The affluent section of the urban population –the 350 million strong middleclass that we hearof so much – is the major target segment forpet food products in India. Indian pet ownershave traditionally fed their pets with home-cooked food, and the slowly increasing practiceof feeding branded pet foods is a relatively newtrend. The size of the Indian pet foods marketestimated by industry sources at approximately6,000 tones and growing annually at 10-15percent – very small compared to the vastinternational pet foods market.

The vast majority of pet owners in India are high-income households, with dogs being the mostpopular pet choice at over 55 percent of the petpopulation, followed by cats. The Indian petfoods market therefore predominantly caters todog food products. Dog food, therefore,accounts for almost 80 percent and cat food forapproximately 15 percent of the total market.Other segments such as aquarium fish food,bird food and food for other animals like rabbitsand guinea pigs account for the rest. The petfoods market in India is largely concentrated ondried foods segment and moist. Semi-moist petfood is not manufactured in India.

Indians traditionally have fed their petsprepared home food scraps, thinking that this ismore nutritious, but this trend is slowly changingin major Indian cities and urban areas. In recentyears, there has been a growing trend of youngpet owners switching to branded pet foodsbecause of increasing consideration of factorssuch as convenience of feeding pets withprepared branded foods and also because ofthe increasing awareness resulting frommarketing efforts of manufacturers and vetsabout the balanced nutritional benefits offeeding pets with packaged prepared foods.The Indian perception of pets has also changedas owners have come to treat them more likemembers of the family. As a result, pet ownersare more interested in ensuring their pet’shealth with pets foods designed for specifichealth conditions leading to increased demandfor branded specialized pet food products.

China vis-a-vis India: Economy Segmentset to GrowThe pet food and pet care products market inChina remains relatively underdeveloped.

According to Euromonitor International data, theChinese market accounted for just 1 percent ofglobal value sales in 2007. Although this figurehas doubled over the past decade, it comparesunfavourably with China’s share of globalpackaged food sales, which expanded by nearlytwo percentage points, to 5.2 percent over thesame period. In order to bring theirperformances more in line with those of theirpackaged food peers, pet food companies needto broaden their consumer base at the lowerend of the market.

Overall, the Chinese pet food and pet caremarket was worth US$676 million in 2007(having posted a CAGR of 13% over 1998-2007), compared to a figure of US$4.7 billion inneighbouring Japan.

In terms of segmentation, premium dog and catfood in China grew its value share of total salesfrom 21 to 35.5 percent between 1998 and2007, while the share of mid-priced brandsdeclined from 70 to 59 percent over the sameperiod. The share of economy dog and cat fooddeclined from 8.7 to 5.9 percent. Moreover, by2012, it is estimated that economy products willaccount for just 5 percent of the Chinese dogand cat food market.

The growth of pet food and pet care products inChina is being held back by a low propensity topurchase among the country’s less affluentconsumers. This is underlined by the fact thatannual expenditure per pet in China stood atjust US$2.50 in 2007 (compared withUS$70.10 in Japan). Although this figure can beINDIA, A

MARKET NOTWHOLLY

DISSIMILAR TOCHINA IN

TERMS OF ITSSCALE AND

DEVELOPMENT,ILLUSTRATES

HOW THEPOTENTIAL OF

ECONOMYBRANDS IS NOT

YET BEINGREALISED IN

CHINA.


A HUGEIMPROVEMENT IN

BOTH THEQUANTITY AND

QUALITY OFCHINA’S

TRANSPORTATIONINFRASTRUCTURE

IS HELPING TOTRANSFORM THE

COUNTRY’SLOGISTICSINDUSTRY,REDUCING

DISTRIBUTIONCOSTS AND

OPENING UP NEWSWATHES OFPOTENTIAL

CONSUMERS TOPET FOOD

MANUFACTURERS.

increased by selling ever more expensivepremium and super-premium products toexisting consumers, there is far greater potentialfor sales growth (in both volume and valueterms) in luring pet owners who continue to feedtheir pets household scraps into the economysegment.

India, a market not wholly dissimilar to China interms of its scale and development, illustrateshow the potential of economy brands is not yetbeing realised in China. The economy productsaccounted for 61 percent of total cat and dogfood value sales in the country in 2007, up from32 percent in 1998.

While the overall growth of Indian pet food andpet care products was less than that of China inthe 10 years to 2007, it is estimated that Indiawill achieve a CAGR of 11 percent between2007 and 2012, compared with a figure of 8.6percent in China. The divergence inperformance between these two markets willbe at least partly the result of the relativenarrowness of China’s pet food consumer basecompared to that of India.

Savvy pet food manufacturers can utilise thesetrends to grow their overall share of the Chinesemarket. This stratum of consumers is extremelyprice-sensitive and high-volume, low-marginsales will be vital to profitability. As a result,manufacturers that invest in local productionfacilities will gain an important additional costadvantage.

A huge improvement in both the quantity andquality of China’s transportation infrastructure is

helping to transform the country’s logisticsindustry, reducing distribution costs and openingup new swathes of potential consumers to petfood manufacturers. This has gone hand-in-handwith the spread of chain retailers, that aremoving beyond the metropolitan areas ofBeijing and Shanghai to second- and third-tiercities. Pet superstore Cool Baby’s expansioninto such markets as Nanjing and Yantai hasbeen particularly notable in this regard. In themedium term, the spread of chain retailers intothe less developed provinces of mid- and westChina will provide an additional boost to sales.

A sustained marketing effort will also berequired to drive demand for economy products.Although China’s urban population is expandingrapidly and should eclipse its rural counterpartsometime during the next decade, the countryretains many of the cultural characteristics of apeasant society. This is of particular relevancefor the pet food market, as it is the continuanceof rural attitudes towards animals that is inmany respects responsible for hampering thegrowth of economy pet food. By stressing thebenefits of packaged pet food over householdscraps, marketing can play an important role inbreaking down these established attitudes inorder to promote anthropomorphism anddevelop the market.

Unlike the premium and mid-priced pet foodsegments, in which foreign firms are dominant,indigenous firms are best placed to benefit fromany growth in economy pet food sales. Althoughthis segment has been extremely fragmented, itwould appear to be consolidating rapidly. For

Asia-Pacific: Pet Food and Pet Care Products Value Sales byCountry 1998-2005


BY STRESSINGTHE BENEFITSOF PACKAGED

PET FOOD OVERHOUSEHOLD

SCRAPS,MARKETINGCAN PLAY ANIMPORTANT

ROLE INBREAKING

DOWN THESEESTABLISHEDATTITUDES IN

ORDER TOPROMOTE

ANTHROPOMOR-RPHISM ANDDEVELOP THE

MARKET.

example, Euromonitor International data showsthat the combined market share of the threelargest players (Chengdu Care Pet Food, NoryPet and Zhangjiagang Lianfeng Pet Food)increased from 20 to 38 percent between2000 and 2006. With growth in this segmentlikely to take off in the medium term, some ofthe global market’s larger players may betempted to make an acquisition in order toboost their growth, gain control of localproduction facilities and improve their overallposition in the potentially lucrative Chinese petfood market.

Top Global Trends till 2012Until now, pet food private label products havebeen largely confined to the economy segment,with the exception of Germany and, to a lesserextent, the US, but they are beginning to developa presence in the premium and mid-pricedsegments.

Pet food superstores are particularly well placedto exploit this trend. In the developed world, thismay be facilitated by the shadow cast overbranded products by the Menu Foods recall, aswell as growing economic insecurity, particularlyin the US.

Euromonitor’s report also proposed that inaddition to the growing threat of private label

encroachment, issues such as the quality andtractability of ingredients will be brought to thefore by the US Menu Foods recall. Consumers’faith in branded pet food products, as markedlysuperior to their private label counterparts, willbe weakened. As a result, products that containhuman-grade ingredients will gain a significantadvantage.

In developing economies, the economy productswill be the main driver and much of the growth isexpected in this segment. As the economysegment in developing markets is price sensitive,it will be very difficult for producers to add value.

Increasing pet ownership driven by smaller householdsizes in developed markets

Pet humanisation

Increasing influence of consumer health awarenesson pet-related purchases

Development of an upper-mass segment bringingpremium qualities to the mass market

Pressure on living spaces in urban areas

Accelerated consumer lifestyles creating demand forconvenient products

Increase in indoor pets

Expansion of pet superstores in major markets

Ageing pet population due to healthier diets andimproved veterinary care

Increased segmentation

Growing consumer concern regarding the provenanceand manufacture of pet food

Dog food, cat food, and small mammal food

Premium dog and cat food, dog and cat treats, and petcare products

Functional dog and cat food, added-value other petfood, dietary supplements and healthcare products

Dog and cat food, including dog and cat treats, withfunctional properties

Small mammal/reptile food, fish food and productstargeting small breeds of dog

Dry dog and cat food, which is easier to serve and store,with a longer shelf-life and less odour than wetalternatives. Resealable pouch packaging for wet dogand cat food

Cat litter, dry dog and cat food

Premium dog and cat food, treats and pet care products

Dog and cat food targeting specific, age-related medicalconditions such as arthritis and diabetes

Products targeting pets according to factors such asage, breed, size, coat length and lifestyle

Increasing demand for pet food made with ‘natural’ingredients, and organic products

OPPORTUNITIES GROWTH

SUMMARY - OPPORTUNITIES AND GROWTH AREAS 2005-2010


FOREIGN PETFOOD

MANUFACTURERSCOULD USE

THEIR NICHEMARKETS TO

FACILITATE THEDISTRIBUTION OFTHEIR PRODUCTSIN DEVELOPING

MARKETS,MAKING IT MOREDIFFICULT FOR

INDIGENOUSMANUFACTURERS

TO DEVELOPTHEIR OWNPREMIUM

OFFERINGS.

The very nature of this segment precludessignificant innovation. The private label productsare likely to gain in such markets which will putadditional downward pressure on margins.

Most of the growth in retailers’ private label salesis likely to come from the economy segment, asrising employment boosts disposable incomeand reduces poverty, adding millions of newconsumers to the bottom of the market.

Branded pet food products can address theseissues by aggressively pushing into developingmarkets in terms of both distribution andmarketing. It could be argued that such aninvestment would be uneconomic. But thepotential for growth in these markets over themedium and long term is huge.

As a result of the limited affordability of premiumproducts in developing markets and the ability of

Man’s best friend gets a makeover as anew trend in personal care sees the

introduction of pet cosmetics. The hunt is onin developed markets for cosmetics andtoiletries to find untapped consumer groups.But as penetration rates soar among men,teens and now even tweens it was only amatter of time before attentions turned towhat have become the ultimate in fashionaccessories – pets.

Pampering pooches has become bigbusiness in some developed markets; mainlythe US, but also in Asia-Pacific and WesternEurope. US consumers spent more thanUS$21.4 billion on their pets in 2005, withpet care products such as accessories andgrooming products proving the most dynamicmarket sector. Business is booming with anever growing range of pet treats available ontoday’s market. From US$225 Burberry dogtrench coats to Omaha Steaks’ gourmetsteak bites for dogs there is a product forevery pet-lover’s whim.

Now the cosmetics and toiletries industry isjoining the pack, offering fur, paw and skincare in hope of attracting some of the petcare pie.

ShampoodleMacy’s has just opened its second petpampering display; the US department storechain positioning the Up on the Woof rangeright alongside its premium skin care brands.Up on the Woof uses gentle, naturalingredients and includes shea butter oroatmeal dog shampoo and paw balm. Salonhair care line Paul Mitchell has also

pet food producers to increase sales volumeswill be limited. While there will be somepotential for premium products in locations withconcentrations of affluent consumers, includingMoscow, Beijing, Shanghai, Mexico City and Riode Janeiro, these will be niche, rather thanmass, markets.

However, foreign pet food manufacturers coulduse their niche markets to facilitate thedistribution of their products in developingmarkets, making it more difficult for indigenousmanufacturers to develop their own premiumofferings.

But one strategy that indigenous firms indeveloping markets can use to gain anadvantage over foreign rivals at the very top endof the premium segment is to market theirproducts in terms of their freshness.

developed a pet shampoo and conditioningrange under the John Paul Pet label.

Even celebrities are getting in on the act. Muchpublicised dog doter Pamela Anderson hassigned a deal with Mascolo’s hair care brandBed Head to launch a range of products forpeople and their pets. Anderson, who held acommitment ceremony for her two caninecompanions last year, said the line wouldinclude everything from hot rollers tosunscreens and verifies that the products will“only [be] tested on humans of course”.

Purr-fect ProductsCosmetics and toiletries for pets is still in itsinfancy and there is plenty of scope fordevelopment. Potential products include oralhygiene products, including toothpastes andbreath fresheners, and fragrances, but the keyto success is maintaining a prestige orspeciality brand image. The kinds ofconsumers who are willing to spend freely onpampering their pet are looking for productsthat are on par with what they would use onthemselves.

Celebrity brands or endorsements could alsobe big winners (perhaps Paris Hilton and herChihuahua Tinkerbell will soon followAnderson into the pet care category?) as couldbrands endorsed by veterinarians or famouspet shows, such as Crufts. The majority oflaunches to date have focussed on dogs, withcats being far less likely to put up with beingwashed and groomed. Yet the feline categorycould still hold promise, with dry, powdershampoos and scented sprays being amongthe innovations that may have potential.

BEAUTY INDUSTRY GOES TO THE DOGS

EuromonitorInternational is theworld’s leading providerof global businessintelligence and strategicmarket analysis. Theyhave more than 30 yearsexperience of publishingmarket reports, businessreference books, onlinedatabases and bespokeconsulting projects.Their research offersinsight into industries,countries and consumers.They deliver qualityinformation solutions tosupport strategicbusiness planning.Euromonitor Internationalis headquartered inLondon, with regionaloffices in Chicago,Singapore, Shanghai andVilnius, and has anetwork of over 600analysts worldwide.


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