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While developed economies remain the leading pet spenders, thriving economies Brazil and Russia have entered the top-10 spenders list (photo: iStockPhoto.com)
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At times of frugality in developed markets, there’s one household member shoppers just won’t say no to: the family pet. In fact, splurging on pets continues in line with falling fertility and rising identification of pets as companions.
The evolving business opportunities bring relief to struggling exporters and offer plenty of room for product diversification. Hong Kong companies, particularly those engaged in toys, houseware and electrical products, are poised to profit from the rising pet trend, given their manufacturing experience and design strengths.
There’s no overall definition of pet-care products, other than for pet food items, so it’s hard to estimate the market size. But various industry reports make it clear that the pet-care market is recession-proof. Harder economic times have had minimal effect on the uninterrupted rise of pet spending and ownership.
Accounting for more than three-quarters of worldwide pet-care market sales, North America, Western Europe and Japan are, not surprisingly, the most important markets for pet product manufacturers. But also worth noting are the fast-growing pet markets in such emerging markets as Brazil, Mexico and Russia.
In the five years to 2010, global pet-care sales grew 27 per cent, showing a compound annual growth of more than six per cent. Although sales grew negligibly in the 2009 recession year, they jumped five per cent in 2010, to hit US$83 billion. So it’s no surprise that struggling manufacturers have become interested in these products.
Brazil and Russia, with their thriving economies, have entered the top-10 spenders’ list, even though developed economies remain the leading pet spenders. But in markets such as Australia, pet care has overtaken the baby-care market, and some reports show that consumers in the United States spend more on pets than on movies.
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Falling fertility rates in most developed economies is a big plus for the evergreen pet sector (photo: iStockPhoto.com)
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The US is by far the world’s largest pet care market, accounting for almost one-third of the global sales of pet care products last year. With the overall rate of pet ownership reaching 53 per cent, approximately 50 per cent of US households owned dogs or cats as of 2010.
Despite the country’s gloomy economic picture, the ownership of dogs, reptiles and fish in the US continued to rise in 2010, as did total pet spending. These trends are crucial for manufacturers of pet care products, as each percentage point of pet ownership in the US is estimated to yield roughly US$1 billion in annual pet product and services sales.
Developed markets are also trendsetters and standard makers of pet care products. The non-profit Association of American Feed Control Officials (AAFCO) often issues and recommends guidelines on ingredient descriptions for the US Food and Drug Administration (USFDA) and the US Department of Agriculture (USDA) to better regulate pet food, while European laboratories such as TUV Rheinland in Germany have been working extensively with manufacturers to develop standards for pet toys.
Falling Fertility
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Some of the innovative pet products showcased last year at the Hong Kong Houseware Fair’s World of Pet Supplies zone
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Fertility rates have been sharply decreasing in most developed economies, a major factor for the evergreen pet sector. Many women today are choosing to give birth to only one child, while no-child families are becoming more commonplace each year, especially in Japan and such major European countries as Germany and Italy.
To compensate for the lack of siblings, many parents will teach their children responsibility and caring for others by owning and raising pets, while childless couples often fill the void with furry animals.
Living with pets not only helps children develop self-esteem and emotional skills, but improves the mental health of the owners. This advantage is especially evident among dog and cat owners, although other pets, including birds and aquarium animals such as reptiles and fish, also make great family pets. Most, if not all, of the leading developed economies are rapidly aging.
Given their therapeutic nature and soothing power, pets have increasingly become the darling of many elderly people, even for those who are in the later stages of dementia.
The trends of falling fertility and aging in the developed world are relevant not only to policy planners and pension companies, but also to manufacturers of consumer products, particularly pet-care products.
Looking Good
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Hong Kong company PetzUp is introducing traditional Chinese medicine to its pet-care products to cater to the trend of treating pets like people
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Pampering pets has become even more popular with celebrities such as Victoria Beckham using nail varnish on their pets to match their outfits. More and more pet owners pamper their animals with grooming, spa treatments and massages, providing them with sophisticated medical treatment and dignified funerals at the end of their lives.
Almost 30 per cent of dog and cat owners in the US celebrate pet birthdays, and one out of 10 pets in the United Kingdom now has its own social-networking account, including Facebook, Twitter and YouTube. As pets become increasingly humanised, premium pet food, delicious treats and stylish care and training products are highly sought after in many of the developed markets. Owners are more conscious about the safety, health and functions of the items they buy for their beloved pets.
With the pet-care market annually expanding in nearly all regions and competition intensifying, Hong Kong companies must find suitable niches to secure a bigger slice of the growing pie.
Pet Fairs
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Following the Lead
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Hong Kong firms have shown their entrepreneurial pedigree in the pet market. For instance, Nobel Creative Ltd has diversified into the pet toy business. The company has differentiated its training toys by subjecting them to the same product safety tests originally designed for children’s toys with world-class German test laboratory TUV Rheinland.
As a market pioneer, Nobel Creative has even helped develop a standard label for its dog-training toys, to highlight the safety of its products and establish benchmarks. Under the brand Major Dog, the certified items carry a label indicating such standards as mechanical and physical properties (EN71-1) and flammability (EN71-2), against which the training toys are thoroughly tested against European standards.
Hong Kong manufacturer Sealand Holdings has come up with an all-in-one aquarium and many other ready-to-use aquarium products. The aquarium packages include all the equipment needed to start a tank, from lighting to filtration systems.
Hong Kong firm Tak Li (China), which has been operating a pet division, manufacturing innovative toys and accessories for pets since 2000, is launching DeliPate, a new line of pet food. These treats are made with natural ingredients, using a self-developed, patented technology (NutrisealTM) to enhance their nutrient value and taste.
Then there’s Puppoose, a sling that allows pet owners to carry their pets with no hands. Designed by UK dancer and dog lover Shannon Beach, the sling distributes the weight evenly by allowing the pet to hang their legs on either side.
Hong Kong company PetzUp meanwhile, has been conducting extensive research into such natural Chinese herbal supplements as lingzhi and yunzhi and how they can help regulate the internal systems of dogs, restoring their normal bodily functions so they can age better.
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Given an increasingly large pool of buyers looking for new, innovative pet-care products, leading pet fairs and exhibitions attract pet products from around the world. For many pet-care manufacturers and traders, Interzoo, the world’s largest, bi-annual pet fair in Nuremberg, Germany is a must-attend event. So is the China International Pet Show (CIPS), Asia’s largest pet and aquarium trade show, which alternates between Beijing and Guangzhou.
According to the show report for Interzoo 2010, the top reasons for visiting are sourcing information about new products, maintaining business contacts and setting up new business contacts.
Pet product retailers, including such key mass-market retailers as supermarket chains and pet shops, and professional buyers such as veterinary practitioners, are major visitors to these trade shows.
To help Hong Kong pet supplies manufacturers grasp pet business opportunities, the Hong Kong Trade Development Council has had a World of Pet Supplies zone in its annual Houseware Fair since 2009.
Last April’s World of Pet Supplies zone attracted more than 100 exhibitors from eight countries and regions, including the Chinese mainland, Hong Kong, India, Italy, Japan, the Netherlands, Taiwan and South Korea. Nearly 9,000 visitors took in the show.
Online promotion for the pet supplies industry, including www.petsinfo.net and www.ipetchannel.com, as well as pet supply trade publications such as PETS International and Pet’s Business Information, are also vital to the success of the pet-care business.
Asian Promise
Hong Kong companies, given their extensive experience in light consumer goods manufacturing, have an edge in pet-care products.
To stand out from rising competition, however, Hong Kong companies must use their advantages to win business. For example, Hong Kong firms have a largely unrivalled advantage over other non-Chinese suppliers in pet food supplements or medicine made from traditional Chinese medicine (TCM).
This market segment is increasingly promising, thanks to better understanding of the effectiveness of TCM in the prevention and treatment of diseases. With pet spending up 3.7 per cent, year-on-year, in the US – one of the hardest-hit markets in the recent global economic downturn – the pet industry has demonstrated resilience amid the recent global economic downturn.
The market outlook for Asia and such emerging markets as Latin America and the Middle East, is even more promising. Largely spared by the downturn, Asia, especially the mainland, is proving to be a hot market for the pet business. With a growing number of new, rich pet owners buying properties in such major cities as Shanghai, the mainland is considered a new frontier for the pet industry.
For more on international trends, please see the December issue of the HKTDC Trade Quarterly, which can be ordered at: http://bookshop.hktdc.com/.
