Cats and dogs have always been favourite pets and account for a large proportion of global pet food revenue. This is not different in the Chinese market. According to iResearch, the total pet industry in China was valued at EUR 36.3 billion in 2023, registering a compound annual growth rate (CAGR) of 23.2% from 2012 to 2023. The pet market size is expected to reach EUR 104.3 billion in 2025.
Overview of China's pet market
China has experienced significant growth during the past decade. The economic transformation has contributed to an urbanisation rate surpassing 60%, marking a notable milestone as the urban population, which was merely 37.66% in 2001, crossed the 50% mark for the first time in 2011. Furthermore, per capita disposable incomes and per capita consumption have doubled over the past decade. From a demographic structure perspective, the average per capita GDP of China will exceed USD 13,000 in 2023. This group, also referred to as the middle class, wants to pursue a healthier and happier life. This includes their willingness to have more furry friends for companionship or entertainment and treat them equally.
According to the Pet Industry White Paper issued by Pethadoop (referred to as The White Paper) in 2023, there are over 120 million pets. Compared to 2022, the number of dogs decreased by 9% but still accounted for 44% of all pets. The number of cats increased 6% yearly, accounting for 70% of the total. The number of cats continues to rise over the number of dogs, and it is expected that the related consumer demand generated by cats will show a steady rise in the future. Still, the relative number of families in China is far below the level of developed countries. As a result, the expectation is that the number of pets will still rise.
Pet owners in Tier 1, Tier 3 and below cities have increased in 2023 compared with 2022. The share of pet owners in Tier 1 cities was 28.9%, while the share of Tier 3 and below cities was 30%. The number of pet owners in urban areas in China will reach approximately 70.43 million in 2022. This is an increase of 1.99 million compared to 2020, exhibiting an upward trend of 2.9% year-on-year. Among pet owners, the amount of dog owners is 34.12 million. This is a downward trend of 5.3% compared with 2021.
Meanwhile, the number of people who own cats is 36.31 million, indicating a significant increase of 12.59% year-on-year. As dogs require a higher activity level outdoors than cats, people, especially those younger, are more reluctant to have a dog and instead own a cat. As a result, it is estimated that the number of cats will keep increasing in China.
Pet food industry development overview
Since the 1940s, pet food has been predominantly manufactured in Europe and the USA. Nowadays, manufacturing factories are everywhere in the world. The close relationship between owners and their pets has led to the development of certain sensory requirements to attract consumers and their furry friends.
Pet food, including staple food, snacks and food supplements, account for the largest percentage of the overall pet consumption market structure in China, with an average of 56.1% in the last three years. The pet food market in 2023 is estimated at EUR 18.3 billion, showing an increase of EUR 2.24 billion compared with 2022. According to Zheshang Securities, the market share in terms of dry food, wet food and snacks of pet food market structure in China is expected to be 3:1:1.
Dry food occupies the largest market share while keeping the highest gross margin. Still, competition is fierce among domestic and international suppliers, as many internationally renowned brands focus on dry food products. The wet food market is still in rapid development, with the second-highest gross margin. The snack market is highly competitive and has the lowest gross margin. Due to this, there is limited space to develop a single brand due to many sub-categories.
Market segmentation
Dry pet food (plus semi-moist pet food)
Dry pet food is composed of several ingredients that contain carbohydrates such as polysaccharides, monosaccharides, oligosaccharides and fibres; proteins such as animal and plant proteins; amino acids; lipids such as animal fats and plant oils; vitamins; minerals; and preservatives such as antioxidants and antimicrobials (Hussein, 2003). The selection of ingredients or formulas for producing dry pet food products is based on their nutrient content, palatability, digestibility, functionality, cost and label (Thompson, 2008). These selected ingredients provide balance, complete or special nutrients and palatability for companion animals.
Dry pet food represents the largest share of the pet food market, accounting for over 60% of the total market in China. However, the market is also fiercely competing for both local and international players. Sorting from the e-commerce platform JD.com, it can be found that among all the brands, Orijen, Acana and Go! The solutions, Nutrience, Fromm, Instinct and Now Fresh, are all recognised by both dog and cat owners in China; Nutram number, Taste of the Wild and Holistic Recipe SOLUTION are popular with dog owners, while cat owners welcome Solid Gold, Nutro and Ziwipeak.
Wet pet food
Although kibble-based diets have gained popularity recently, wet pet foods have several unique features and may offer distinct advantages in certain situations. Wet food is often reported to be more palatable than dry food. This is partly because wet foods are typically higher in protein than dry foods. Furthermore, wet food usually contains more fat, which enhances palatability. Wet food may also be more aromatic and is available in different forms and textures, such as loaf, morsels and gravy.
International wet canned food players like Frisian, Purina, Mars, CANIDAE and Real Pet Food manufacture their products in Thailand and export them to the Chinese market. Thailand has rich seafood resources and relatively cheap labour costs, and most of the products related to feline wet food are produced there. New Zealand and Australian pet food companies also occupy a large market share in China.
Treats and snacks
Treats and snacks for pets are aromatic or highly-flavoured products with a special chewy texture and aim to provide an enjoyable experience for the animal and its owner. Pet treats are usually made from various combinations of meat or meat-derived materials with other ingredients, such as cereal flour, (sweet) potato starch, fruits and vegetables, oils and additives. Jerky products mainly consist of dried and flavoured or pure meat or animal by-products, such as pig or cow skin.
Dog treats offer traditional dog biscuits and crunchy and chewy snacks with high meat content, ensuring that the product per unit weight can contain more nutrients. Cat snacks include milk products, canned food with high protein and lickable creamy-style wet snacks. If pets could do their shopping, they would probably be excited by the huge variety of treats.
China's popular shopping site JD.com lists over 350,000 items in both the dog treats and snacks section and the cat treats and milk section. Brands like Zeal, Real Pet Food, Ziwi and Holistic Recipe SOLUTION are popular with Chinese pet owners because their high-quality meat jerky snacks are made in New Zealand and Australia, which are reliable for Chinese customers.
Although added nutrition can be a selling point for snacks, it is not the main purpose. Some snacks, however, are designed for dental health, training, calming, bonding, or hiding pills. According to the White Paper, over 70% of Chinese pet owners use pet treats to facilitate communication with their pets. Around half of pet owners give their pets snacks to boost their appetite. Apart from a training reward, another trend is that an increasing number of Chinese pet owners prefer to help their furry friends kill time when they are bored by offering them a variety of snacks.
Nutrient supplement
An increasing number of pets are likely given some sort of dietary supplement. These supplements have different usages, ranging from joint issues and arthritis to coat care and intestinal support. Many types of pet nutrient supplements are beneficial for a pet's health, but at the same time, consumers' preferences regarding different products vary.
During the past two years, dog owners have had a high demand for bone care, stomach and intestine care and coat/skin care products. Dog owners also paid more attention to their dogs' oral health problems. Furthermore, the number of dog owners considering joint care has increased in recent years. This may be in part due to obesity or slippery floors. These days, it is common for many Chinese houses or apartments to have wooden, laminated, or tiled flooring. For cat owners, the most prioritised categories when selecting nutrient supplements are hairball relief, stomach and intestine care and immune system improvement. In 2023, the previous preferred choice among cat owners for pet coat and skincare-related supplements experienced a decline of approximately 1.7%, followed by decreases in oral care, bone care and joint protection.
Although dog and cat owners focus differently on providing nutrient supplements to their pets, products related to stomach and intestine care, bone and joint care, coat care and immune system improvement are the most popular supplements for both dogs and cats in general.
Consumer insights
The robust development of e-commerce and the rise in demand for natural pet food are some of the major factors driving the country's pet food market. Among all the factors, humanisation is one of the key trends driving pet food development over the past several years. Dogs and cats are regarded as companions or family members by their owners and have equal status to humans in the family. This, together with the large expenditure of veterinary bills, has led to the development of a wide range of food products, including natural, organic and healthy pet food and supplements.
Consumer profiles
According to The White Paper, pet owners have broken through 90 million in China in 2022. In 2023, the number was almost 106 million. Pet owners indicate plenty of benefits of having a cat or dog as a companion. People expect unconditional love and gain a sense of purpose from pet ownership, especially those who live by themselves. Many pet owners consider themselves pet parents, which, in turn, becomes an important part of their identity. This ensures the quality of pet food is held to the same standards as their own.
Millennials are the primary group of pet owners. Around 47% of pet owners are born post-90s, and 31% are born post-80s. These two generations are mainly responsible for the increasing percentages of pet owners in recent years. Due to better-paid jobs and more opportunities in higher-tier cities, many young people have left their hometowns and relocated to work in big cities such as Beijing, Shanghai, Guangdong and Shenzhen.
As they are still in their twenties or thirties, many are still single or have not yet started a family. According to CCTV News, China had over 92 million young people who lived alone in 2021. The younger generation enjoys interacting with pets as companionship can alleviate part of their loneliness and pressure. These millennials generally have a more open attitude towards pet consumption, which differs from older generations.
Older generations, especially solo agers, are another segment of the Chinese population who enjoy owning pets. According to data issued by the National Bureau of Statistics in January 2024, people over 60 years old accounted for 21.1% of the total population, whereas people over 65 years old accounted for 15.4% of the total 1. Due to the growing number of ageing people, it is estimated that the number of dogs and cats that function as companions will also increase. According to the Online Consumption Trends Report for the Middle-aged and Older People released by Jingdong, the pet consumption among people over 60 years old is 22% higher than the proportion of other categories. Like the demand for pets in the "single economy", pets also give middle-aged and elderly people a sense of companionship and ease the loneliness of old age2.
Purchasing trends
There is a trend that an increasing number of pet owners in China prefer purchasing pet food online. Pet owners choose online sales channels mainly because of convenience, speed and a diversified product portfolio. Offline channels are chosen for a good retail experience and a fixed purchase habit by consumers. Zooming in on the age distribution of pet owners who purchase online, it is no surprise that over 60% are millennials. As a result, these young pet owners facilitated the rise of diversified sales channels of pet food. Among them, online sales channels are mainly comprehensive e-commerce umbrella platforms (such as Jingdong and Taobao) and specific e-commerce platforms (such as Boqi Pet and Epet) for pets. The umbrella platforms naturally occupy a larger market share, while offline channels mainly include pet stores and pet hospitals, accounting for 17.5% and 16.2%, respectively.
According to the latest Takeaway for Pet Report released by Ele, one of the most popular Chinese food delivery platforms, pet-related delivery orders have grown exponentially since 2019. Most consumers who grew up after the '90s spent an average amount of EUR 17.7 per delivery, much higher than the unit price for food and beverage takeaways.3According to Meituan, in January 2022, there were only 589,000 pet users of Meituan's InstaShopping sale service, and by July 2023 there were 1.39 million users of the service in a single month, with the number of monthly purchasing users increasing by 136.5%; in the first half of 2023 alone, more than 10 million users had placed orders for pet goods in its insta shopping service.
Consumer preferences
When consumers talk about natural and wellness foods, they think about the food that offers general health benefits. Many of these products are related to high energy levels, long life and general maintenance of a healthy coat and skin.
In terms of dry pet food, consumers share different opinions regarding pet food sold in China. Due to the overwhelming choice and information asymmetry regarding dry food, Chinese consumers pay the most attention to the nutritional content and ingredient composition when choosing dry food brands. According to the survey from the White Paper, palatability and pet preference have become increasingly relevant to their owners in 2022. Product reviews and feedback shared by other owners are growing steadily. In other words, an increasing number of shoppers is being influenced by the (digital) word-of-mouth reputation of the products, and they consider it a useful way to eliminate their concerns regarding a product. Invesp stated that 90% of consumers read online reviews before deciding, and 72% will be prompted to act after reading a positive review4. Moreover, one-third of the consumers consider brand awareness and unit price purchasing.
The market size for pet snacks is relatively small compared to dry pet food. Some dry food brands are providing one or two types of pet snack solutions based on their kibbled food's well-known reputation towards Chinese consumers. Consumer loyalty to the brand is low as the ceiling of a single brand is obvious. Pet owners are less sensitive to the origin of pet snack brands, so the advantage of imported snack brands is not that obvious. Due to the variety of pet snacks and different functions, most pet owners have a low loyalty towards snack brands. The young generation prefers switching brands when buying snacks, so it is difficult for a single brand to gain a large and consistent market share.
Lastly, functionality plays a pivotal role in consumers' decision factors when purchasing pet food supplements, as functional ingredients are used to generate general wellness or address specific health concerns such as joint and cartilage function, gastrointestinal problems, immune system strength, or dental health. According to the food industry, the need for innovative nutritional solutions for companion animals is driven by health-conscious pet owners5. Moreover, around 44% of pet owners considered other consumers' feedback when making purchase decisions, so they research if the products are working as advertised.
Overview of main foreign players
In the past few years, the market size of China's pet food industry has been expected to grow at an annual growth rate of 20%, exceeding EUR 20.1 billion in 2023. Although the pet food market is expanding rapidly, the current market penetration rate6 of packaged pet food products in China is less than 20%. Considering the penetration rate of more than 90% in developed countries in Europe and North America, there are still plenty of market opportunities. It is estimated that imported pet food still accounts for a considerable proportion of China's pet food market purchases.
In 2018, the Ministry of Agriculture and Rural Affairs (MARA) issued a Pet Feed Management Measures to enhance pet feed management and facilitate the development of the pet feed industry. According to the Measures, foreign pet feed manufacturers who export pet food and premixed pet additives to China should be entrusted to agents or representative offices of overseas enterprises in China to apply for registration with the competent agricultural administrative departments of the State Council. After approval, they will obtain the import registration licence.
According to an announcement published by the Ministry of Agriculture and Rural Development, a growing number of imported pet product registration licences issued by MARA from 2016 to 2021 have been witnessed. In 2021, there are 602 imported pet product registration licences issued by MARA. These increasing numbers of applications are predominantly from Europe, America, Asia and Oceania. The top five countries that received the most certifications for imported pet food products were Canada, Belgium, New Zealand, Germany and the United States.
Chinese market-entry strategies
Short-term strategy
In terms of short-term strategies, international pet food enterprises could consider importing pet food products through cross-border e-commerce (CBEC). CBEC consists of importing certain products directly from foreign suppliers through an internet platform registered by GACC and only through certain CBEC pilot ports of entry. Pet food is an eligible and approved category for cross-border e-commerce in China. Companies that currently lack knowledge of the Chinese pet food market can implement a trial-and-error mode by testing consumer interest without significant investments in terms of incorporations or warehouses through CBEC. Importing pet food products through CBEC offers several advantages over the traditional customer clearance process.
First and foremost, pet food in China is categorised as animal feed. Under the Ministry of Agriculture and Rural Area's (MARA) import product registration, exported pet food to China must obtain General Administration of Customs' quarantine access. Moreover, applying for the import registration certificate of feed and feed additives from the Ministry of Agriculture and Rural Areas is essential. China permits the inclusion of animal-origin ingredients derived from poultry, livestock (swine and ruminants), farmed terrestrial animals, aquatic animals (farmed or wild-caught) and bees. Ingredients derived from wild terrestrial animals, reptiles, amphibians and insects other than bees are prohibited. Import registration will take more than one year if international companies plan to export through traditional trade.
On the other hand, pet food imported through the CBEC is exempt from submitting an import licence to MARA. So, importing pet food through CBEC can be the fastest sales channel for these companies to enter the Chinese market. Second, product compliance inspections within CBEC pilot zones are, on average, shorter and less restrictive. Customs officials may use discretion to clear products with less than complete documentation. Plus, value-added taxes and import duties are waived, and the consumption tax is reduced by 30%.
Lastly, required Chinese language labels can be electronic and do not need to be physically affixed to the products. The downside of CBEC is that the products can only be sold to consumers online instead of to enterprises. This will restrict the sales channel from a B2B point as local distributors cannot be used.
Government policies support CBEC. In April 2016, the Ministry of Finance, the Ministry of Commerce, and 13 other departments in China jointly released the Cross-border E-commerce Retail Import Commodity List (Second Group), which added pet food to the positive list. In August 2018, the Chinese government adopted the e-commerce law. The purpose of this law was to regulate CBEC platforms in China further, enhance the protection of intellectual rights and protect personal information as well as consumer rights.
Due to Chinese consumer interest in indirectly purchasing consumer-oriented imports, CBEC sales have seen an upward trend in recent years. Lockdown policies disrupted international trade during the COVID-19 pandemic, and consumer demand for imported products spiked as more international brands entered China via e-commerce platforms.
According to the news from Tmall International in 2022, the turnover of more than 1,000 overseas brands during the Double Eleven Shopping Festival increased by more than 100% year-on-year, with 425 new overseas brands breaking the turnover of million Chinese Yuan and 26 new overseas brands breaking the ten-million-Chinese Yuan. Among them, pet food from North America, snacks from New Zealand and canned food from Europe are the most popular products among consumers. In terms of the distribution of pet food, young, female and high-income consumers are the characteristics of Chinese consumers. The new middle class continues to grow, while the Z generation has the greatest potential for pet ownership.
Long-term strategy
After gaining experience in the Chinese market through CBEC, international pet food companies can opt for a more localised market entry strategy through general trade. This opens routes for both online and offline channels. China has a complex system of market access, product registration and facility registration requirements that imported animal feed products and ingredients must navigate to be eligible to export to China. Every animal feed product or ingredient used in animal feed must be listed in the MARA Feed Ingredient Catalogue. From the date the foreign manufacturer submits the application form to begin the registration process, it can take at least one year to receive the import registration licence. Import licences are valid for five years and must be renewed. As CBEC does not require the licence issued by MARA, general trade will take longer in terms of the registration process. As a result, international pet food companies need to plan and start the registration process as soon as possible to seize the opportunities in the Chinese pet food market.
Even if international companies have their advantages like wholesome food and traceable ingredients, favourable animal health status, brand reputation overseas as well and mature marketing operation experience in other countries when they enter China, their international success may become an obstacle to the Chinese market, as the Chinese pet food market is developing rapidly. Collaborating with a local business partner with rich operation experience and perspective insights is essential. International pet food companies should speak to as many partners as is feasible to get an idea of their sales plan for pet food products, where and to whom they market and their overall sales philosophy. The agent's role is to localise the successful international marketing operating model and help the brands adapt to the Chinese market.
When doing business with companies registered in mainland China, it is important not only to develop a relationship, which is considered common in China but also to make sure all requirements and agreements are communicated. This can include payment schedules, material specifications, or sourcing requirements. As a result, it is crucial to ensure that signed agreements and contracts are legally valid in China. Using a local agency in China that has experience in these matters is a good first step toward a market entry or during negotiations.
Conclusion
The Chinese pet food industry stands as a dynamic and rapidly evolving landscape, driven by factors such as the rising middle class, urbanisation and the humanisation of pets. The market promotes significant growth potential, as evidenced by the increasing number of pet owners and their diverse preferences. Short-term strategies like cross-border e-commerce offer initial entry points, while long-term success hinges on strategic partnerships, market localisation and a deep understanding of Chinese consumer behaviour. By embracing innovation, market trends and collaboration, international pet food companies can carve out a successful niche in China's flourishing pet industry.
Footnotes
1 National Bureau of Statistics, 20242 千亿宠物市场中的银发族：谁在影响中老年宠物主的消费决策？the Paper, 2021.06
3 宠物经济引燃外卖新商, bbtnews, 2020.08
4 The importance of online customer reviews, invesp, 2021.04
5 Infographic: Functional dog, cat food and pet treat trends, Petfood Industry
6 Market penetration rate is defined as how much pet food products are being used by customers compared to the total estimated pet food consumption.
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