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1、Azoya InternationalDecember 2023Overview of Chinese Pet Food Market in 2023Overview of Chinese Pet Food Market in 2023Azoya International Ltd.2Chinas pet economy had surged post-pandemic,fueled by the lifestyle shift caused by increased time spent at home.Primarily led by Chinese millennials and Gen

2、-Z,who are products of the One-Child Policy era,the trend reflects a preference for fur babies over traditional parenthood.According to Analysys,a tech and market analysis agency,the Chinese pet market will hit 392.7 billion yuan($55 billion)in 2023,with pet food claiming over 60%of this share.The c

3、ontinuous rise in pet households and penetration rates indicates substantial growth potential for Chinese pet food economy.Delve into this report for in-depth insights and trends in the Chinese pet food market.Changes In The Number Of Household Cats And Dogs(unit:1m)Under the continued process of ur

4、banization in China,the number of adopted cats&dogs is increasing.More young people raise pets as if they are their children for companionship.This drives the number of pet adoptions and multi-pet households.20192020202120222023E6536511971905273?Changes In The Number Of Households With Pets In China

5、(unit:1m)In 2021,due to the COVID-19 lockdown,Chinese families had more time to spend at home,which changed their living habits and rose the number of pet adoptions.By 2023 the number of households with pets was estimated to reach 105 million.20192020202120222023E598991686369980010565Penetration Rat

6、e Of Households With Pets In China20192020202120222023E13%18%14%20%22%?70%?46%The penetration rate of households with pets in China is still low compared to the USA and EU.However,China has great potential in this industry since the popularity of pet adoption is increasing.YoY of Spending on Pets Pe

7、r CapitaWith the increase in the number of pet owners,more information about keeping pets emerged.Due to economic development and the improving quality of life,average spending on pets per capita was increasing significantly from 2021 to 2022,and would continue to rise in future.2019202020212022+8%+

8、14.7%Growth of Demand Driven by Increasing Pet AdoptionsAzoya International Ltd.Source:JD.com x Pethadoop,2022 White Paper of Chinas Pet Industry32021012021092022052021052022012022092021032021/112022072021072022032022/112021022021/102022062021062022022022/10202104202112202208202108202204202212202301

9、2023022023/03On Double Eleven in 2021,the pet category on Douyin experienced its first boom,with the sales of cat staple food reaching the highest levels,boasting a year-on-year growth rate of 64.5%.During Double 11 in 2022,pet product sales surpassed 420 million,and almost 70 thousand live streamin

10、g hosts featured pet product sales.Brands own livestream host contributed to 46%of the sales,reaching a record high on November 11.This years Queens Day sales popularity on Douyin is nearly equivalent to last years Double Eleven,despite Queens Day not being the biggest festival of the year.2021-2023

11、 Douyin Pet Category Sales Trends(Measured by Sales Popularity)Staple food(?“in Chinese):a popular nutrition concept in China,referring to the daily essential food for pets.The daily essential food contains dry&wet food but does not contain snacks such as cans or packed food that are not necessary f

12、or daily consumptionShort Video Platforms Fuel Growth in Pet MarketAzoya International Ltd.Source:Guoji&Feigua,Insights into social media marketing trends of the pet economy in 20234Imported Pet Food Surges with U.S.Brands LeadAzoya International Ltd.Source:Tmall Global&C2 Capital Partners,Opportuni

13、ties to Building a$1 Billion Pet Food Brand in China5020001500100050020161382,0252021219886337583?MOA:the Ministry of Agriculture and Rural Affairs of ChinaMOA certifications has been growing significantly since 2016.Chinas pet food market experienced a particular opening up to imports in 2016 becau

14、se of the easing of import regulations and the emerge of cross-border e-commerce channels,both of which have made it easier for import brands to access Chinas pet food market.These well-performed brands are mainly from U.S.,Canada,New Zealand and France:Vital Essential,Blue Buffalo,Taste of wild,Ste

15、lla&Chewys,Fromm,Fancy Feast(U.S.),Acana(CA),Ziwi Peak,K9 Natural(NZ),Royal Canin(FR).?Total Number of New SKU Approvals by MOA since 2015YoY of Pet Food Sub-Categories and their Top Brands on Tmall on 2022 Singles Day Top performing imported brandsFreezedriedSmall-to-mid sized dog foodFunctionalfoo

16、dWetGMV110%40%60%30%213K9 NaturalVital EssentialsStella&ChewysTaste of the wildAcanaRoyal CaninTaste of the wildBlue BuffaloFrommK9 NaturalZiwi PeakFancy FeastHomogeneity is the Top Challenge for Pet Food Brands in ChinaAzoya International Ltd.Source:Guoji&Feigua,Insights into social media marketing

17、 trends of the pet economy in 20236The Focus Of Different Stages Of Industry DevelopmentMKTVALUEPRODUCTVALUE?If a brand can have strong differentiation in raw materials,processing technology or formula(to meet more refined needs),it will be easier to stand out from the market.The Focus Of Different

18、Stages Of Industry DevelopmentProducts CategoryAge GroupSizeCriteriaProductionTechnologyMoisture ContentDry type,Semi-dry type,Freeze-dried type,Soft wet type,Wet typeWeaning,Infancy,Adulthood,Pregnancy,Lactation,Old ageSmall,Medium,Large,JumboPowder type,Extruded granule type,Single puffed granule

19、type,Double puffed granule type,Fried typeMost brands adopt the OEM/ODM method from product design to landing,lacking independent R&D and design capabilities,innovation in production technology and advantages in raw materials.It has led to high similarity of products available in the market.In a hom

20、ogeneous market,brands without unique selling points tend to win market share by low prices-and this is what we observe in the markets most brands tend to offer huge discounts to drive sales.Pet Staple Food Now a Functional and Refined Selling PointAzoya International Ltd.Source:Guoji&Feigua,Insight

21、s into social media marketing trends of the pet economy in 20237LowYOYIncreaseSales ScaleHighHighLow FatLow Salt&OilGastrointestinalprotectionProbioticsGlow HairHypoallergenicCheck GrowingSales scale and year-on-year growth rate of various functional pet products in March 2023Chinese pet consumers a

22、re gradually improving their awareness of scientific feeding.There are changes in production technology,and is also a demand for products efficacy.Requirements become more detailed.Refined pet care time has come.The promotion highlight of the products is gradually shifting to functional nutrition.Th

23、e traditional boundaries between staple pet food and pet snacks are increasingly blurred.This is because consumers are becoming more concerned about the ingredients,nutrition,protein sources,and the scientific formula of pet food.Products with both palatableness and nutrition would be preferred.Addi

24、tionally,the market is gradually witnessing the emergence of big single products(?in Chinese)in each function,indicating that products emphasizing specific functions can gain significant market share.Imported Brands Lead Cat Food with Functionalities and FormulaAzoya International Ltd.Source:Zhiyi T

25、ech,2023 August Pet Food Market Analysis Report8Cat Food Brands Sales Rank(July 2023)RankBrandMarket ShareImported31425Royal CannieMyfoodieLifeeaseKERESOrijen9.1%3.2%3.9%2.7%2.7%YNNNYFrench cat food brands Royal Canin dominates the market with over 2 times market share than the second brand.Royal Ca

26、nin leverages its functionality formula as selling points,meanwhile adjusting the functional targets to cats digestion,urinary,skin and post-sterilization recovery.Kitten Milk CakeFor 1-4 months kittens at weaningImprove immunity,protect sensitive stomachs and easier to chew&digestAdult Cat FoodFor

27、4-12 months kittensDecrease hair balls,protect urinary and build body shapeKitten FoodFor 4-12 months kittensImprove immunity,protect sensitive stomachs and grow skeletonsProtein Exigent Cat FoodFor cats with Sensitive Intestinal TractsEasy to digestUnstoppable Demand for Aging ProductsAzoya Interna

28、tional Ltd.Source:Calculation by JD.com Pethadoop 2022 White Paper of Chinas Pet Industry9In 2023,it is estimated that 13.09 million pets will enter middle and old age.After pets enter middle age,their food needs to be adjusted appropriately.Consumers gradually realize that what their pets need is n

29、o longer high-protein products,but the ones suitable for their physical conditions.We can see from the search results and transaction performance of Taobao and JD.com that pet food for middle-aged and elderly people is trending.JDs Senior Dog Search Index increased 114%.Taobaos search popularity for

30、 elderly dogs tripled in June this year,and the payment conversion rate is steadily increasing.Age distribution of cats and dogs in 2023(Unit:1K)Search performance of Aging Dogs food on TaobaoAge GroupCats AgeDistributionDogs AgeDistribution2023E CatsNumber2023E DogsNumberAdulthoodInfancyMiddle AgeA

31、dolescenceOld Age7%39%49%2%3%7%45%30%12%16%5,03028,04035,2301,4402,1603,69023,73015,8206,3303,160Increasing rate of Old Dogs search on JD?61 times?114%+?New Generation Drive the Growth of JDs Pet IndustryAzoya International Ltd.Source:Calculation by JD.com Pethadoop 2022 White Paper of Chinas Pet In

32、dustry10SalesProportionGrowth Rate60%18%10%6%22%12%Grey HairGroupEmptyNesterTrendyFamilyNewGenerationLeisure manYoungGenerationIndependentFemaleHappy FamilyTypical Groups Sales Volume And Growth Rate On JDFrom JDs typical pet consumption classification:Consumers under the age of 25 are growing rapid

33、ly as they have just entered the society and have their space,right and ability to raise a pet.It can be seen that the main consumers are the 26-35 age group.The largest sector is Happy Family,which still has a relatively high growth rate.The first-and second-tier cities are still the main consumpti

34、on force.Single group has higher potential in the market,as the pet industry was referred to the lonely economy or single economy in China.Typical Group Who Have PetsGrey HairGroupSingle GroupFamily GroupNew Generation:below 25 years old,unmarriedIndependent Female:1st-2nd tier,26-35 years old,unmar

35、riedYoung Generation:1st-2nd tier,26-35 years old,unmarriedGrey Hair Group:over 50 years oldTrendy Family:26-35 years old,marriedHappy Family:36-45 years old,marriedEmpty Nester:46-50 years old,marriedLeisure Male:31-50 years old,2nd-3rd tier cityYoung Peoples Moderate Monthly Pet Spending is Betwee

36、n$28.2-$70.5Azoya International Ltd.Source:TOPKLOUT.COM,Young People Life Spending Observation11100-20012.58%Under 1006.62%300-50026.49%200-30021.19%800-10009.93%500-80015.23%1500-50003.31%1000-15004.64%48%people spend 200-500 yuan on pets per month,while 25%spend 500-1000 yuan($28.2-$70.5)with the

37、group born after 2000s taking the leadOnly 8%people spend over 1000 on pets per month,mainly composed of those born in the 1985s and 1995s?The Monthly Spending on Pet of Young People(born between 1980s to 2000s,unit:yuan）Comparison of Monthly Spending on Pet of Young People(Unit:yuan)10%20%30%40%50%

38、60%70%80%90%100%0%1980s1990s1985s1995s2000s17%12%42%Weibo,Douyin,Kuai,Bilibili and Little Red Book are Major Pet Content PlatformsAzoya International Ltd.12Source:TOPKLOUT.COM,Young People Life Spending ObservationHot ContentWeiboDouyinKuaishouBilibiliLittle Red BookHot CategoryDaily sharing and pub

39、lic benefit voiceNot limited to pet products.Seeded of daily products relevant to pet scenarioInteractive daily life between pets and ownersEmerging Chinese pet food and technology productsFunny pet content and talentPet cleaning products,toys and snackInnovative contentTechnological products improv

40、ing pet familyenvironmentPet lifestyle from the owners viewDewormer and health supplement for petsInstinct:U.S.Pet Food Brand Leveraging KOLs Across Multiple Social PlatformsAzoya International Ltd.13The U.S.pet food brand Instinct secured the seventh position on the 2023 Singles Day pet brand sales

41、 list on Tmall.It also claimed the second most popular imported pet food brands,ranked behind the French brand Royal Canin.Source:Ebrun?Little Red Book?Bilibili?Douyin?WeiboInstinct tends to choose middle or small Key Opinion Leaders that show pets lives from the owners perspectives to find targeted

42、 audience and leverage customers Bandwagon effect.The brand strategically combines product promotions into renown pets daily lives.This form of soft advertisement tends to resonate with audience better.China Pet Food Brand MyFoodie:Combining Online and Offline Promotion ChannelsAzoya International L

43、td.14The CAGR of MyFoodie was 43.5%from 2019 to 2022,generating 204.6 million yuan($28.7 million).Additionally,its sales was the highest on Tmall among all pet brands in China during 2023 Singles Day.Source:MSigning Chinese actor Nicholas Tse as spokesmanSponsoring various TV shows or playsReality s

44、how Back to FieldTV Drama Twenty Your Life OnMultiple Offline ChannelsCover 27 provincesCooperation with over 20,000 pet stores,animal hospitals and retailers.51 Distributors across the countryAttracting Youthful Customers:The Power of Brand+PetAzoya International Ltd.15Brands which are not in pet i

45、ndustry could also leverage pet ingredients or launch pet products to attract young customers,driving sales and build brand presence.Pet ProductsPet-relevantdesignPet-friendlymarketing strategyMcDonald catteriesBurger King Midumidu Pet chokerHermes DoghouseHEYTEA PIDANCat Paw CupStarbuckPet-friendly

46、 stores&Puppucchino(a drink for pets)Trends insight of Chinese Pet Food MarketAzoya International Ltd.16Consumers prefer pet food produced by advanced technology that could maximize nutrition retention.Consumers care increasingly more about pet food safety and traceability.Increasing concerned about

47、 disease prevention,such as urinary,gastrointestinal,and joints.Consumption is evolving rationally,leading consumers to make their decisions not only on brand value but on various factors,including quality,prices,and personal demands.Production TechnologyInnovationSafety&TransparencyHealth Functiona

48、lRequirementsRational UpgradeNatural and healthy raw materials provide higher and better nutritional value.The variety of meat sources not only mitigates the risk of food-related issues but also enhances nutritional richness.Consumers increase awareness of original places and the form of meat,such a

49、s fresh meat,frozen meat and meat powder.Natural&HealthMeat Source VarietyHigh QualityIngredientsHigh Quality,Scientific,Safety and RationalAs the number of pet owners grows and brands emphasize scientific pet care education,consumer expectations are elevating to a more high-end and refined level.Thanks!?/wechatAF Group https:/