In recent years, major consumer brands have rubbed the heat of “kitten and dog”.
For example, McDonald’s introduced limited Kitty nest set, happy tea set up pet friendly theme store, perfect diary, launched with Li Jiaqi’s pet Never joint puppy eye shadow disc, Starbucks launched cat paw cup and so on.
In fact, the marketing idea of binding with pets has indeed enabled these enterprises to achieve a double harvest of traffic and sales.
McDonald’s 100000 restricted cat nests were sold out in one day, and the discussion on relevant microblog topics spent 100 million; The pet friendly theme store opened by Xi tea has attracted many consumers to take photos and clock in; Perfect diary and Li Jiaqi’s dog Never joint puppy eye shadow disc, in Li Jiaqi live room 100 thousand inventory less than 1 minutes sold out; Starbucks’s cat claw cup is “hard to find”.
Behind the “big fire sale” is the love and pursuit of new things by emerging consumer groups, which also reflects the continuous rise of China’s pet market
side a of pet economy:
booming market
According to the white paper on China’s pet industry in 2020, the number of pets and the number of pet keepers in China continued to grow. In 2020, the number of dogs and cats in China has exceeded 100 million, and the number of dogs and cats has reached 62.94 million, an increase of 2.8%; Among them, more than 60% of the pet groups are distributed in the first and second tier cities. The increase in the number of pets has driven the pet industry into a broader blue ocean market.
“I’d rather live frugally than give pets better living conditions.” This is the inner monologue of many pet lovers at present. the industrial chain of pet industry can be divided into three parts: the upstream includes pet adoption and trading, the midstream includes pet food and supplies, and the downstream includes pet beauty, foster care, medical treatment, insurance and other services.
It is precisely because pets are playing a higher and higher role in people’s life. Around the pet industry chain, the whole industry began to “grow rapidly”.
According to the data released by Taobao, in 2019, “double 11” cat food has surpassed baby milk powder and won the first place in the list of “most popular imported goods”; During the “double 12” period of the same year, the sales of cat Hanfu, Hefeng pet quilt, pet dryer and kennel electric blanket increased significantly.
During the Spring Festival this year, products such as pet New Year’s Eve dinner and pet couplets are also very popular on e-commerce platforms. Taking pet New Year’s Eve dinner as an example, the price ranges from dozens to hundreds of yuan, up to nearly 1000 yuan.
Pet consumer goods have involved all aspects of pet daily life. According to the report on China’s pet consumption market in 2020, the annual consumption amount of a single pet per capita in China in 2020 was 6653 yuan, a year-on-year increase of 19.6% compared with 5561 yuan in 2019; This shows that pet owners are more and more willing to spend money for their pets.
Meanwhile, according to the white paper on China’s pet consumption trend in 2021, the pet economy has reached nearly 300 billion yuan in 2020 and is expected to reach 445.6 billion yuan by 2023
source: iResearch consulting, red star capital Bureau
The number of pets and consumers’ willingness to spend money for pets are increasing. Under the huge market scale, the pet track is particularly “attractive”.
According to tianyancha data, since 2015, pet track has rapidly become the “sweet pastry” of capital. In the next few years, the market enthusiasm remained unchanged in terms of financing quantity and amount. According to incomplete statistics of Yilan business, there were 42 financing cases in China’s pet industry in 2021, and the disclosed financing amount has exceeded 3.1 billion yuan.
The market focuses on pet food, pet products and pet medical treatment.
Pet food is a necessity throughout the life cycle of pets. It has the characteristics of high frequency, strong rigid demand and high repurchase rate. Therefore, it is the most important field in the whole pet consumption structure. In 2021, there were 16 financing events in the field of pet food, with a cumulative financing amount of more than 1.6 billion yuan
source: public information, Yilan business
Pet products are needed for pet life. They are consumer goods other than food. At present, they are developing in the direction of intelligence. In 2021, there were 13 financing events in the field of pet products (including pet Intelligence), with a cumulative financing amount of nearly 300 million yuan, which is the second largest market segment after pet food
source: public information, Yilan business
Pet medical treatment is the subdivided field with the highest capital and technical threshold in the pet economy, covering three categories: pet diagnosis and treatment, pet medicine and pet vaccine. In 2021, there were five financing cases in the pet medical industry, with a cumulative financing amount of 700 million yuan. In terms of financing amount, the enterprises that raised more than 100 million yuan in the pet industry in 2021 are mainly concentrated in the field of pet medical treatment
source: public information, Yilan business
In addition, according to tianyancha data, by the end of October 2021, there were more than 750000 pet related enterprises in China, and the year-on-year growth rate of newly registered enterprises in the first half of 2021 was as high as 237.74%.
The entry of new players and the continuous increase of capital make the pet track full of vitality and excitement
side B of pet economy:
listed companies sitting on the “cold bench”
Although the pet economy looks very hot, there are relatively few A-share listed companies focusing on the pet economy in China, mainly including pet food manufacturers Petpal Pet Nutrition Technology Co.Ltd(300673) (300673. SZ), Yantai China Pet Foods Co.Ltd(002891) (002891. SZ) and pet products manufacturers Tianjin Yiyi Hygiene Products Co.Ltd(001206) (001206. SZ); At the same time, the enterprise volume is relatively small and the business coverage is relatively narrow.
\u3000\u3000 1。 Performance of pet listed companies
From the perspective of enterprise revenue, according to the financial report data of various enterprises, Petpal Pet Nutrition Technology Co.Ltd(300673) , Yantai China Pet Foods Co.Ltd(002891) , Tianjin Yiyi Hygiene Products Co.Ltd(001206) the operating revenue in the first three quarters of 2021 was 915 million yuan, 2.012 billion yuan and 944 million yuan respectively, with a year-on-year growth rate of – 5.8%, 24.2% and 2.2% respectively; The high revenue in the first three quarters of Yantai China Pet Foods Co.Ltd(002891) was mainly due to the acquisition of 70% equity of pfnz, a New Zealand pet canning factory, which was included in the consolidated statements in the third quarter. Regardless of the acquisition factors, the revenue growth of enterprises in the first three quarters was relatively weak.
In terms of net interest rate, the net interest rate of enterprises is not high. The net interest rates of Petpal Pet Nutrition Technology Co.Ltd(300673) , Yantai China Pet Foods Co.Ltd(002891) , Tianjin Yiyi Hygiene Products Co.Ltd(001206) in the first three quarters of 2021 were 8.78%, 5.26% and 10.98% respectively; In addition Petpal Pet Nutrition Technology Co.Ltd(300673) in the performance forecast for 2021, it is said that the net profit attributable to shareholders of Listed Companies in 2021 decreased by 47.75% ~ 21.62% compared with the same period of the previous year, mainly due to the shutdown of factories in Vietnam due to the epidemic and other factors.
At the same time, the main revenue sources of the three enterprises come from overseas. The financial report shows that in 2020, Petpal Pet Nutrition Technology Co.Ltd(300673) , Yantai China Pet Foods Co.Ltd(002891) , Tianjin Yiyi Hygiene Products Co.Ltd(001206) overseas and other business revenue accounted for 85.14%, 75.89% and 88.13% of the total revenue respectively. The so-called core of overseas business is to provide production OEM services for foreign pet brands.
As the enterprise mainly adopts the “OEM” mode of production, the gross profit margin of the enterprise is not high. In contrast, the United States focuses on freshpet (frpt. US), a fresh natural pet food enterprise, and the gross profit margin of the enterprise is basically maintained at more than 40%. In addition, the “OEM” mode of these Chinese enterprises also needs to face the risk of changes in raw material costs in the upstream of production, and there is no own brand premium. Without the core voice, it can be said that what we earn is “hard money”
source: company financial report, red star capital Bureau
\u3000\u3000 2。 Self built brands, enterprises still have a long way to go
In order to improve the brand influence and increase the bargaining power of products, these Chinese companies starting from OEM are trying to launch their own brands to obtain greater profit space.
For example, Yantai China Pet Foods Co.Ltd(002891) launched “wanpy naughty” and “zeal Zhenzhi” in the Chinese market, and launched pet snack brands “wanpy”, “jerky time” and “toptrees” in overseas markets; Petpal Pet Nutrition Technology Co.Ltd(300673) launched its own brand haoshijia healthguard, toothenergy chewnergy, jueyan meatyway, Patty, CPET, etc; The private brand launched by Tianjin Yiyi Hygiene Products Co.Ltd(001206) is hushpet.
However, the road of self built brand is not easy. On the one hand, the end users of pet track are scattered and it is difficult to reach the consumer level quickly; On the other hand, buyers and users of pet food are separated, and consumers tend to buy brands they trust, so it is relatively difficult to get customers.
This may lead to the embarrassing situation that enterprises spend money on marketing in order to launch their own brands, but the market response is flat. For example, China’s pet e-commerce listed its first share of Boqi pet (BQ) in the United States, The enterprise first launched the “Yiqin” with cost-effective route, invited Jia Nailiang to speak for it, and then launched the freeze-dried food brand “magic coffee” with light luxury route. However, the situation of these two private brands is not optimistic, product sales have always been difficult to improve, and the proportion of net income of private brands has also been in a downward trend. According to the financial report, in fiscal 2019, fiscal 2020 and fiscal 2021, the net income brought by private brands accounted for 25.9%, 19.2% and 15.1% respectively
figure according to the company’s financial report
For these listed enterprises in China, I’m afraid they still have a long way to go if they want to get brand dividends and obtain more consumer recognition
thinking caused by plane a and plane B
On the one hand, there is a huge market and competing capital, on the other hand, there is an immature development path of listed companies. It seems that there is a “fault” in the capital level of pet track.
The main reason for the “fault” is that at present, China’s pet market is still in a period of barbaric development, the market as a whole is disorderly competition, and the concentration of the whole industry is also low.
In terms of pet food industry, according to Euromonitor data, in 2020, China’s pet food market CR10 accounted for only 18.2% of the market scale of China’s pet food industry, that is to say, there are many players in the pet food industry, but there are few brands that really have the right to speak in the market. In addition, due to the low threshold of the pet products industry and the diversified demand for pets, the industry is also highly fragmented, and there are no big brands running out.
Due to the asymmetry of information and resources in the pet medical market, the whole industry has shown a state of “frequent chaos” in recent years. According to the report on pet medical industry of Jingzhun, there were 10000 ~ 15000 pet hospitals in China in 2019, of which the number of large-scale chain hospitals accounted for less than 15%. Many problems in the pet medical industry, such as opaque charges, low medical level and poor service quality, need to be solved urgently
summary:
China has a large population base. At the same time, due to factors such as aging population and high life pressure of young people, there is huge imagination space for the future of “its economy”. On the other hand, the development of China’s pet market is still in its infancy, and the industry still needs time to practice the law of survival of the fittest in the market. For players, this is not only an opportunity, but also a challenge.
