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text丨liu nana guo mengyi

“i’m a dad because i have a dog.”

a joke wu hao made on his talk show revealed that single, dink young people are treating their "furry kids" as their own children.

relying on "love", china's young pet owners have leveraged a market worth hundreds of billions of yuan.

from carefully selecting dog food brands, matching them with exclusive snacks and toys, to regularly bathing the pets in the store and occasionally "beautifying" them - "my two shiba inus spend about 1,500-2,000 yuan a month, of which food accounts for more than half." meiling (pseudonym), a post-90s office worker in beijing, said. most of the money is spent on dog food, snacks, nutritional supplements, toys and other pet supplies. at the same time, meiling also began to pay attention to the prevention of some long-term health problems of her dogs, such as joint health and dental hygiene.

as pet owners' pet-raising methods become more scientific, intelligent, and "humanized," various new opportunities are emerging in this super track. so far, xiaomi, jd.com, and taotian have already entered the market, and jinding capital, legend capital, and kkr are also actively deploying. all kinds of "gods" hope to grab a place before the leader of this industry emerges.

during the 618 shopping festival this year, the pet category on e-commerce platforms saw impressive growth, many pet listed companies released impressive semi-annual reports, and food and dairy companies "betting" on the pet sector... the pet economy seems to be supporting the growth goals of more companies.

data shows that since the beginning of this year, 945,000 new pet industry-related companies have been registered in china; in 2023, the scale of my country's urban pet consumption market reached 279.3 billion yuan, and is expected to jump to 361.3 billion yuan by 2026.

as more and more players enter the pet industry, how long can the "industry blue ocean" last? can we glimpse its development trend based on the current market?

01

the pet economy is booming, providing a one-stop service for birth, aging, illness and death

nowadays, half of the baby strollers may contain pets.

on august 20, a piece of data was revealed at the jd international pet industry summit forum: "the scale of my country's pet market is expected to exceed 300 billion yuan in 2024, and future growth is expected to stabilize."

the "pet blue book" released by asia pet research institute shows that people born after 1990 have become the majority of pet owners today, and pet owners aged 25-34 account for 50.2% of the entire pet-owning group. on douyin, as of june, the search index for the keyword "pet" has reached 1.212 million.

when the post-90s children become "pet parents", the way of raising pets has gradually upgraded to "baby-style parenting".

from the recently released "douyin e-commerce safe pet raising trend report", we can see that people get warmth and companionship from their pets, hope to give them more caring and meticulous care, and also pay more attention to the emotional connection between them and their pets.

under the trend of "scientific pet care", from 2023 to 2024, the pet industry will gradually shift from the rigid demand of food to the broader track of pet supplies and pet services. in the content of grass-roots promotion, in addition to traditional pet food, topics such as pet charity, scientific pet care, and pet entertainment have gained popularity.

in the past, people would feed their pets whatever humans ate, but now pet owners pay special attention to the professionalism of feeding.

when it comes to choosing dog food, meiling basically looks at the brand. "i used to buy a foreign brand, acena, because i did a lot of research and found it had a generally recognized good reputation. later, i switched to buying domestic brands and would look at the nutritional content in the ingredient list." in addition to dog food, meiling also buys raw meat for her dog and makes homemade freeze-dried meat every month as a snack.

ren yi (pseudonym), who works in shanghai, has two cats. in addition to cat food, he also buys fish oil, hairball remover, cat strips and various snacks. "as long as the brands i buy regularly have new ones, i will let them try them. i also often follow some pet bloggers to see what cats need besides staple food."

as the concept of pet raising is further upgraded, pet owners have put forward higher requirements for product quality, especially in terms of naturalness, safety, health, and nutrition. from the analysis of douyin e-commerce data, it is known that today's pet consumption pays more and more attention to rational dimensions such as pet health and food safety, and people choose to raise pets in a scientific way. in 2023, the mention rate of keywords related to the concept of "scientific pet raising" on the douyin e-commerce platform reached 56.6%, among which users are particularly concerned about fresh meat feeding and nutritional supplements.

eating is only a basic requirement for young people to raise pets. nowadays, young people also give enough emotional value to their pets.

ren yi (pseudonym) told business data, "i will observe the status of my cats, such as installing surveillance cameras at home to see if they are bored when i am not at home, or learn pet behavior from pet bloggers. then i will buy them a lot of toys and supplies like an 'old mother', such as cool mats, cat scratching mats, and various toys."

"some of these are just iq taxes," said ren yi honestly. for example, he bought an electric toy for his cat at home, a ball that can run around by itself, "but my cat didn't even look at it."

among emotional values, companionship is naturally what pet owners care about most, so when it comes to traveling with their pets, everyone has their own unique ideas.

in order to socialize her cat, she bought a pet stroller. "i used it once or twice but it didn't work well, so i threw it away. after that, i used a backpack when traveling."

shasha (pseudonym), who works in beijing and whose hometown is shenyang, takes great pains to take her dog with her when traveling.

"i don't have a car, and i'm often refused to take didi, so i often take huolala. later, i saved the contact information of several drivers. i always take a small truck with my dog. but long distance is my biggest headache. every year when i go home for the spring festival, i always take my dog ​​with me. i tried taking a long-distance bus with my dog, but it cost more than 3,000 yuan for a round trip. finally, i tried many ways to contact a 'dog bus' that delivers dogs alone. the one-way fee for a dog is about 400 yuan."

in order to travel with her dogs, meiling simply bought a motorcycle with a scooter and even took a driver's license. "i have taken my two dogs and my fellow riders to go hiking, travel with them, and stay in pet hotels."

photo: meiling travels with her dog. photo provided by meiling

if you want your pet to accompany you for a long time, it must be healthy. young people who keep pets are more open to pet insurance and pet medical treatment. pinpin (pseudonym), who found a stray cat in april this year, first did a physical examination, vaccination, and sterilization after picking up the cat. in addition, young people are more accepting of daily deworming and medical treatment for pets.

intelligence and hardware are another trend among young people in keeping pets. ren yi bought a set of smart feeding and cat litter equipment from catlink. "i can check the status of cat litter and cat food on the mobile phone app every day, which is very convenient."

health, companionship, and intelligence, young people's way of raising pets is becoming more and more "humanized".

the new trend of keeping pets has brought new opportunities to the pet industry. from basic food, clothing, housing and transportation to travel, foster care, and funeral services, the pet industry has spawned various sub-sectors.

02

pet consumption upgrade: their food is more expensive than mine, and their living quarters are better than mine

food, as a permanent and essential demand for pets, naturally attracts a lot of attention.

"i buy the best dog food for my dog ​​at home, and on average one meal costs four yuan more than my takeout," wu hao complained in a talk show.

as the new leaders of domestic dog food brands, mai fu di, bernard tianchun and crazy puppy won the top three places in dry food and snacks sales in the 618 jd platform this year.

the bustling pet market corresponds to the continuous influx of entrants.

public data shows that in the domestic pet market, except for mars and nestlé, which have a market share of nearly half of the cr10 (about 14%), the domestic pet market has shown a flourishing state.

for example, solid gold under the health & happiness group; yili launched the "yibo" brand, which uses the same milk source as jindian; beingmate launched a series of pet dairy products. among the pet vertical companies, china pet foods has naughty, leading, and zeal; petco has cultivated jueyan, haoshijia, and chineng.

however, while the pet industry is booming, the market concentration of the domestic pet food industry is still at a relatively low level. public data shows that the cr10 of domestic pet food brands is 24%, while that of the united states and japan is 47.4% and 50.4% respectively. the cr10 of chinese pet food companies is 29.8%, while that of the united states and japan is 95.9% and 84.6% respectively. in addition, due to the low entry threshold and other current situations, industry chaos also occurs from time to time. at present, with the surge in entrants, food safety reforms in the pet industry are also imminent.

it is worth noting that there are also star investment institutions behind domestic pet food. the parent company of mai fu di, guaibao food, successfully rang the bell in august last year, and kkr and legend capital participated in the investment. bernardus was favored by l catterton, an investment institution under lv, and participated in its earliest strategic financing as early as 2022. later, l catterton also participated in the b round of financing of another high-end pet food, pat.

even in the cold winter of many industries, the pet industry is still growing against the trend and is known as a "counter-cyclical" industry. in addition to food, in the pet track, freeing hands is the daily wish of "poop scoopers" and is also the "breakthrough point" for major pet brands to make money.

driven by both supply and demand, the domestic pet smart hardware track has become increasingly "involved", with new brands emerging in an endless stream, prices rising all the way, and sales continuing to increase.

in a home with both cats and dogs, there are often low-temperature baked foods, smart water dispensers for drinking, smart litter boxes for pooping, and smart dryers for washing... every aspect of pet life is equipped with relevant refined and intelligent products.

walking into the home of cat owner timo (pseudonym), you can see a fully intelligent cat-raising scene: next to the sofa is a warm and constant temperature intelligent cat bed, outside the cat bed are automatic feeders and automatic water dispensers, and on the balcony is an intelligent cat litter box. if you want to bathe the cat at home, you can turn on the intelligent dryer. even if taotao is not at home, you can continue to follow the cat's real-time dynamics through the intelligent pet monitoring...

smart pet hardware that saves time, effort and worry is all the rage. smart water dispensers, smart litter boxes and smart feeders have become what everyone calls the "three big things" for pet raising.

in recent years, pet owners have become more and more familiar with these pet smart hardware. even if they don’t have everything like timo’s home, they are more or less equipped with one or two of them.

how does pet smart hardware gradually cover the eating, drinking, defecating and urinating needs of pets?

we may be able to get a glimpse of this from the development history of xiaopei pet, a company that "entered the pet industry with smart hardware".

the person in charge of xiaopei pet once told the media that in 2016, xiaopei learned that 80% of cats suffered from urinary tract diseases due to insufficient drinking water, so the team began to study how to promote pets to drink water. it was also from this period that pet smart products entered the public eye. in 2017, xiaopei began to make a series of pet feeding products; in 2020, the company continued to launch an automatic cat toilet.

xiaopei's development history is also the general path of the development of the pet smart hardware track.

by 2024, smart pet cabins have become a popular trend in smart hardware.

last year, wu zhao, the former ceo of dingtalk, founded the smart pet products brand hho. after completing crowdfunding in north america, he launched a cat smart companion robot. there are also startups that are directly entering this field with the goal of going overseas: in august 2023, furbulous, a pet smart products brand going overseas, completed angel round + financing, and its product direction is smart cat toilets, feeders and other products. xiaopei, who entered the market earlier, released its first pet smart product as early as 2013, and also set its sights on going overseas.

in fact, there are not many life scenes for pets. since there are already automatic feeders and water dispensers on the market, petton came up with the idea of ​​building a "finely decorated room" for pets, which combines functions such as fresh air, temperature control, feeding, cleaning, real-time monitoring and interaction.

such products are relatively expensive, and the buyers are still concentrated on the b-end (enterprise end). at present, the average customer price of petton smart cabin has reached more than 40,000 yuan, and the scope of use is still concentrated in pet stores, pet hospitals, hotels, commercial properties, community services and other scenarios. the b-end business contributes more than 90% of the revenue.

at present, the current situation of the pet smart hardware market is: on the one hand, ordinary consumers are deterred from purchasing smart hardware that costs thousands of yuan; on the other hand, entrepreneurs in the smart hardware track inevitably face high costs and high risks.

while young people are downgrading their own consumption, they have to let their pets take the lead in upgrading their consumption.

03

still waiting for the top players

young people who are willing to pay, and companies and capital that want to capture young people. although this quasi-trillion-dollar market has caught people's attention from the beginning, whether it can continue to be popular remains unknown.

in the pet industry, there is still no leading company.

dt finance once counted the pet industry-related companies registered from 2018 to 2023, of which self-employed individuals accounted for 75.8%. among the top ten pet brands in sales on taobao and tmall in 2023, there were 9 domestic brands, 6 of which were small and micro enterprises.

it can be said that small businesses support most of the domestic pet economy.

this is naturally related to the form of services provided by the pet economy. in addition to pet food and supplies that can be purchased online, pet medical care, cleaning, foster care, training and other services are more likely to be found in brands and stores close to home.

however, for an industry like this with a low entry threshold and numerous self-employed businesses, there are only two ways to become a leader: either open up for franchising and recruit small businesses to form a big brand, or operate entirely on your own and build a brand by piling up stores.

many pet hospitals choose the former, but the problem with franchising is that the quality of medical care is uneven.

many pet hospitals were originally self-employed. after they were named a brand hospital, except for the change in the purchase channels of drugs and equipment, the level of doctors inside remained the same. for brands, this method can expand rapidly. but for consumers, if they go to the same brand pet hospital, the service and effect will be completely different whether they go to the east or west of the city, and the experience will be very poor.

a typical example of expansion through mergers and acquisitions is xin ruipeng. its prospectus shows that by the end of 2021, xin ruipeng already owns 23 pet hospital brands including ennobest and meilian zhonghe. the medical accidents in its hospitals not long ago also exposed the drawbacks of this idea.

of course, relying solely on self-operation is also a challenge to the brand's cash flow. if all offline stores are self-operated, the rent alone will be enough to make the brand suffer.

the large number of small businesses poses another challenge to companies that want to become leaders: the homogeneous competition is too fierce, and maintaining the brand requires more effort.

take the listed guaibao pets as an example. in the first half of 2024, the gross profit margin of guaibao pets has reached a considerable 42.04%, but its marketing expenses are still the bulk of the expenses, accounting for 18.96% of the overall revenue. in the first half of the year, when the revenue only increased by 17.48% year-on-year, the marketing expenses increased by 43.66%. this shows that the brand has spent a lot of money on promotion and advertising to expand its influence, and the emergence of homogeneous small brands is all sharing this cake.

in this situation, what opportunities are there in the pet track?

for relatively mature tracks, such as pet food, medical care, and supplies, what brands need to do is to compete for the leading position and create sufficient differentiation in the segmented fields. for example, almost all pet owners know that pets with fragile stomachs should eat royal food. domestic pet food is also launching various pet foods for the elderly and pet foods for sensitive stomachs. it is easier to produce leading brands by focusing on refinement than by being big and comprehensive.

as for sectors that have not yet matured, such as pet funeral services and pet hotels, brands can take the initiative to seize the opportunity. for example, for transportation businesses such as shipping pets for young pet owners after long vacations, brands can cooperate with fleets and use social accounts for dissemination to explore new explosive opportunities in new sectors.