The US pet economy is worth $41bn. Yes, you read it right.This is more than the gross domestic product of all but 64 countries in the world. I am not surprised. I love cats and it is clear to me why spending on pets – nutrition, grooming, medical care etc- is booming. You can read more about this phenomenon and its drivers in the Businessweek cover story of August 6. This post is about the next $41bn and how can companies accelerate that trend.
The BRIC countries will be dominant here too. I have lived and worked in the RIC trio and will focus on that group. Amongst pets I am largely referring to cats and dogs i.e birds and fishes are excluded.
Russia- 140mn people, 52mn households,35mn pets. They love their pets here. A girl in my office had 7 cats in her house (and she had 2 rooms in the flat). Usage of branded pet foods and other basic associated pet care products(e.g. cat litter) are relatively well established here with clear price segments. Given the already high percentage of pet ownership, the big opportunity here is increasing the value of the basket and adding more things to the basket. This means premiumisation of pet food and growing the incidence of pet food supplements, pet grooming, pet accessories and pet medical care (including insurance), amongst pet owners. This is a gravy train which can only be halted by the alarming Russian demographic trend (for every 1000 Russians there are 15 deaths and just 10.7 births leading to a population decline of about 750,000 to 800,000 a year).
China : 1.3bn people,291mn pets (in 2004 and this number includes birds and fishes). If the Chinese pet population was spun-off as a country it would be the 4th most populous country in the world. However the organised pet food market is still quite small, around $1bn. Thus there is only one way for the pet care segment to go. With one child households, ageing population, people staying single for longer, societal change (complicated interpersonal relationships) and growing wealth (and hence house size) the demographics strongly support a growth in the number of pets and also spending per pet. Mars dominates the pet food market currently, but given the size there is room for everyone- other MNCs and local players. Mars and Nestle will be obvious gainers with established brands in pet food. For somebody looking to benefit from this huge pet population, looking beyond “food” is potentially a big opportunity. For example, food supplements or pet vitamins which are low cost (per unit) and can be added to food to enhance nutritional value can help people start using branded pet care products at a low outlay. These are already big in developed pet markets like US. Mars and Nestle should be thinking of that also.
India:1.1bn people, 300mn in cities. No official number for pets, but my guess is less than 2mn. There are more street dogs and cats in India than pet dogs and cats. Pet ownership is still limited to the upper class and is dominated by dogs (cats are considered inauspicious in general). Even amongst these pet owners usage of branded pet food is quite low and most feed their dogs home made food. This is partly driven by low availability and high prices of pet food (due to import duties) and partly by habits and attitudes. With the economic boom, growth in organised retailing and changing attitudes towards pets the future is bright. The marketing focus here should be on increasing the number of pet owners, as opposed to focusing on current pet owners. This is classic habit and attitude change, category creation stuff. Something which should get marketeers salivating and purring. I will take the job of creating the “cats as pets” category in India tomorrow.
For the pet care market today, US is the wealthy middle aged aunt with a big retirement pot, Russia is the employed daughter with some savings to indulge herself, China is an impressionable teenager with a bit of pocket money and India is a toddler.