Pet Food Market trends - p
Enlighten Pet Food Landscape and Opportunity
Thailand Pet Food Market Trends
Enlighten Pet Food Landscape and Opportunity
The opportunities for brands
Pet food sector grows in Thailand as the ‘pet humanisation’ trend rises
At Worldpanel, we’ve been observing the pet food market for over a decade. During that time the market has grown strongly across many dimensions, gaining more value, more buyers, and more players. This has been driven by a trend called ‘pet humanisation’: people nowadays tend to have fewer children, instead choosing to have a pet like a dog or cat. This is a trend not only in Thailand, where the birth rate is declining, but all around the world.
Pet humanisation is when an owner considers their pet to be a family member, or – in Asia and Thailand – a kid. These households demonstrate quite similar behaviours to those with children, buying the best products because they want to raise them well. This makes the pet food sector a potentially promising expansion opportunity for major brands – especially those in the food industry.
Why should food
industry players focus
on the pet food market?
Simple: they already have the capability to produce food products. They also have by-products left over from manufacturing human food which they can use for pet food; this has the added benefit of supporting sustainability and CSR (corporate social responsibility) programmes.
To understand the market landscape and the opportunity for brands to enter the pet food market, it’s essential to consider four key questions: Who are the buyers? What is the market opportunity? What do people buy? and Where do they buy?
Demographics – Who are the buyers?
Households with cats are growing faster than those with dogs, and mostly in urban areas
Through Kantar Worldpanel’s Household Panel (HHP) sample in Thailand, we collect profiles of each household – including the number of members, intended user, household income, pet ownership, and whether they have a cat or dog or both (we don’t yet cover other animals). From this, we can see that the number of households owning pets has grown in Q3 of 2022 compared with Q3 2021.
Households that only own cats are growing faster than Thailand’s national population growth rate, as are those that own both dogs and cats. Households that only own dogs are in decline when benchmarked against the national growth rate.
If we look deeper into the region, the number of households with pets is growing faster in Greater Bangkok (Bangkok and vicinity) than in any other area. This might be a sign of a major change on the horizon for the whole country, as the capital city normally leads the way on changing trends.
While our figures don’t reflect the total dog and cat population in Thailand, they give a clear indication that the pet owning trend in the country is on the rise.
Value sales are still increasing
in overall pet food
Despite the increase in households with pets, less than half purchase packaged pet food. Only 30% of dog owners buy packaged food, but on the other hand most of the cat owners buy packaged cat food, especially in Greater Bangkok. In upcountry urban areas, less than half of dog owners buy dog food, and only one third of rural households with pets purchase pet food.
This leads to the question: what do they feed their pet instead? Answering this question, and identifying what triggers people to purchase packaged pet food could unlock a market opportunity worth over 10 billion THB – with the gap in the dog food market alone worth 7.4 billion THB.
When we look at the pet food market today, there’s not been much change in terms of number of buyers overall. Growth in buyers has mainly come from cat food, while for dog food the buyer base is shrinking. However, value sales are still increasing in overall pet food, driven by cat food, while spend on dog food is declining in line with its lower buyer base.
So, what’s driving market growth? The drop in sales volume, combined with the fact that the average spend per trip is increasing, implies that buyers are purchasing more premium product segments. Another reason might be that the BARF (bone and raw food)/RMBDs (raw meat-based diets) trend has arrived in Thailand. This trend is more popular among dog owners, which might be why buyers of packaged dog food have reduced in number more than the market average.
If we benchmark pet food against the FMCG market, we find that its three-year CAGR (Compound Annual Growth Rate) is higher, at 3.2%. Lots of new players have entered the market in the past year, but the average shopper buys around two brands per year. Cat owners buy more brands on average than dog owners, who buy around one brand per year.
The cat food market is quite fragmented, with eight brands contributing 80% of the market share, while dog food is less fragmented with only five key brands. This means the players in dog food are larger, making it more difficult for new players to gain share.
So, what are the implications for manufacturers who wants to enter the pet food market? They must have different strategies for dog food and cat food. In dog food, they need to compete with a few main players and try to recruit new buyers, while cat food brands have to win share from multiple players – and there’s not much room to gain new buyers except in rural areas.
Products – What segments do consumers buy?
Both cat and dog food are
experiencing a premiumisation trend
In total pet food, dry food dominates the market. More wet cat food is bought than wet dog food, but the proportion is still low, at less than 15%. The mainstream and economy dry segment dominates the dog food market, while the premium segment is experiencing very high sales value growth at +46%. The trend is the same in puppy food, with growth of 54%.
Wet cat food not only has a larger share of the market compared to wet dog food, but it’s also growing faster than dry cat food – indicating that brands should pay more attention to this format and dig deeper into the reasons for its relevance. Cat food also seems to be more developed as a category than dog food: premium and super premium dry cat food are growing faster than any other segment within cat food, and this has pushed the economy tier into decline. Kitten food also shows strong growth of around 25%, driven by new pet-owning households.
Scoop up dry pet food is quite popular in Thailand, but a declining trend. The key factor is fewer buyers, as shoppers switch to packaged instead. Following a global trend across FMCG as a whole, purchase frequency is still dropping, while average volume per trip is stagnating compared with the same period last year due to the effect of inflation. However, shoppers who still buy scoop up buy it at a higher frequency, usually every month, which could imply that this group is buying in smaller amounts. Brands will need to dig deeper to understand why people still purchase scoop up, and what pack size they’re looking for, to fulfil this need and convert consumers to buying branded packaged food instead.
The channels to focus on – Where can we reach shoppers?
Hypermarkets and convenience stores are growing fast. Online is also increasing in importance
Pet shops and provision stores (PVS) are the key channels for this category. However, modern trade and online channels are growing fast, while PVS is declining.
Even though overall pet food shopping occasions are declining, mainly due to the frequency drop which can be seen throughout the FMCG market, occasions within modern trade are still increasing – especially in hypermarkets and national chain convenience stores (CVS). Furthermore, shoppers are tending to choose the online channel to stock up on pet food; we’re seeing extremely high volumes bought per trip while the frequency remains lower.
Brands should take advantage of the online channel to increase consumption and gain share from stock up behaviour, while focusing on pet shops as their main strategic channel. These stores hold a market share of almost 40%, while shoppers in this channel spend more per trip.
What are the key takeaways to focus on when developing a strategy?
Thailand’s pet food market offers valuable growth opportunities for both existing and new players
Thailand’s pet food market offers valuable growth opportunities for both existing and new players. To set up an effective strategic plan to enter or to win more share, brands require market insight in four key areas:
Even though households with pets are increasing, less than half buy pet food even once a year, leaving a huge gap in the market. Households with cats are growing faster than those with dogs, and mostly in urban areas. The key area for the rising pet adoption trend is Greater Bangkok.
Landscape and opportunity
Despite a huge opportunity gap between the number of pet owners and the number of pet food buyers, the sector is experiencing consistent growth, while benefiting from a trading up or premiumisation trend. There’s room to enter the dog food market: most of the non-pet food buyers have a dog, and there are fewer competitors in that space compared with cat food. Cat food has the potential to penetrate most cat-owning households, but at the same time the market is more competitive as the average brand purchase is higher and the market more fragmented.
Dry formats dominate the market in both cat and dog food. More cat owners than dog owners buy wet food, but this format still contributes only a small part of the market. Both cat and dog food are experiencing a premiumisation trend, with the premium and super premium segments growing strongest. The puppy and kitten segments are also growing fast, emphasising the rising pet population in Thailand. However, while scoop up used to be popular shoppers are now switching to packaged formats and this trend is likely to continue.
Pet shops and provision stores play a major role in the pet food market, between them holding the largest share of sales value among all channels in Thailand. Modern trade is growing fast, however, especially hypermarkets and the online channel where shoppers tend to stock up. To enter this market, brands have to be prepared for distribution in both modern trade and traditional trade channels, since both are important in serving different shopping missions.
This report gives you an overview of the key points and findings uncovered through Kantar Worldpanel’s ongoing analysis of Thailand’s pet food market.
We can take you on a deeper dive to understand shopper behaviour, with insights from our services and expertise that span more than 20 years in Thailand and 65 years globally.