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.
