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The 2024 Asian Pet Expo will be held in Shanghai from August 21st to 25th. As one of the most influential pet industry exhibitions in Asia, the first day of the Asia Pet Expo was extremely popular, with pet food, pet supplies, and medical nutrition sectors dominating the exhibition hall. It is reported that the scale of this year's Asia Pet Expo has reached a new high. The exhibition covers an area of 300000 square meters, covering 17 new international pavilions, 7 supply chain pavilions, and outdoor areas, gathering more than 2500 exhibitors from home and abroad. Among the exhibitors are A-share listed companies such as Petty, Zhongchong, Tianyuan Pet, Guibao Pet, and Yuanfei Pet, as well as internationally renowned companies.

The pet industry has become a representative industry that is resistant to cycles. Driven by the growth in the number of pets and structural upgrading in China, the pet industry has maintained a high growth rate in recent years. According to statistics from China International Capital Corporation, the factory production scale of pet food in China will reach 51 billion yuan in 2023, with a compound annual growth rate (CAGR) of 8.3% from 2020 to 2023. At the same time, the semi annual reports or semi annual forecasts released by A-share pet industry listed companies recently have reported good news.

Several leaders of pet food and pet supplies companies told reporters on site that the domestic pet market has entered a relatively stable growth stage. From the perspective of channels, the impact of online e-commerce channels on the pet industry has further deepened since the beginning of this year, and e-commerce is still the main channel for companies to invest in; From a product perspective, whether it is pet food or pet supplies, there is an overall problem of product homogenization in the industry. The way to break through in the future lies in creating differentiated large products and brand operations.

Consumer demand

Upgrade trend is emerging

The reporter learned on site that pet food and pet supplies, as key sub sectors in the pet industry, have gradually increased consumer demand and also significantly upgraded.

In recent years, we have truly felt the enthusiasm of people for pet consumption. Since the beginning of this year, we have felt that consumers' demand for food has become more refined. For example, high-end fresh food and functional staple foods are becoming more and more popular in the food industry. Many pet food companies in the market are also paying more attention to the health and nutritional needs of pets, launching scientific and healthy pet food. "At the Asian Pet Expo, a pet food exhibition organizer told reporters.

According to data provided by Taobao, during the "6.18" period this year, various categories of pet consumption experienced comprehensive growth, with "cat and dog baked goods" seeing a year-on-year increase of over 100% in transaction volume, "cat and dog raincoat" seeing a year-on-year increase of 166%, and "cat and dog hair accessories" seeing a year-on-year increase of 214%. According to the White Paper on China's Pet Food Industry released by Deloitte China, it is expected that the market size of pet food in China will reach 114 billion yuan by 2026, with compound annual growth rates of 17%, 15%, and 25% for pet staple food, pet nutrition products, and pet snacks, respectively.

The upgrading of consumer demand is also reflected in the performance of listed companies. Recently, a veteran player in the pet industry, Zhongchong Shares, released its semi annual report showing that the company achieved revenue of 1.96 billion yuan in the first half of this year, a year-on-year increase of 14.1%, and a net profit attributable to shareholders of 140 million yuan, a year-on-year increase of 48.1%. Among them, the overall gross profit margin of the company increased by 3.33 percentage points year-on-year to 28.98%. The gross profit margin of pet staple food increased the most, with a year-on-year increase of 8.18 percentage points, reaching 35.84%.

The upgrading of consumer demand in the pet supplies industry is reflected in the scenario of human pet symbiosis. At this year's Asian Pet Expo, many companies have set up exhibition areas as "beautiful space scenes of human pet coexistence". For example, Tianyuan Pet has won the largest booth at this year's Asia Pet Expo, covering an area of 480 square meters. Its exhibition area is planned and arranged with "human pet life aesthetics+" living scenery, showcasing higher quality application scenarios for the ideal life of friendly coexistence between humans and pets.

The emerging intelligent pet supplies brand Perig is also one of the pet supplies manufacturers that has attracted a lot of attention on site. At the Asian Pet Expo, Perig showcased its "Smart Pet Cabin" series of products, which attracted the attention of professional audiences due to their compatibility with the concept of human pet symbiosis. This series of products has been iterated to version 5.0, integrating functions such as fresh air deodorization, heating, disinfection and sterilization, monitoring and interaction. It can be widely used in shopping malls, pet stores, homestays and hotels, parks, communities/parks and other scenarios. On the first day of the exhibition, more than 11000 units of the "Smart Pet Cabin" series products from Pairuige were ordered, with an order amount of nearly 30 million yuan.

Online e-commerce channels

Deepening impact

Based on the influence of consumers' online consumption habits, most companies in the pet food and pet supplies industry mainly focus on online e-commerce channels for sales. The reporter found on site that since the beginning of this year, enterprises have still maintained a large proportion of investment in online e-commerce channels, but offline user interaction experience activities have also become a key focus of layout for many pet food enterprises.

Hao Bo, the person in charge of the product selection center of Runhe Supply Chain Group and the manager of Haobo Pet Industry Channel, said that young pet owners are gradually forming a purchasing process of "deep seeding on content platforms, convenient purchase on comprehensive e-commerce platforms and short video platforms, and interactive experience in offline stores".

Although the proportion has slightly declined, 90% of pet owners still believe that comprehensive e-commerce is the most important online shopping channel, continuing to lead the development of online retail. However, with the continuous integration of short video platforms, content platforms, and food delivery platforms combined with their own platform characteristics, users are also enjoying more diversified online shopping experiences, "Hao Bo pointed out.

According to statistics from Tianfeng Securities, in 2023, 80.6% of pet owners in China will purchase their main food through traditional online platforms. In addition, live streaming platforms have risen rapidly, with the proportion of pet owners who have purchased their main food on live streaming platforms increasing by 6.3 percentage points in 2023 compared to 2022.

Because consumers' consumption habits are mainly online, investment in online e-commerce must be focused on layout. However, this year we will pay more attention to user communication and operation, and systematically carry out user activities, linking online and offline. This year, we are preparing a city influence plan, which may hold user activities in cities such as Shanghai, Beijing, and Chengdu, with the main purpose of improving the reputation and loyalty of the target user group, "Chen Niehan, Vice General Manager and CEO of Petti Intelligent Creation, told reporters.

Differentiated single item approach

Cracking the problem of homogenization

Overall, we didn't see any innovative products at this year's Asia Pet Expo, mainly because the entry threshold for domestic pet food and pet supplies is relatively low, and innovation on the product side is no longer evident globally. Whether it's functional pet food or intelligent pet supplies, domestic manufacturers have basically covered all the concepts that need to be covered, "said a professional audience member attending the Asia Pet Expo.

Although the pet industry as a whole is still in a growth trend, product homogenization has always been a problem in the industry. Since the beginning of this year, the pet industry has shown a trend of intensifying internal competition in homogenization. How to break through this situation has always been a topic of continuous exploration for various pet food and product manufacturers.

Industry insiders point out that currently, domestic manufacturers generally make differentiation from the marketing and branding aspects. For example, the pet food industry currently relies on new sales methods such as short videos, KOLs, text and image seeding, and live streaming e-commerce to create differentiated large products and brand operations, which is also becoming a way for pet companies to go out of differentiation in the future.

If companies in the pet supplies industry want to break out, large products are very important to rely on. Pet feeders, water dispensers, and litter boxes are products that everyone can make. If they don't create a selling point for a large product, it's actually difficult to break out of the market, "Yiwan, the head of Bird Song Flower Fragrance, a leading pet supplies company, told reporters. At this year's Asian Pet Expo, bird songs and floral scents showcased this year's new products such as Shenzhou C1 • Intelligent Cat litter box, Xiaofang M3Pro • Intelligent Lock Fresh Feeding Device, and Yufeng H4 • Intelligent High speed Care Drying Box, all of which have further iterated and upgraded in technology.

Liu Lu, General Manager of JD Supermarket's Pet Business Department, stated that there are three key points for pet companies to create differentiated large orders. Firstly, based on accurate data decision-making tools, accurately identify the positioning of differentiated large orders in segmented markets, and polish the image of large orders to make differentiation; The second is to solve the problem of user trust through transparent raw materials, build user trust with channels, and promote brand growth with new products; The third is the accumulation of high-quality users, maximizing repeat purchases, choosing high-quality, compound interest platforms to jointly create the ultimate user experience, and enhancing the core competitiveness of the brand.