A flourishing industry

Enormous growth

Thirty years ago, in 1988, the worldwide pet market was worth $26.9 billion (€21.6 billion). Today, that figure has risen to $104 billion (€83.4 billion). What is driving this growth? There are several driving forces behind that growth, which is still continuing: the growth of world trade, new markets, humanization, the internet and social media.

The growth of world trade

Trade has become global. With more and more efficient systems in IT and transport – e.g. the introduction of standard container transport – costs have been lowered. The cost of logistics is now very affordable. A 40-ton food container costs between €2,000 and €4,000, depending on location. The tonnage price has dropped from $5.86 (€4.70) in 1956 to $0.16 (€0.13) nowadays. There is no reason to assume that this will rise.

International transportation will nevertheless be impacted by sustainability; CO2 emissions will have to be lowered. source: comtrade.un.org & atlas.cid.harvard.edu Another factor affecting the growth of international trade is that numerous trading treaties have been concluded over the last few years, not forgetting the opening up of European borders. The result is that world trade grew in twenty years (1995-2015) by a factor of three. The pet industry has followed that trend.

One could argue that in the years to come there will be changes, due to global warming and sustainability. Will consumers accept products shipped across the world, if those same products could be produced locally?

New markets

The Berlin Wall came down in 1998, which opened up the East European borders. Of course, consumers in the East European countries also kept pets, but readymade pet food was in fact a product unknown to them at the time. The could still buy a dog collar or a bed for their pets, but that is about as far as it went.

South east Asia, and China in particular, has become a very attractive area – initially because of cheap labour there. But now that China has become a very attractive, fast-growing market for the pet industry, it is expected that it will equal the size of the US market in the coming years.

Humanization

In de developed countries we are still seeing growth. The reason for that growth is mainly due to the impact of humanization. This can be seen for example in probiotics, which have been added to pet food since 1991, and in the trend towards natural, holistic, biological and organic foods which have been making inroads since 2000.

At the moment, we are seeing a trend towards raw food, and even grain-free and everything in between. The trend will continue in 2018, with product claims being based mainly on specific added ingredients. By way of a contribution to sustainability, we are seeing the rise of such things as insects used as protein substitutes. Of course, there is also growth in the field of accessories, too: travelling with cats, indoor dogs and cats, high-end fashion products, and much more.

Internet and social media

The internet really began to take off in the mid1990s, together with email. The combination of smartphones and e-readers made it possible to be online 24/7. The social media made their appearance and consumers are more than ever being influenced from many different sources. Borders are disappearing, and cross-border communication has never been so easy.

As a result, we saw the birth of the online sales channels – Zooplus and Chewy have become a permanent feature of the industry. The growth of market share and impact of online is far from over. It makes the market transparent; the online channels are putting pressure on retail prices, forcing branded products to lower their prices.

A study conducted in March 2016 revealed that 46% of internet users in the Asia Pacific region, and 28% of those in North America do their shopping via their smartphone or tablet computer. Furthermore, BI Intelligence forecasts that US consumers will spend $385 billion online in 2016 growing to $632 billion in 2020.