Japanese pet care: Swimming against the demographic tide

Declining volume sales

Real value sales of pet care in Japan were largely stable between 2011 and 2016, reaching $4,773 million (€4,302 million) during the latter year. Real value sales of pet food increased by 2%, to $3,477 million (€3,134 million). Volume sales of dog and cat food actually declined slightly, but this was more than compensated for by a shift to premium brands: Real value sales of premium dog and cat food surged 6%, to $1,571 million (€1,393 million). Mars Inc, Colgate-Palmolive Co, local company Unicharm Corp and Nestlé SA are the dominant players in this segment, accounting for a cumulative 69% of value sales. 

Negative demographics have a silver lining

Population decline is weighing on consumer demand in Japan: Between 2010 and 2015, it fell by 1%, to 127 million. Japanese women are marrying later (average age of women at first marriage rose from 30 years to 31 years between 2010 and 2015) and are not having many children (children born per female stood at just 1.5 in 2015).

In 2012, Tokyo resident Jiro Akiba told the Guardian newspaper, “In Japanese society, it’s really hard for women to have a baby and keep a job … so we have a dog instead.” Declining incomes have also played a role in discouraging some from starting a family: The average annual gross income of those aged between 30 years and 34 years fell by 1% in real terms, to $36,475 (€32,928), between 2010 and 2015.

Despite of this lack of income growth, there is a strong trend towards premiumization in pet food. In 2012, Nobuaki Yanagihara, chairman of the Japan Pet Products Manufacturing Association, told the Japan Times newspaper: “Nowadays it’s quite common to see owners who lavish their pets with expensive products and services. Many owners treat their pet like their child or partner, and often even better.” An unnamed executive from a European pet food manufacturer added: “More and more, it seems like Japanese owners want their dogs to be less like animals and more like people. They want their dogs to eat like people, dress like people and even smell like people.”

Larger dogs are squeezed out

The proportion of Japanese households with a dog fell from 18% to 14% between 2011 and 2016, while the proportion of households with a cat declined only marginally, to 10%. Earlier this year, the Japan Pet Food Association noted: “It is becoming difficult to take care of dogs as the number of people living alone, as well as the number of elderly increases. Owners do not need to walk cats and keeping cats does not represent a big financial burden, compared with keeping dogs.”

Not only is Japan’s population shrinking, it is also greying, with the country’s old-age dependency ratio (the percentage of persons aged 65 years or older per persons aged between 15 years and 64 years) soaring from 36% to 44% between 2010 and 2015. In 2015, 34 million Japanese consumers were aged 65 years or older, while ten million of these were aged 80 years or older.

This disproportionate decline in dog ownership is partly due to the fact that the country’s rural population declined by almost 32%, to just eight million, between 2010 and 2015. Given the famously small size of urban homes in Japan, it is hardly surprising that fewer consumers are opting for dogs. 

When consumers do opt for dogs, they are increasingly choosing small ones. The population of medium dogs more than halved between 2011 and 2016, and by 2016, small dogs (no more than 9kg) accounted for 82% of the country’s canine population, up from 71% during 2011, with Chihuahuas, miniature dachshunds and toy poodles particularly popular.  

Prescription products to the fore

Products with a focus on health and wellness are particularly popular with Japanese owners – the two leading brands in premium dog and cat food are Colgate Palmolive’s Hill’s Science Diet and Mars Inc’s Royal Canine Veterinary Diet. In 2015, Unicharm Corp launched a cat food aimed at felines aged around 20 years. The average life span for cats in Japan increased from 14 years in 2011 to 16 years in 2015, with the number of cats aged over 20 years old on the rise, according to the Japan Pet Food Association. 

Stylish accessories are de rigour

The Japanese market for other pet products (such as pet clothing, toys and accessories) was worth more than $1 billion (€903 million) during 2015. Many local consumers are prepared to pay a premium for style. During early 2016, Japanese studio Nendo launched a collection of accessories for dogs that are designed to look good inside minimally furnished homes. It includes a soft toy, a rectilinear dog house, a ball with square cut-outs and a square food bowl.

The connected pet

Japanese consumers have long been gadget lovers, and this fondness for technology increasingly extends to their pets, with a flurry of pet gadgets launched over recent years. For example, during 2015, local company Anicall Corp unveiled a wearable gadget and smartphone application for pets at the inaugural Wearable Device Technology Expo in Tokyo. This device is worn around the neck like a collar. It can measure a pet’s heart rate and body temperature to help determine, among other things, when it would be unwise to take it for a walk, according to the company. The app will even analyse photos of a pet to assess its mood.

A robust outlook

Despite the fact that the decline of Japan’s (human) population is set to accelerate over the coming years, the premiumization trend will continue to buoy the pet care market. Real value sales are forecast to rise by 6% to $5,061 million (€4,562 million), between 2016 and 2021, with real value sales of premium dog and cat food forecast to increase by 9% to $1,714 million (€1,544 million).