Regional report the Balkans: global opportunities

Recent history has left its mark on the Balkans, with demographic decline prolonging a period of slow economic growth.

The region has now left those challenging and turbulent times behind, however, and according to the latest growth indicators, Serbia, Croatia, and Bosnia and Herzegovina are catching up with the rest of Europe.

Tipping towards exports

The upswing includes the numbers and the expectations of pet owners, as well as the retail and pet food manufacturing landscape.

Additionally, in the import-export balance, there are signs of a trend towards more exports. This makes the Balkan Peninsula a region to keep an eye on for pet industry players. So what’s going on in the region’s key countries?

Serbia

It is believed that 67% of Serbians own at least 1 pet, according to recent findings from online and mobile survey agency TGM Research. Of those, more than 7 out of 10 (74%) have a dog and 45% have a cat.

The research concludes that 47% of pet parents own more than 1 companion animal.

The popularity of pet ownership is driving the demand for the personalized services and unique product offerings that small shops can provide.

For example, lots of local players are now selling smart devices for pets and branded clothing, but they also have specialized salons intended for four-legged companions.

Small shops thrive despite big players

This shift in consumer preferences is allowing smaller establishments to thrive. At the pet shop and veterinary pharmacy Atos and Maša, the focus is on building strong relationships with its customers and offering care tailored to individual needs.

“More and more shops are being registered as veterinary pharmacies where they can sell even more products or help pets in need,” says Smiljana Vučićević, owner of Atos and Maša.

Another trend is that big pet stores are opening branches in exclusive parts of Belgrade and major shopping centers. But even so, big players don’t tend to interfere with smaller shops because they don’t have the same target audience.

While shopping centers tend to attract lots of tourists and people who don’t necessarily live in the city, customers at small retail outlets are usually locals who buy modest quantities of pet food.

Regional powerhouse for exports

However, not everybody shares this positive attitude. Founded in 1995, Premil is the oldest pet food producer in Serbia. According to its Director Vesna Popović, the company is just too small to compete with the global players.

She also says that the company is facing a certain stagnation in the domestic market due to a rapid increase in foreign supply. Perhaps this stagnation at home is driving Serbia’s shift towards international expansion.

It has become a regional powerhouse that exports its products to many different countries, not only in the traditional region of Eastern Europe, but also in the rest of Europe and as far afield as the US, Peru, Bangladesh,

Taiwan and South Korea. To support its exports to the EU, Serbia is pushing towards GMO-free status, with 19 manufacturing facilities having achieved it.

Growth set to continue

In an interview with Serbia Business News, Miroslav Zdravković, a prominent economist, highlighted some important facts and figures: “The global economic crisis has not negatively impacted the export of dog and cat food [from Serbia]. On the contrary, exports have surged by 60.6% over the past 6 years, reflecting an average annual growth rate of 8.2%. Additionally, the exports of food for other pets have risen by 65%.”

This success seems set to continue. According to market intelligence firm ReportLinker, the Serbian pet food market is projected to hit €271 million ($295M) by 2028.

By the same year, ReportLinker has also predicted that Serbia will export 38.3 million kilograms of pet food – an average annual growth rate of 3.2%.

Manufacturers with vision

Much of this growth is the result of the strong ambition, creativity and commitment displayed by the nation’s pet sector. King’s Choice is a great illustration of this.

In 2023, the company from Petrovac na Mlavi in the east of the country began production of a specialized juice for dogs – one of a kind on the global market – which it subsequently presented at Zoomark.

Since then interest in the juice has skyrocketed. “Production expansion is inevitable, because once we’ve conquered the Serbian market, we will focus on other countries as well,” says CEO Nikola Gakovac.

Croatia

Croatia’s EU membership has changed the economic landscape of the country in recent years and the sustainable growth of the middle class has led to a higher percentage of pet ownership.

Subsequently, the COVID pandemic caused the number of pet owners to rise even higher. As a result, at least 59% of households in Croatia now have at least 1 pet.

Evolving consumer preferences

According to a 2024 report on the Croatian pet food market by research and consultancy agency StrategyHelix, the size of the pet food industry will increase by 9% by 2029.

This market growth is partly influenced by the variety of sources offering the desired product; consumers now have more choice thanks to modern retail channels and e-commerce platforms, which have been on the rise in recent years.

A TGM research study showed that 46% of Croatian pet owners buy pet food in the country’s supermarkets. This is followed by 28% who choose small independent pet stores/small pet chains, and 21% who prefer to do their shopping online.

Additionally, consumers are becoming more open towards buying premium and organic food, signaling growing awareness of pet health and nutrition.

Booming domestic market

Mauro Lukić, General Director and co-owner of feed manufacturer Tvornica Dobre Hrane, is optimistic about the future.

He says that the domestic market has been booming in recent years, and his company has been able to sell between 85-90% of its entire production.

This surge in the local market is also being noticed internationally. The Ukrainian food and agricultural technology company MHP is investing €40 million ($43.5M) in the construction of a wet pet food factory in Croatia that will be fully operational in 2026.

Role of education in retailing

As for the retail business, Pet Centar – part of the Pet Network International Group – describes itself as one of the pet industry’s leaders, with a significant presence across the whole country.

“Our advantage is that we are also oriented towards the education of our potential clients. We do that through the workshops that are organized by the company and throughout social media platforms,” says Mara Marković, Marketing and Communication Director of Pet Centar.

Bosnia and Herzegovina

Both the export and import of pet food are continuously rising in Bosnia and Herzegovina. According to ReportLinker, pet food exports will be equal to 4.6 million kilograms by 2028.

On the import side, the need for various products will rise to 18 million kilograms in the same period. This is a rather different picture from 2013, when Bosnia imported 90% of all pet food consumed, valued at $7.5 million (€6.9M).

Pet popularity on the rise

These trends are testimony to the rise in pet ownership. This is paired with growing consumer awareness that their favorite companions deserve the best-quality products – albeit at elevated prices.

The shifting mindset illustrates the increasing versatility of the market compared to previous years.

A market for premium products

One company playing into the evolving consumer preferences for quality is Agrokomerc, the biggest producer of dry food in the country.

The company is an established presence at the Interzoo trade fair, where it displays a wide selection of premium products.

According to the firm’s representative, a great deal of effort is also put into the preservation of the environment and support of local communities through various programs.

Shifting retail trends

Local players are also shaping the shifting trends in the retail industry. For example, Pet City – the biggest pet store chain in Bosnia and Herzegovina – offers full accommodation with a veterinary pharmacy service.

Besides obtaining treatment for their pets, owners can also gain useful tips on how to best care for them.

The company’s marketing team also puts significant effort into its webshop, which provides access to a wide range of premium products.

However, the market in Bosnia and Herzegovina still holds lots of room for improvement. According to Statista, the biggest issues are limited distribution channels and high import taxes.

Innovation driving expansion

The future of the pet industry in the Balkans looks promising across the whole region.

The markets are open to importing high-quality products and there is also a strong foundation for export, not least thanks to an educated and highly engaged workforce, a commitment to quality and the drive to innovate.