Get Ready for a Seismic Shift in the Pet Industry
The pet industry has seen many changes in the past three decades—but one of the most striking is the growing strength of small- and medium-sized manufacturers. Hans-Jochen Bungener, chairman of the exhibition committee that oversees Germany’s huge Interzoo trade show, reflected on this change at the expo in Nuremberg last week.
“Some of the major international manufacturers are absent from this year’s Interzoo,” Bungener said. “This has happened repeatedly in individual cases in the last few years. But now, this appears to reflect a real change going on in the market. The numbers make clear that—at least in Germany—the brands of small- and medium-sized enterprises are making strong inroads into pet stores and challenging the global layers for shelf space and sales.
“The owner of a long-established medium-sized enterprise said to me: ‘Mr. Bungener, Interzoo is reflecting the victory of small- and medium sized enterprises.’
“This was more than just wishful thinking, because smaller companies have repeatedly proved to be innovators and quick movers that are shaking up the market—particularly in our industry.
“Other trends can be observed as well. Asian manufacturers always have been known as private-label suppliers to Western-brand manufacturers and importers, but a different trend is beginning to emerge.
“The big Asian manufacturers are beginning to present their own brands to compete against the international suppliers in their own fast-growing home markets. This trend is most apparent in China, a market that is set to explode in the foreseeable future. The Chinese market today is worth only $1.9 billion; however, awareness of the fact that dogs are good for people and play a valuable socio-ethical role especially for small families is growing.
“All conditions for growth are in place. As a result, the larger Chinese manufacturers are turning their interest to the domestic market where they are increasingly offering their own brands.
“According to price observations in pet stores, Chinese customers are willing to pay double the price for domestic goods that meet Western quality standards. In pet stores in Shanghai and Beijing amongst other cities, I saw that a 1.5 kg bag of domestic product was offered for the same price as a 3 kg of known international brands.
“Asian brand-name manufacturers are beginning to launch their own subsidiaries in Europe as opposed to just trading companies. Sooner or later the former suppliers will emerge as equal competitors.
“Today, Asia is on the march; tomorrow perhaps South America. Pet ownership is clearly on the rise throughout the world. And so it is only to be expected that industries in countries with developing markets are growing and building self-confidence as their quality awareness increases.”
Interzoo—the biennial show held in Germany every spring—had more than 1,800 exhibitors this year. Much of the growth came from companies outside Germany. There were gains in numbers from Italy, Czech Republic, Turkey, Brazil, China, Taiwan, South Korea, Thailand and New Zealand. There also were more exhibitors from the U.S., France and Hungary than in previous years.