In 2022, the pet "it" economic track is still hot
In 2022, the pet "it" economic track is still hot, the number of pets and the number of pet owners in China continues to grow. The growth in the number of pets has driven the pet industry into a broader blue ocean market. 2022 pet "it" economic track is still hot.
2022 pet "it" economic track is still hot1"Pet stores usually give a cat a bath is 60 yuan, in the Spring Festival during the price increase to 100 yuan once." During the Spring Festival, pooper scoopers are helpless.
Along with the increase in pets, a series of related industries throughout the life of pets, from pet food, pet clothing, pet toys to pet supplies, etc., showed prosperity during the Spring Festival.
Is the booming pet industry bringing fire to listed companies in the pet industry?
Pet track continues to heat up
Ai Media Consulting data show that the scale of China's pet market from 2015 to 2020 is a continuous growth trend, the market size of 295.3 billion yuan in 2020, an increase of 33.5% year-on-year, with the development of the community so that the concept of pet care continue to promote the popularity of the market's scale of development. Make the pet market extension services continue to improve, the pet market development prospects are more optimistic, is expected to 2023, China's pet industry market size will reach 592.8 billion yuan.
In fact, as early as 2021, during the "Double Eleven Shopping Festival", the degree of heat in the pet industry has been revealed.
According to the Tmall pet war report, as of 8:00 am on November 11, 2021, the cumulative turnover of Tmall pets has exceeded the 2020 "Double Eleven" full-cycle turnover. Among them, 49 pet brands among the ten million dollar club, million-dollar pet single product reached 308.
During the 2021 "Double Eleven" period, the consumption growth rate of seven categories was the most significant: pet smart supplies, pet skin medicines, pet medical services, bakery food, prescription food, freeze-dried cat food and mixed cat litter.
It is also easy to see from the data that the pet market is constantly being segmented. Take the most basic pet food as an example, at first the main products are only based on cat food, dog food, etc., and then gradually extend the pet snacks, pet nutrition and health care products and other sub-tracks, product categories also began to enrich, such as cat strips for cats, hair cream, cat cans, etc. have become the focus of the shoveling officer to add to the shopping cart.
One of the key reasons for the segmentation of the pet market is the change in people's perception of pet ownership. At first, people raised pets more for its functionality, such as through the dog to realize its function as a caretaker, but with the gradual increase in economic level, people began to gradually pay attention to the emotional level, slowly, pets attached to the value of companionship began to occupy a dominant position.
At the same time, the rise of the "single economy" and the "silver economy" is also catalyzing the importance of people's spiritual and emotional well-being, and to a certain extent, promoting the development of the pet industry. Nowadays, more young people choose to live alone or busy with their careers, this time in the economic conditions allow, have one or more pets to accompany their own is undoubtedly a good choice; at the same time, in the case of not accompanied by their parents, pets can also act as a companion to the parents of an important role.
However, although the pet track is quite hot, the listed companies in the pet industry are not as prosperous as the pet industry.
What's going on here?
Difficulties faced by listed pet companies
Public information shows that there are currently four listed companies in the pet industry in China, including pet food manufacturers Petit shares (300673.SZ) and in the favor of the shares (002891.SZ), pet supplies manufacturers Yi Yi shares ( 001206.SZ), pet supplies manufacturer Yi Yi shares (001206.SZ), and in the U.S. stock listed "domestic pet vertical platform first share" of the pet e-commerce Boqi Pet (BQ.NYSE).
In terms of quantity, there are fewer listed companies in the pet industry. Performance-wise, there has also been a certain decline from 2021.
Take the "pet concept of the first stock" in the pet shares, for example, in the pet shares of the main business for the research and development of pet food for dogs and cats, production and sales business.
2021 three-quarterly report shows that the pet shares in the first three quarters of 2021 to achieve revenue of 2.012 billion yuan, an increase of 24.20%; to achieve net profit of 91.7103 million yuan, a year-on-year decline of 4.71%. Among them, in the third quarter of 2021 in the pet shares to achieve revenue of 755 million yuan, an increase of 19.48%; to achieve net profit of 31.0218 million yuan, down 38.11% year-on-year.
The same pet food manufacturers Petty shares are facing the risk of revenue, performance double decline. 2021 three-quarter report shows that Petty shares in the first three quarters of 2021 to achieve revenue of 915 million yuan, down 5.84% year-on-year; to achieve net profit of 78.6841 million yuan, a year-on-year decline of 5.19%. Among them, Petty shares in the third quarter of 2021 to achieve revenue of 204 million yuan, down 47.77% year-on-year; to achieve net profit of 13.726 million yuan, down 65.44%.
January 13, 2022, Petty shares released 2021 results forecast, is expected to achieve net profit attributable to shareholders of listed companies 60 million -90 million yuan, down 47.75% -21.62%, mainly because of the Vietnam factory by the epidemic shutdown and other factors.
And in the pet shares and Petty shares net profit decline compared to the 2022 fiscal year interim report shows that the Porch Pet attributable to the parent company's net loss of 78.490 million yuan, the loss of synchronized reduction of 50.40%.
In addition to facing the situation of declining performance, affected by the wave of raw material price increases starting in 2021, pet food is also bearing the risk of raw material price fluctuations.
China Pet Food had said in its 2021 semi-annual report that its main raw materials are chicken breast, duck breast, skin rolls and other meat products. The impact of raw material price fluctuations on its operations includes a direct impact on operating costs, and if raw material prices rise, there is generally a lag between price adjustments with customers, which can lead to a decline in gross profit margin levels in the short term.
And for domestic listed companies in the pet industry, the brand effect will also become a focus of the enterprise to break through itself.
Or in the case of China's pet shares, for example, China's pet shares in its revenue performance has always been presented in the internationalization of the main features, but in the domestic market and brand building is still weak, to be further strengthened.
2021 half-yearly report shows that the main business income of China Pet shares is mainly derived from the overseas market. 2021 first half, China Pet shares of overseas revenue of 943 million yuan, an increase of 25.39% year-on-year; domestic revenue of 314 million yuan, an increase of 33.00% year-on-year.
The pet industry is still favored by capital. Data show that China's pet track in 2021 *** counted the total amount of financing occurred more than 3.62 billion yuan, the number of financing occurred 57.
In addition, China's pet penetration rate (i.e., the proportion of pet-owning households to all households) has some room for growth. Currently, China's pet 'penetration rate is only 22%, compared to 68% in the US, 52% in Canada and 57% in Australia.
Therefore, the hot pet track is both an opportunity and a challenge for pet companies in each of the refined tracks. After improving the quality of their own products, how to build their own brand will also become a crucial factor affecting the future development of the enterprise.
2022 pet "it" economic track is still hot2In recent years, the major consumer brands have rubbed up the "kitten puppy" heat.
For example: McDonald's launched a limited cat's nest package, Xi tea opened a pet-friendly theme store, the perfect diary launched with Li Jiaqi's pet Never co-branded dog eyeshadow disk, Starbucks launched cat paw cups and so on.
And in fact, the marketing idea of bundling with pets did allow these companies to get a double harvest of traffic and sales.
McDonald's 100,000 copies of the limited edition cat's nest sold out in one day, and the related microblogging topic discussion over a hundred million; Xi tea opened a pet-friendly theme store, attracting a lot of consumers to go to take pictures of the card; perfect diary and Li Jiaqi's dog Never co-branded puppy dog eyeshadow disk, 100,000 stock in Li Jiaqi's live broadcast less than a minute sold out; Starbucks' cat paw cups, but also the "one cup is hard to find", the cat paw cup. "A cup is hard to find".
"Big fire behind the sale" is the emerging consumer groups for the love and pursuit of new things, but also reflects China's pet market is rising.
Side A of the pet economy: a booming market
According to the 2020 China Pet Industry White Paper, the number of pets and the number of people raising pets in China continues to grow. 2020 China's number of dogs and cats has exceeded 100 million, and the number of people who raise dogs and cats has reached 62.94 million, an increase of The number of dogs and cats in China has exceeded 100 million in 2020, and the number of people owning dogs and cats has reached 62.94 million, with an increase of 2.8%; more than 60% of the people owning pets are located in first- and second-tier cities. The growth in the number of pets has driven the pet industry into a broader blue ocean market.
"I'd rather save money and give my pets better living conditions." This is the inner monologue of many pet owners at the moment. The pet industry chain can be divided into three parts: upstream for pet adoption and trading, midstream including pet food, supplies, etc., downstream including pet beauty, boarding, medical, insurance and other services.
It is because of the increasing status of pets in people's lives, around the pet industry chain, the whole industry began to "fast growth" up.
According to data released by Taobao, in 2019, "double 11" cat food has exceeded baby milk powder, won the "most popular imported goods" list; the same year, "double 12" period cat Chinese clothes, cat milk powder, cat food, cat food, cat food, cat food, cat food, cat food, cat food, cat food, cat food, cat food, cat food, cat food and cat food.
During the Spring Festival this year, the pet dinner, pet couplets and other products in the e-commerce platform is also very hot, to the pet dinner, for example, the price of dozens of hundreds of dollars ranging up to nearly a thousand dollars.
Pet consumer products have been involved in all aspects of the pet's daily life, according to the "2020 China Pet Consumption Market Report", China's per capita annual consumption of a single pet in 2020 amounted to 6,653 yuan, compared to 5,561 yuan in 2019, an increase of 19.6% year-on-year; it can be seen that the pet owner's willingness to spend money on their pets is getting stronger and stronger.
Meanwhile, according to the "2021 China Pet Consumption Trends White Paper", the pet economy has nearly 300 billion yuan in 2020, and the scale is expected to reach 445.6 billion yuan by 2023.
Source: Ai Rui Consulting, Red Star Capital Bureau
The number of pets and the willingness of consumers to spend money on pets are both increasing, and with the huge market size, the pet track is particularly "attractive".
According to eyeball data, from 2015, the pet track quickly became the "meat and potatoes" of capital. After a few years, whether it is the number of financing or the amount of financing, the market enthusiasm has not decreased at all. According to the incomplete statistics of One View Business, in 2021, 42 financings occurred in the domestic pet industry***, and the disclosed financing amount has exceeded 3.1 billion yuan.
The market focuses on key areas mainly pet food, pet supplies and pet medical.
Pet food is a major necessity throughout the life cycle of pets, with high frequency, strong rigid demand, high repurchase rate and other characteristics, and is therefore the most important area in the entire pet consumption structure. 16 financing events occurred in 2021 in the field of pet food***, with a cumulative financing amount of more than 1.6 billion yuan.
Source: public information, One View Business
Pet supplies are necessary for the life of pets, and are a consumer product category other than food, which is now developing in the direction of intelligence.13 financing events occurred in 2021 in the field of pet supplies (including pet intelligence) ***, with a cumulative financing amount of nearly $300 million, which is the second largest market segment in terms of the number of financings, second only to pet food. second largest market segment.
Source: public information, One View Business
Pet healthcare is the segment with the highest threshold of capital and technology in the pet economy, covering the three major categories of pet diagnosis and treatment, pet medicines, and pet vaccines.5 financing events occurred in 2021 in the pet healthcare industry***, with a cumulative financing amount of $700 million. From the perspective of financing amount, enterprises in the pet industry financing over 100 million yuan in 2021 are mainly concentrated in the pet medical field.
Source: public information, One View Business
In addition, according to eyeball check data, as of the end of October 2021, there are more than 750,000 pet-related enterprises in the country, and the year-on-year growth rate of newly registered enterprises in the first half of 2021 was as high as 237.74%.
The entry of new players and the continuous increase of capital have made the pet track full of vigor and lively.
The B-side of the pet economy: listed companies sitting on the bench
Although the pet economy seems to be very hot, there are relatively few A-share listed companies focusing on the pet economy in the country, mainly pet food producers Petit shares (300673.SZ). 300673.SZ), China's favorite shares (002891.SZ), and pet supplies manufacturer Yi Yi shares (001206.SZ); at the same time, the volume of enterprises is also relatively small, the business coverage is also relatively narrow.
1, the performance of listed pet companies
From the point of view of corporate revenue, according to the data of the financial reports of the enterprises, Petit shares, China Pet shares, Yi Yi shares 2021 the first three quarters of the operating income of 915 million yuan, 2.012 billion yuan, 944 million yuan, year-on-year growth rate of -5.8%, respectively, 24.2%, 2.2%; and the high revenue in the first three quarters of China Pet Stock is mainly due to the acquisition of 70% of the equity of New Zealand pet canning factory PFNZ, which will be included in the consolidated statement in the third quarter. Putting aside the acquisition factor, the first three quarters of each enterprise revenue growth are relatively weak.
Net profit margin, the net profit margin of each enterprise is also not high. Petty shares, in favor of shares, Yi Yi shares in the first three quarters of 2021 net interest rate of 8.78%, 5.26%, 10.98%; in addition Petty shares in the 2021 results forecast that the company's net profit attributable to shareholders of listed companies in 2021 than the same period of the previous year decreased by 47.75% to 21.62%, mainly because of the Vietnam factory by the epidemic shutdown and other factors.
Meanwhile, the three companies' main source of revenue comes from overseas. The financial report shows that for the whole year of 2020, the proportion of revenue from overseas and other businesses of Petty, China Pet, and Yi Yi shares to the total revenue was 85.14%, 75.89%, and 88.13%, respectively, and the so-called core of the overseas business is to provide production OEM services for foreign pet brands.
As the enterprise mainly go "OEM" mode of production, so the enterprise's gross margin is not high. In contrast, Freshpet (FRPT.US), a U.S.-based company specializing in fresh, natural pet food, maintains a gross margin of more than 40%. In addition, the domestic enterprises of the "OEM" model, but also need to face the risk of raw material cost changes in the production of upstream, but also do not have their own brand premium. There is no core right to speak, can be said to earn are "hard money".
Source: company financial reports, Red Star Capital Bureau
2, self-branding, there is still a long way to go
In order to improve the brand influence, increase the bargaining power of the product, these domestic companies started as OEM are trying to launch their own brands, to get a larger profit space.
For example, China Pet Co. has launched "Wanpy" and "Zeal" in the domestic market, and "Wanpy" and "Jet" in the overseas market. "Jerky time" and "Toptrees" in the domestic market; Petty launched its own brand Healthguard, ChewNergy, Jennifer's Feast, Meatyway, Petty, and Pets. Meatyway, Petti, CPET, etc.; Yi Yi shares launched its own brand for the Leshi favor (HUSHPET).
But the road to self-branding is not good, on the one hand, the pet track end-users are more dispersed, it is difficult to quickly reach the consumer level; on the other hand, the pet food and other purchasers and users are separate, consumers tend to buy their own trusted brand, so it is relatively difficult to acquire customers.
This may lead to the enterprise in order to launch its own brand, vigorously burn money to smash the marketing, but the market has a mediocre response to the embarrassing situation. Such as domestic pet e-commerce to the U.S. listing of the first shares of the Boqi pet (BQ.), the enterprise first launched a cost-effective route "Yee pro", and invited Jia Nailiang endorsement, followed by the launch of a light luxury route of freeze-dried food brand "magic curry". However, these two private brands are not optimistic, product sales have always been difficult to improve, and the net income of private brands has been in a downward trend. According to the company's financial report, in fiscal 2019, 2020 and 2021, the net income from private brands will account for 25.9%, 19.2% and 15.1% respectively. Figure according to the company's financial report
For these domestic listed companies, I'm afraid there is still a long way to go if they want to get the brand dividend and gain more consumer recognition.
A side and B side of the thinking
One side of the huge market and scramble for capital, one side of the listed companies are not mature enough to develop the path of the pet track in the capital level seems to have a "fault".
The reason why there is a "fault" is mainly because the current domestic pet market is still in the barbaric development period, the market as a whole for the disorderly competition, the entire industry concentration is also low.
In terms of the pet food industry, according to Euromonitor data, in 2020, the domestic pet food market CR10 only accounted for 18.2% of the market size of the pet food industry in China, that is, there are many players in the pet food industry, but there are few brands that have the right to speak in the market. In addition, due to the low threshold of the pet supplies industry, pet demand diversification, so the industry also exists in a highly decentralized, there is no big brand run out of the situation.
And the pet medical market due to information asymmetry, resource asymmetry, in recent years, the industry as a whole presents a "chaotic" state. According to Whale Quasi's Pet Medical Industry Report, in 2019, there are 10,000 to 15,000 pet hospitals in the country***, of which the number of large-scale chain hospitals accounts for less than 15%. There are many problems in the pet medical industry such as non-transparent charges, low medical level, poor service quality, etc. that need to be solved.
China's large population base, at the same time, due to the aging of the population, young people living under pressure and other factors, "it economy" future imagination is huge, but on the other hand, the development of China's pet market is still in its infancy, the industry needs time to practice the law of survival of the fittest in the market. For players, this is an opportunity but also a challenge.
2022 pet "it" economic track is still hot3Purchase new clothes, prepare a meal, do a beauty salon, become a pet New Year's Eve necessary "three sets"? Yes, you heard right.
According to an e-commerce platform survey, in 2022, the pet new year clothing for the first time in the top ten fastest-growing "new" New Year's goods, pet "food, clothing, housing and transportation" related to imported goods ushered in the peak of sales, which has doubled the search volume of pet New Year's gift packs! The pet's new year gift bag has doubled in search volume, and the sales of canned pet food and cleaning products have increased by more than 60% year-on-year.
The pet New Year's Eve products are hot, reflecting the new trend of consumption in the Year of the Tiger - the domestic pet economy is accelerating the rise, increasingly becoming an incremental market.
New Year's Eve is not only for people to have a new look, but also for pets to change the "new image". In recent years, with the companionship of pets as a new way of life, the role of pets is no longer "home guard", more and more people are willing to pay for pets. During the Spring Festival, many people with their own "hairy children" bathing and beauty, to put on the new clothes of the Year of the Tiger, but also add food, grass, New Year's toys, order a "pet New Year's Eve dinner", spending a lot of money.
The same is true for everyday life, quality pet food, deworming and sterilization, and seeking medical advice when sick, are all the immediate needs of families with pets, not to mention that many pet owners in order to cats and dogs to eat fine, play happily, and live a high quality of life, at all costs. Behind the cute pets, a complete industrial chain from birth to death covering food, trading, supplies and services has been formed. The 2021 White Paper on China's Pet Industry shows that the size of China's urban dog and cat market has reached RMB 249 billion, a year-on-year increase of 20.6%, which is 8 percentage points higher than the total retail sales of consumer goods in 2021, indicating that the pet economy has had a huge pulling effect on China's social consumption.
The booming pet economy has a profound historical background. At a time of rising material living standards, on the one hand, with "Generation Z" (people born between 1995 and 2009) becoming the new consumer force, they are more willing to spend on pets for their own pleasure; on the other hand, China's aging population is becoming more and more prominent, and the number of single youths, Dink families, and families with fewer children is increasing; including during the epidemic, the number of pets in China's economy has increased by more than 20 percent. Increase; including the epidemic, more and more people love the "cloud sucking pets" ...... all factors add up to drive the rapid development of the pet economy, from the niche market to the hundreds of billions of dollars level of the mass market.
Although the market is hot, but China's pet industry started late, there is still a lack of strict standards, consumption of all kinds of weak short boards, such as the whole but not strong, the existing products and services, it is difficult to meet the growing demand of pet owners. How to select cost-effective food for the "hairy child", where to find a professional doctor, are the pet owners face problems, especially the pet medical costs, often thousands of yuan, chaotic service charges, etc., so that many people can not bear the burden and suffer a lot of trouble. How to promote the standardization of the pet industry, quality and standardization of the development of the future is the urgent need to solve the problem.