IPOs, expansion plans give China’s US$16 billion pet food sector paws for thought

Home-grown and foreign pet business operators are bullish on China’s booming pet market this year, eyeing initial public offerings and localising supply chains, fuelled by young consumers’ growing interest in their animals’ health and wellness.

Fubei, a major domestic pet food maker based in Shanghai, filed its IPO application with the Hong Kong stock exchange on Monday. The company has built a diversified product portfolio centred on cat and dog food, according to its prospectus.

The number of pet dogs and cats in China’s urban areas reached 126 million last year, up 1.8 per cent year on year, with the number of both species edging up, according to a white paper released this year by pet industry data platform petdata.cn.

Lin Qihua, a partner at KPMG China, said in a recent report that “driven by the boom in self-reward and emotional consumption, pets are gradually shifting from functional companion animals into full-fledged family members”.

“With young consumers, especially Gen Z, accounting for a growing share of pet owners, they prefer cost-effective and functional goods, driving the pet market’s shift from volume-driven to quality-led growth,” Lin said.

Those born in the 1990s comprise 42.7 per cent of Chinese pet owners, and their pet spending has been growing. Pet food remained the top spending category, accounting for 53.7 per cent of the total market, followed by pet healthcare, the white paper said.

Fubei ranks second in China’s third-party pet food production – the packaging and manufacturing of other brands’ formulations – with a market share of 5.3 per cent. It also ranks second in third-party staple pet food original equipment manufacturing production with an 8.5 per cent share. Its proprietary brand Bi Le ranked 10th among domestic pet food brands by annual retail sales last year, according to consultancy Frost & Sullivan.