New entrants taking a bite of pet food market

As Chinese pet owners are paying more attention to pets' health care and nutrition than before, the sector is seeing robust growth, with increasing newcomers and billions of investment plunging in, Securities Daily reported Monday.

In the first half of this year, the number of financing rounds in the pet sector had reached 22, and seven were about functional food and nutrition products, according to data from Chongyejia, an information service company for the Chinese pet industry.

In 2020, the pet consumption market reached 206.5 billion yuan ($31.84 billion), with money spent mainly on food, snacks and nutrition accounting for 55.7 percent of the total.

RedDog, a brand of pet nutritional supplements founded in 2013, won its first round of funding of nearly 200 million yuan earlier this year, in a move to enhance medical research and advertisement in China.

In May, Shanghai Chongxing Pet Products Co Ltd completed a nearly 400 million yuan B+ round of financing with Tencent Investment‘s involvement, and another B++ round in July, raising over 200 million yuan.

A food industrial expert told Securities Daily there were a climbing number of enterprises marching into the pet sector during the COVID-19 pandemic.

However, the nutrition product segment only accounts for 3 to 4 percent of the massive pet food consumption market, with most companies still in the initial stages.

Traditional giant RedDog took the lead, followed by H&H Group, Mars and Peidi. Companies on other tracks are also scrambling for a piece of the booming pet nutrition segment.

Chen Honghui, founder of Chongai Biotech, a pet food manufacturer in Fujian province, said "diversity" is crucial for a company to compete in the market.

"We must develop our own research team and supply chain," he said.

DearDeal, a pet nutrition product brand under Chongai Biotech, has generated 40 million yuan in GMV after its debut in October last year.

"We have built up the biggest pet nutritional and functional food factory in China, enhancing our advantages in R&D and supply chain," Chen said.

He also noted the sector is still a "blue ocean", with massive opportunities for start-ups to expand their market share.