Pet food and pet care products have taken off in India with a spike in pet ownership and FMCG players are out to grab a share of this market, which is estimated to triple to $1.26 billion four years from now.
Emami, a skin and healthcare products maker with brands such as BoroPlus, Navratna, and Zandu Balm, acquired a 30 percent stake in pet-care startup Cannis Lupus Services India in July. The company sells pet food branded Fur Ball Story.
Nestle India bought Purina Petcare India for Rs 125 crore. Globally, Purina Petcare is owned by Nestle and was launched in India as a separate entity in 2017.
Pet food brands such as Pedigree, Royal Canin, Whiskas, and Drools have been around in the Indian market for years. Mars Petcare, which makes Pedigree, Royal Canin, and Whiskas products, and the Indian Broiler Group, the maker of Drools, together command over 60 percent of India’s pet food market.
Purina Petcare has a 3 percent share in the segment. Stylam Sydney, Cargill, Farmina (Russo Mangimi Group), Bharat International Pet Foods, Agro Food Industries, and Himalaya Drug Co. are the other companies in the market.
Why has the pet food segment caught the interest of FMCG companies now?
Pandemic, millennials, and pet ownership
Pet ownership is on the rise in India. According to industry estimates, there are about 30 million pets in the country today and the number is growing at about 11 percent, which means an addition of about 3 million pets every year.
Experts said although 90 percent of the households feed their pets home-cooked meals, the trend has been changing as owners become aware and seek better pet care products and food.
The pet food industry in India, said Anil Razdan, executive vice president of PGA Labs, a business research firm, is currently valued at about $405 million, or Rs 3,199 crore, and is expected to reach $1.26 billion, or Rs 9,978 crore, by 2026. The market growth has accelerated, especially during the pandemic.
“In 2021, the pet food market grew at a CAGR of 19 percent from 2016. The Covid-19-related restrictions and lockdown resulted in many people adopting pets, which, coupled with rising per capita disposable income and increasing nuclear families, resulted in the growth of the pet food industry,” said Razdan.
Several other trends are leading to the growth of the pet food industry.
While dogs remain the favourite pets, consumers are also adopting cats. Dog food accounts for 85 percent of the pet food market, although the cat food segment is growing the fastest, at about 20 percent CAGR, according to industry estimates.
Pet ownership has risen in the smaller cities and towns, too.
“Pet ownership is growing across town classes. Owning pets is no longer just a metropolitan phenomenon but a phenomenon across the country,” Suresh Narayanan, chairman of Nestle India, said at a press conference recently.
Ease of access due to online shopping is helping pet food companies extend their reach to the smaller towns and expand the market. About 73 percent of pet owners purchase food online, and about 27 buy them from pet specialty stores, according to industry estimates.
There’s also a growing trend of premiumisation in the segment as customers seek better quality and even organic food for their pets. The trend is found among new-age pet owners and millennials, who account for 30 percent of pet ownership in India, experts said.
FMCG adjacencies
Experts said there are other reasons for FMCG companies to hop on to the pet food bandwagon, most notably the similarities between the two categories.
“The frequency of purchase for pet foods is as high as FMCG products and the industry is known to drive frequency of consumption through better formats. Hence, it makes sense for them to leverage this opportunity,” said Anand Ramanathan, a partner at Deloitte India.
Besides, companies operating in staple food categories such as maize can also tap their supply chain to manufacture some of these products, he added.
The high margins of these products – 15-25 percent as per estimates – also make them a lucrative proposition for FMCG companies.
Nevertheless, the FMCG segment has several challenges.
“The cost of acquisition is high in the segment due to low awareness of the high nutritional value of manufactured pet foods,” said Ramanathan.
An ambiguous regulatory environment and quality standards, isolated government policies focusing on livestock and animal feed (cattle feed) specifically, higher taxation on pet food and the absence of a single nodal authority are other roadblocks in the segment.
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