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The number of pets in Chinese cities is expected to outnumber children under four this year, creating a $12 billion pet food market by the end of the decade, according to Goldman Sachs. The U.S. investment bank’s China arm estimates that pet ownership will continue to rise in the coming years as young Chinese prefer to keep cats and dogs rather than start families. By 2030, pets will outnumber children under four in China by two to one, Goldman predicts. Goldman’s analysis is prompting a broader recalculation among investors about the impact of China’s demographic challenges, namely a declining overall population, a growing elderly population and a decline in births.
“We expect pet ownership to gain momentum amid a relatively weak birth rate outlook and a higher rate of pet ownership among younger generations of households,” wrote Valerie Chu, a Goldman consumer staples analyst who led the report. A Goldman report citing National Bureau of Statistics data showed there were 90 million children aged zero to four in China in 2017, while the bank’s estimates show 40 million cats and dogs were kept as pets in urban areas.
Bank of America estimates that this year the number is about 58 million, and by 2030 the number of pets in China’s urban areas will exceed 70 million, with fewer than 40 million pets for children under four years old. “I think the trend of keeping pets is related to social fragmentation,” said Luo La (30), who works in education in Chengdu. In addition to her possessions (crested geckos, snakes and pigs), there is 500 yuan (70 US dollars) of food per month, which is a small monthly food expense because the animals’ main food is live cockroaches and frozen mice, respectively. “It’s much cheaper and easier to maintain a relationship with a pet than to maintain a relationship with a person,” she said.
Goldman Sachs believes that China’s pet food industry will grow at a compound annual growth rate of 8% from 2023 to reach RMB 51 billion to RMB 63 billion by 2030. According to the bank’s most optimistic forecast, China’s pet food market could double to $15 billion as cat food consumption is twice that of dog food.
The report also forecasts the M&A phase of China’s pet food industry and compares its current status with developed market peers such as the United States and Japan. The study shows that the number of pets in Japan is 20 million, which is about four times the number of children under the age of four (5 million). The bank’s path to enter Japan is based in part on the relationship between pet food sales in Japan and infant formula sales, due to Japan’s low birth rate and high pet ownership rate. He noted that Japan’s pet food market is currently eight times the size of the formula market.
The United States is by far the world’s largest pet market, with more pets than children of any age. The American Veterinary Medical Association estimated there were 84 million to 89 million dogs and 60 million to 62 million cats in 2020. Government data showed there were 73 million children of all ages in the same year. Pet ownership in China has also come into focus given the country’s strict lockdown between 2020 and 2022. A UBS survey of 1,500 pet owners found that 80% maintained or increased pet-related spending “post-pandemic versus pre-pandemic.” Analysts at the Swiss bank said this “demonstrates the pet market’s strong resilience in the face of macro headwinds.” She attributed the resilience during the pandemic to “the important role pets play in the household.” About the Financial Times
• According to Goldman Sachs, by 2030, there will be more than 70 million pets in urban areas of China, while there will be fewer than 40 million children under the age of four.
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