Northeast: Increasing pet ownership and upgraded consumption drive continuous growth in demand for pet products.

Northeast released a research report stating that the pet consumption market continues to expand as the penetration rate of pet ownership increases and the trend of pets becoming family members. Pet food remains the core expenditure, but the proportion of pet supplies, medical care, and services continues to rise, reflecting a trend towards higher quality and more refined pet ownership. Driven by the growth in pet ownership and consumption upgrading, the pet supplies industry is still in a growth stage, with the potential for the market size to continue to expand in the future. However, attention should still be paid to risks such as fluctuations in overseas demand, rising raw material prices, and increased industry competition. Northeast's main viewpoints are as follows: - As the penetration rate of pet ownership increases and the trend of pets becoming family members drives it, the pet consumption market continues to expand - The industry growth logic is shifting from "growth in the number of pets owned" to "increase in consumption per pet". In recent years, China's urban pet consumption has steadily increased from about 250 billion yuan in 2021 to over 300 billion yuan in 2024, and is expected to reach nearly 400 billion yuan by 2027. At the same time, the number of pet owners continues to grow, with the urban pet ownership population increasing from 56.48 million in 2018 to 76.89 million in 2024, forming a stable demand base. In terms of consumption structure, pet food remains the core expenditure, but the proportion of pet supplies, medical care, and services continues to rise, reflecting a trend towards higher quality and more refined pet ownership. - Driven by increasing demand and consumption upgrades, China's pet supplies industry has maintained rapid development in recent years - The market size has grown from 28 billion yuan in 2020 to 51.3 billion yuan in 2024, with a compound annual growth rate of about 16%, expected to reach around 55 billion yuan by 2025. Currently, pet supplies consumption is still dominated by daily life products, accounting for about 80%, mainly including basics such as food bowls, cat litter, and pet beds; grooming, beauty care, travel products, and pet toys have lower proportions, but as pet ownership becomes more refined, their demand is continuing to grow. Overall, basic supplies form the industry's demand foundation, while grooming products, interactive entertainment products, travel products, and smart pet devices are expected to be important directions for future growth. - Looking at the competitive landscape - There are many segments in the pet supplies industry and the industry concentration is low, with a global CR5 of only about 15% and a similar situation in the domestic market with a large number of enterprises and dispersed competition. Currently, major domestic companies include Hangzhou Tianyuan Pet Products, Tianjin Yiyi Hygiene Products, and Wenzhou Yuanfei Pet Toy Products, among which Hangzhou Tianyuan Pet Products has a rich product line and a large scale; Tianjin Yiyi Hygiene Products has a scale advantage in pet hygiene products; and Wenzhou Yuanfei Pet Toy Products has a strong manufacturing capability in the traction toy segment. Overall, as the industry size expands and brand awareness increases, companies with product development, manufacturing capabilities, and channel advantages are expected to gradually increase their market share. - From the perspective of the industry chain - The upstream of the pet supplies industry mainly consists of raw material suppliers such as textiles, plastics, rubber, and pulp, the middle stream consists of product development and manufacturing companies, and the downstream is sold through channels such as e-commerce platforms, pet stores, and supermarkets, with online channels accounting for nearly 70%. At the same time, China has become an important supplier of pet supplies globally, with the export structure mainly focusing on cleaning and care products, pet wearables, and toys, with steady demand in North America, Europe, and Asia markets. Overall, driven by the growth in pet ownership and consumption upgrading, the pet supplies industry is still in a growth stage, with the potential for the market size to continue to expand in the future, but attention should still be paid to risks such as fluctuations in overseas demand, rising raw material prices, and increased industry competition. Risk Warning: Risk of fluctuations in overseas demand, risk of exchange rate fluctuations, intensification of industry competition.