Sealand Securities released a research report stating that intensified competition in the pet industry makes marketing-driven growth unsustainable long-term. The current market demands stronger capabilities in supply chain control, new product development, and precision marketing. The firm concludes that leading brands have established significant advantages over small and medium competitors, with industry competition patterns becoming clearer, thus maintaining its "Recommended" rating for the pet food sector. Key points from Sealand Securities' analysis include:
Reviewing two decades of domestic pet market channel evolution, the industry transitioned from offline to online and from wholesale to direct sales. Leveraging e-commerce platform dividends, domestic pet brands grew rapidly between 2003-2012 when China's pet industry was in its early development stage dominated by offline and wholesale channels, with foreign brands controlling the market. From 2012-2018, e-commerce platforms like Alibaba's Tmall and events like "Double 11" became core drivers reshaping the industry landscape. Since 2019, content-driven platforms like Douyin have upgraded channel refinement to reshape brand development pathways.
Online channels remain the primary sales avenue for pet food. E-commerce platforms enabled rapid scaling and now serve as the main pathway for domestic brands to reach mainstream consumers and capture daily purchases. The rise of content e-commerce has further enhanced its traffic acquisition and conversion capabilities. Offline channels remain crucial for building trust and servicing consumption needs, primarily through specialty stores and pet hospitals that provide product experiences, professional consultations, and hard-to-replace services like medical care and grooming. They also serve as vital penetration points in lower-tier markets, complementing online channels.
Channel strategy decisions, efficiency improvements, and brand building remain critical competitive factors, with brand awareness being central. As industry growth slows and customer acquisition costs rise in this "stock game," brands must shift from extensive expansion to "efficiency refinement" across users' full lifecycle. The firm predicts traditional channels will transform digitally with precision targeting and refined operations as core directions.
Risk factors include: intensifying competition among domestic pet food brands; slower-than-expected domestic sales growth; raw material price fluctuations; pet food safety concerns; trade friction risks; potential underperformance of key companies' earnings forecasts; and incomparable risks across different products.
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