Growth of the Indian Pet Care Space

Eddie Izzard, the British actor and comedian, once said, “Cats have a scam going — you buy the food, they eat the food, they go away; that’s the deal.” According to GLG Network Member Nitin Kulkarni, former director of corporate affairs at Mars Inc., an increasing number of Indian households are discovering the truth in that statement.

Even in the face of such feline disregard, the pet care space is growing at previously unseen rates. To unpack this exploding market, GLG’s Divya Guha hosted a teleconference with Nitin where they discussed the size of the market, trends, and the future of the space. Below is an edited and condensed version of that teleconference.

What key trends are you seeing in the pet care space in India? What might be the market size of the pet care management industry in India?

The pet care space is a rising star in India. The pet population has seen explosive growth. Pets are increasingly elevated to full-family-member status, a progressive step. Pet owners are spending more not only on veterinary care but also on food, toys, clothes, furniture, etc. This is driving rapid growth in pet-related sales and services.

When I started in the category, there were hardly any pet shops and very few clinics offering small animal practice. Upon graduation, veterinary doctors used to go into government service. But now students are increasingly joining a veterinary practice or even starting a private clinic.

One macro factor that impacts Indian pet care trends is digital media. Digitally influenced buyers have increased by more than three times, and overall fast-moving consumer goods buyers have increased by more than six times. All this leads to increased spend on pet health. It’s also a result of the growth in affluent households. There’s more disposable income now, so a pet isn’t an expense — it’s a luxury to enjoy.

As far as market size, we can estimate the pet care market at about 4,500 crores, of which pet food is 2,500 crores; pet care, treats, and accessories roughly about 1,000 crores; grooming and boarding about 100 crores; and veterinary healthcare roughly about 1,000 crores. Bear in mind that these are estimated figures, plus some of the private studies people have done in this market.

What are the main macroeconomic factors affecting the industry?

Three major factors. One is inflation. It is impacting demand and therefore may impact growth in the future. So far, inflation has not had a significant impact on the industry. Another factor is falling currency, which impacts cost and demand. Major brands today are being imported into India, and the falling rupee means expensive imports. Expensive imports means people must pass on costs. They don’t have the flexibility to manage any costs at their end. Of course, they can negotiate with their principal suppliers, but there is a limit to that. Currently, a lot of players have increased their prices by 5% to 10%.

GDP growth will also have an industry impact. The higher the GDP, the more the spend; the more disposable incomes, the better the future for the pet care category. However, it also means fewer entry barriers for competition. For companies like Nestle, that’s no problem. They’ve entered through a distributor model, but as soon as the GDP reaches a certain level, they’ll come in directly. When that happens, they will bring in a lot of investment, which means a lot of competition for the market, which has a not-so-good impact. It’ll have an impact on prices. Indian companies will have to do various things, implement strategies to remain competitive in the market. So, three factors: inflation, falling currency, and GDP growth.

What impact did COVID-19 have on the industry overall, and then how do you see that shifting as we enter a post-COVID world?

COVID-19 was indeed an unfortunate incident. But it had a tremendously positive impact on the pet care industry. As I said earlier, the market has jumped considerably in the last three years. The current pet population is roughly 28 million to 30 million, of which 4 million are cats. The cat population is growing faster due to smaller space constraints in pet owners’ homes.

This means there is a lot of headroom for pet food companies to grow. The compound annual growth rate in the last three years has also exploded. Why is this? COVID brought changes in our working style. Due to the growing adoption of a hybrid working style, pet owners now spend more time with their pets. Earlier, the pet population was concentrated only in urban areas. But because of this hybrid working style, people have shifted from urban areas to tier-one, tier-two cities.

 

About Nitin Kulkarni
Nitin Kulkarni is an industry veteran with over 35 years of experience. He is an ex-member of the leadership team at Mars India, a wholly owned subsidiary of Mars Inc., where he served as the Director of Corporate Affairs for 12 years. Before this, Nitin held the position of National Head — Specialist Channel Sales at the food giant for eight years.

This article is adapted from the GLG Teleconference “Pet Care Industry of India.” If you would like access to the transcript for this event or would like to speak with experts like Nitin Kulkarni or any of our approximately 1 million industry experts, contact us.

Questions asked during the teleconference:

• What key trends are you seeing in the pet care space in India? What, according to you, might be the market size of the pet care management industry in India?
• What do you see as the latest trends in the pet market that impact vet clinics?
• What impact has inflation had on operations demand and labor issues?
• You touched on cost-cutting measures being taken because profit margins are under pressure. Will this impact the quality of product in the future?
• What are the main macroeconomic factors affecting the industry?
• Is there a growth in pet owners buying insurance for their animals?
• What are pet owners spending on the most for their animals? What is bringing in the most cash flow for the makers of pet care products?
• What are the key segments in the pet care industry in India?
• Who are the main players in this space, and which among them are the front-runners? Do you see any of them breaking into international markets?
• Is the demand for high-quality pet products rising in India? How will this impact demand for vet services?
• What impact did COVID have on the industry overall, and then how do you see that shifting as we enter a post-COVID world?
• Can you discuss market dynamics and any tech-assisted service offerings within the vet practice management space in India?
• Do you see any developments in the pet wellness space in India?
• What are some of the entry barriers into pet care management that new players should be aware of?
• What are some of the investment and growth opportunities in this industry, and what are the potential innovations?
• What’s your outlook for the pet care market in India, and perhaps your broader thoughts on the pet market for 2022 and beyond?
• Any final thoughts on the industry going forward?