Summary of the Pet Food Industry Conference Call Industry Overview - The report focuses on the **China Pet Food** industry, specifically analyzing domestic demand, average selling price (ASP) trends, competitive dynamics, and overseas demand for pet food products [1][2]. Key Insights 1. **Growth Performance**: - Domestic brands in the pet food sector experienced a **17% year-over-year (yoy)** growth in GMV for October and November combined, outperforming other local brands at **8% yoy** and global brands which saw a **9% yoy decline** [2]. - **China Pet Foods** achieved a remarkable **43% yoy growth** in GMV, driven by strong performances from **Wanpy** and **Toptree** [2]. - **Gambol** recorded a **15% yoy growth**, down from **22% in 3Q**, while **Petpal** and **Meatyway** saw a turnaround with **3% yoy growth** in November after a **-14% yoy decline** in October [2]. 2. **Sales Channels and Trends**: - The **premiumization trend** continues, with top brands like **Rosy Fresh** and **Toptrees** attracting more fans and sales compared to previous months [2]. - There was a noted improvement in the organic traffic mix in November, with a shift towards higher non-livestreaming sales across brands, except for **Pro Plan** [2]. 3. **Overseas Demand and Cost Trends**: - Imports into China saw a significant decline, with a **49% yoy drop** in August, worsening from **-18% yoy in July**, attributed to tariff impacts [3]. - Overall raw material costs decreased in November, particularly for **Duck**, **Starch**, and **PET**, although there was a slight rebound in **Chicken** costs [3]. 4. **Market Share Dynamics**: - **China Pet Foods** is rated positively with a "Buy" recommendation, indicating strong market confidence [4]. - Market share for local brands like **Gambol** and **Myfoodie** has shown fluctuations, with **Gambol** gaining market share in certain categories while **China Pet Foods** has seen a slight decline in dog treats market share [20][21]. 5. **Category Performance**: - The performance of various pet food categories on platforms like **Tmall** and **Taobao** showed mixed results, with **cat treats** and **dog staple food** categories experiencing declines of **-19%** and **-11%** respectively in November [13]. - The **baked/air-dried cat staple food** category has seen a significant increase in market share, indicating a shift in consumer preferences [22]. Additional Important Insights - The **Douyin channel** experienced a weakening in performance compared to October, affecting most brands negatively [17]. - The overall GMV for the pet food market is derived from the combined sales of **Tmall**, **Taobao**, and **Douyin**, highlighting the importance of these platforms in the industry [18]. - The report emphasizes the need for investors to consider potential conflicts of interest when interpreting the findings, as Goldman Sachs has business relationships with companies covered in the report [7]. This summary encapsulates the key points from the conference call regarding the current state and dynamics of the China Pet Food industry, providing insights into growth trends, market performance, and consumer behavior.

Summary of Pet Food Monthly Report - October 2025 Industry Overview - The report focuses on the **pet food industry** in China, highlighting domestic demand, average selling price (ASP) trends, competitive dynamics, and overseas demand [1][2]. Key Insights 1. **Performance Comparison**: Pet food sales outperformed other consumer categories, with a year-over-year (YoY) decline of only 9% in Tmall compared to a 14% decline in cosmetics. Sequentially, pet food showed improvement from September's 13% YoY decline [2][11]. 2. **Market Leaders**: Companies like **Gambol**, **China Pet Foods**, **Rosy Fresh**, and selective global brands are experiencing significant sales growth, with Gambol achieving a 23% YoY GMV growth and China Pet Foods leading with a 61% YoY growth in October [2][12]. 3. **Product Discounts and ROI**: There is a noted divergence in product discounts across brands, with some brands like Fregate increasing live-streaming sales and paid traffic, while others like Myfoodie and Wanpy maintained healthy performance. Discounts on selective SKUs have widened, reaching over 50% off [2][12]. 4. **Cost Trends**: The report indicates a decrease in raw material costs for October, particularly in chicken, duck, starch, PET, and corn prices on a month-over-month basis [2][12]. Company Performance - **China Pet Foods**: Rated as a "Buy," the company reported a remarkable 61% YoY GMV growth in October, significantly up from 31% in September, driven by strong performances from brands Toptrees and Wanpy [3][12]. - **Gambol**: On track to achieve a GMV growth of 23% YoY, consistent with the trends observed in Q3 2025 [2][12]. - **Petpal and Meatyway**: Both companies experienced a decline in GMV, with Petpal and Meatyway reporting an 8% YoY decline in October [2][12]. Competitive Dynamics - The competitive landscape shows a consolidation trend where market leaders are outperforming others. Local brands like **Gambol** and **China Pet Foods** are leading the market, while global brands are generally underperforming [2][12]. - The report highlights the performance of various brands, with local brands averaging a 61% GMV contribution, while global brands like **Royal Canin** and **Orijen** showed mixed results [12][13]. Additional Insights - **Channel Performance**: The Douyin channel's contribution to sales has slightly weakened compared to September, while Tmall and Taobao's contributions have increased month-over-month [13]. - **Future Outlook**: The ongoing trends suggest that the pet food market in China is likely to continue its growth trajectory, driven by strong demand for premium products and effective marketing strategies by leading brands [2][12]. This summary encapsulates the key points from the October 2025 pet food monthly report, providing insights into market performance, competitive dynamics, and future outlook for the industry.

Summary of Conference Call Notes Industry Overview - The conference call discusses the **China Consumer** sector, focusing on consumption trends and market dynamics in **2Q25** and the outlook for **2H25** [1][2]. Key Points and Arguments 1. **Consumption Trends**: - Demand softened in **2Q25**, with unexciting demand continuing into **3Q25**. Some categories like restaurants, sportswear, prepared food, and spirits showed minor sequential improvements in August, attributed to normalizing policy impacts [1][2]. - Companies maintain a prudent outlook due to demand uncertainty, with expectations for significant demand-side stimulus being unlikely in the near term [1]. 2. **Pricing Dynamics**: - There are downside risks to pricing in categories such as sportswear and spirits due to demand softness. The restaurant sector is experiencing intensified pricing activities driven by food delivery subsidies and market education on new categories [1][2]. 3. **Structural Growth Opportunities**: - Continued demand for experience-based consumption, particularly in IP retailers, freshly made drinks, and pet foods [2]. - Opportunities for category expansion and penetration in beverages, cosmetics, and pet foods, with companies like Laopu experiencing upward brand cycles [2]. - Overseas expansion remains a growth opportunity, especially in home appliances, despite demand uncertainties [2]. - Lower-tier cities present untapped potential for various categories [2]. 4. **Sector Preferences**: - Preferred sectors include sports brands, diversified retailers, beverages, and pet food. Least preferred sectors are apparel/footwear OEM, furniture, projectors, and non-super-premium spirits [3][8]. 5. **Stock Recommendations**: - Buy recommendations include companies like Anta, Eastroc, Midea, and WH Group, while jewelry has been upgraded to Neutral due to stabilized sentiment [8]. 6. **Market Sentiment**: - The market is showing interest in turnaround themes, with shareholder returns supporting stock prices [2]. Additional Important Content - The macroeconomic environment remains resilient, but consumption-related indicators are muted. The GS macro team anticipates limited significant demand-side stimulus due to the stable GDP numbers [1][9]. - The report highlights a divergence in performance among companies, with stronger brands gaining market share while weaker ones struggle [9]. - The conference call also touches on the impact of policy changes, including temporary interest and childbirth subsidies, which may influence consumer behavior [1]. Conclusion - The China Consumer sector is navigating a challenging landscape with softer demand and pricing pressures. However, structural growth opportunities and strategic sector preferences present potential investment avenues. The outlook remains cautious, with companies focusing on prudent strategies to manage uncertainties in demand and pricing.

Investment Rating - The report indicates a mixed investment outlook for the consumer sector in China, with a preference for new consumer names that can deliver unique growth amidst demand uncertainties, while mature names face investor concerns due to fluid overall demand [2][12]. Core Insights - The overall consumption trend in China appears unexciting for 2Q25, with sequentially softer trends observed across multiple sectors, including spirits, dairy, sportswear, cosmetics, condiments, and prepared food, despite resilient headline numbers supported by trade-in policies [1][35]. - There is a divergence in stock preferences, with investors favoring new consumer brands that show strong growth potential, while mature brands are under scrutiny due to demand fluctuations [2][12]. - Structural growth opportunities are expected to drive stock outperformance in sectors such as sports brands, diversified retailers, pet food, beverages, and restaurants, while sectors like apparel, footwear OEM, and furniture remain less favored [2][3]. Summary by Sections Demand Trends - Sales trends are softening in 2Q25, with headline growth numbers steady due to trade-in policy support, but multiple consumer subcategories indicate fluid demand [35][37]. - Categories benefiting from subsidy support, such as appliances and freshly made drinks, show solid performance, while spirits and high-end restaurants face headwinds from anti-extravagance policies [38][39]. Pricing Dynamics - Emerging pricing risks are noted across various sectors, with increased competition leading to deeper discounts, particularly in the automotive and sportswear sectors [43][44]. - The report highlights a trend of rational spending among consumers, leading to weaker average selling prices (ASP) across multiple categories [30][43]. Sector Performance - The report outlines expected revenue and net income growth for new consumer names to outperform older ones from 2025 to 2027, driven by structural growth opportunities [12][21]. - Specific sectors such as pet care and freshly made drinks are highlighted for their robust growth potential, while traditional categories like spirits and dairy face challenges [11][21]. Future Outlook - The outlook for 2H25 suggests cautious optimism, with expectations of easier comparisons and continued support from trade-in policies, although growth pressures remain due to high bases and macroeconomic conditions [35][39]. - The report emphasizes the importance of overseas expansion and product innovation as key themes for future growth, particularly for companies looking to penetrate lower-tier cities and international markets [31][34].

Investment Rating - The report does not explicitly state an investment rating for the pet food industry in China Core Insights - The pet food market in China is experiencing robust growth, with online GMV across major platforms increasing by 18% YoY in May 2025, driven by a 22% rise in volume despite a 4.3% decline in average selling price [2] - Douyin is leading the growth in the market, with a 54% YoY increase in GMV, significantly outperforming JD and Tmall [2] - The top 10 pet food brands accounted for 39.7% of the market share in May, showing an increase of 1.7 percentage points MoM and 3.2 percentage points YoY [3] Sales Trends - Gambol's online retail sales increased by 42% YoY in May, with its premium cat food brand, Fregate, surging by 147% YoY [4] - China Pet Foods (CPF) recorded an 18% YoY growth in online sales in May, with its brand Toptrees growing by 50% [5] - Petpal's core brand, Meatyway, saw a 14% YoY increase in online sales in May and a 38% YoY rise for the January–May period [5] Cost Trends - The average cost of raw materials for pet treats and staple food declined by 7% and 2% YoY, respectively, in May 2025, primarily due to lower prices for chicken, duck, and soybean meal [6] Market Share Dynamics - The market share for Myfoodie and Fregate increased by 0.5 percentage points and 1.6 percentage points YoY, respectively [4] - CPF's aggregate online sales for January–May were up 24% YoY, with Toptrees' market share increasing to 1.1% [5] Online Sales Channels - Online channels for pet food are showing significant growth, with Tmall, JD, and Douyin all contributing to the overall increase in GMV [27][29]