Core Viewpoint - The pet health food industry is expected to enter an accelerated development phase by 2027, driven by increasing pet ownership, higher quality of pet owners, and stronger awareness of pet health [1][3]. Industry Overview - The pet health food sector is positioned between pet food and pet pharmaceuticals, characterized by functional benefits and mid-to-high frequency consumption. It is considered a discretionary upgrade consumption category with a high growth potential [2]. - The compound annual growth rate (CAGR) for pet health food consumption from 2020 to 2024 is projected to be 13%, which is higher than the growth rates of disposable income and GDP per capita during the same period [2]. Market Size and Growth - By 2024, the pet health food market in China is expected to reach approximately 1.522 billion, with a CAGR of 13% from 2020 to 2024. The market share of pet health food within the overall pet health product category is anticipated to be 40%, an increase of 0.8 percentage points from 2020 [3]. Trends and Comparisons - The pet health food industry is expected to follow trends seen in the human health food sector, which has shifted towards precision nutrition. The sales channels for human health foods have evolved from direct sales to pharmacies and now to e-commerce, indicating a similar transition for pet health foods [4]. - The U.S. pet health food market is the most mature globally, with significant differences in consumer demographics and purchasing channels compared to China. In China, e-commerce is rapidly becoming the primary sales channel for pet health foods [5]. Investment Opportunities - The report suggests focusing on high-potential quality brand manufacturers and contract manufacturers in the pet health food sector. Companies like Pet Happiness and Hongrui are highlighted for their strong market foundations and successful channel transitions [6]. - Overseas brands, such as Zesty Paws, are encouraged to localize production, while contract manufacturers are expected to play an increasingly important role in meeting the growing demand for pet health foods [6].

Investment Rating - The report maintains an "Accumulate" rating for the pet health food industry [1] Core Insights - The pet health food sector is experiencing significant growth, with a projected CAGR of 13% from 2020 to 2024, indicating a high level of market vitality [14][15] - The industry is characterized by a clear division of labor across its supply chain, with segments that share commonalities with human health food products [18][19] - The increasing number of pets in China, estimated at approximately 124 million by 2024, presents a vast market opportunity for pet health products [20][22] - The pet health food market is expected to reach approximately 1.522 billion yuan by 2024, with a notable increase in its share of the overall pet health product market [28][29] Summary by Sections 1. Overview of Pet Health Foods - Pet health foods serve as a supplement to regular pet diets, providing functional benefits without being a substitute for medications [10] - The market for pet health foods is diverse, with various product types catering to different health needs [13][11] 2. Industry Growth Potential - The number of pets is steadily increasing, with significant room for growth in pet ownership rates compared to countries like the USA [23][24] - By 2027, the pet health food industry is anticipated to enter a phase of accelerated growth, driven by rising pet ownership and health awareness among pet owners [32][34] 3. Trends in Human Health Foods - The pet health food market is expected to follow trends seen in human health foods, such as increased specialization and a shift towards online sales channels [44][49] - The profit margins for pet health foods are projected to be higher than those for human health foods, with average gross margins ranging from 70% to 90% [54][56] 4. International Market Comparison - The USA represents the most mature market for pet health foods, with a significant reliance on traditional retail channels, while China is rapidly adopting e-commerce as a primary sales channel [21][25] - The competitive landscape in China allows for equal opportunities among various players, including both domestic and international brands [4][4]

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The pet economy in China is experiencing significant growth, driven by changing family structures and increasing disposable income, with pet ownership evolving from functional to emotional companionship [6][9] - The number of pet cats is projected to increase from 44.12 million in 2019 to 71.53 million by 2024, marking a growth of 62.2%, while pet dogs show a slight decline from 55.03 million to 52.58 million during the same period [6][4] - The pet consumption market is expected to grow from 219.9 billion yuan in 2019 to over 300 billion yuan by 2024, reflecting a structural shift in human-pet relationships and an increase in spending on pet health and wellness [17][15] Summary by Sections Section 1: Trends in Pet Ownership - The trend of pet ownership in urban China is on the rise, with pets becoming essential companions for both children and the elderly due to changing lifestyles and demographic shifts [5][6] - The elderly dependency ratio has increased by 5 percentage points over five years, indicating a growing need for emotional support through pets [8] Section 2: Market Size and Growth - The urban pet consumption market is projected to reach nearly 500 billion yuan by 2029, driven by a deeper emotional connection between pets and owners [17][14] - Pet health has become a core focus for pet owners, with health-related products seeing significant demand [17] Section 3: Pet Health Concerns - Pet owners prioritize bone and joint health, with a notable preference for calcium and bone-strengthening supplements [21] - There is a lack of awareness regarding the full benefits of health supplements, with many pet owners viewing them primarily as treats rather than preventive care [21] Section 4: Common Bone and Joint Issues - Common bone and joint issues in pets include developmental abnormalities and degenerative diseases, with specific conditions varying between cats and dogs [25][26] - Factors affecting pet bone health include genetic predisposition, nutritional imbalances, and aging [26] Section 5: Efficacy of Health Supplements - Type II collagen has been shown to be more effective than glucosamine in alleviating joint pain in pets, with significant improvements observed over time [33] - The combination of Type II collagen and glucosamine does not yield synergistic effects, suggesting that they should be used cautiously together [33]