Harnessing consumer and e-commerce insights to supercharge pet food exports to China

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Key insights from a presentation by Sarah Walmsley, Penrose Data to the Pet Food Manufacturers Association of NZ, Auckland, February 2019.

New Zealand’s pet food export market has been growing rapidly in recent years, and it was great to present at the NZPFMA annual conference in an export-focused session.

Sources: White Paper on China's Pet Industry in 2018; NZ Pet Food Manufacturer’s Association

Sources: White Paper on China's Pet Industry in 2018; NZ Pet Food Manufacturer’s Association

Secretary of the PFMA Richard Brake covered the staggering year on year growth, particularly in China, which has grown from virtually nil to over $22M per annum in 5 years. Echo Tan from NZTE gave the audience plenty to consider about the challenges and opportunities around exporting to China. Her engaging presentation covered economic growth, Chinese perceptions of themselves and how this impacts the ways NZ producers should market to China, and the impact of new regulations around export of pet food products. Outlining her 10 top tips for exporters, Echo challenged the audience to set high standards for the way it engages with Chinese consumers, undertake the necessary market and consumer research to deeply understand their consumers’ unique needs and preferences in order to compete in the crowded pet food market.

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Understanding consumer insights is key to differentiating in a crowded pet food market

We provided the audience with some quick-fire insights from a 2018 industry report that surveyed 53,000 pet owners in China – these are summarised in this infographic.

It was interesting to note that Chinese pet owners saw their pets more like children or family members rather than pets, and that the greatest challenge of being a pet owner is travel. This could provide pet food manufacturers to think about how these factors impact brand choice and purchasing habits, and whether they could capitalise on them through innovative brand messaging or packaging solutions.

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How e-commerce data and insights can help inform optimal pricing, packaging and positioning.

Our pet food e-commerce data showed the impact of the US-China trade war on online pet food sales, and how this plus recent regulatory changes have drastically reduced sales for some well-known US brands. We presented the relative market share of pet food vs treats vs health products, and challenged the audience to think about their product ranges, noting that very few brands existed in all three categories, highlighting the potential to diversify from pet food products with health benefits ‘baked in’ to developing pure health focused products. While the majority of online sales of pet food in China come from domestically produced brands, New Zealand performs well relative to our size, capturing around 2.5% of the export market for online sales, similar to Belgium.

To highlight the difference in approach for market positioning and pricing, we shared the comparative price ranges and distribution between Belgium and New Zealand for November 2018 (noting that single’s day dominates trade over this month). Most of Belgium’s value is achieved at $15-25/kg, whereas New Zealand has three distinct pricing clusters, at $10-25/kg, $60-85/kg and $105-125/kg which poses the question of whether pricing is optimised in the pet food sector, and whether the products in the middle sit in a pricing ‘no man’s land’ – priced too high to compete with the lower end, and too low perhaps to dominate in the premium segment

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Finally, we touched on the considerations for packaging and positioning products, developing Echo’s points on needing to know the target customers and their unique needs and preferences, sharing insights into the influencer culture in China, and presenting a case study of a local product range that demonstrates the following nicely:

  • A diversified range in food, health, cleaning/bathing and clothing product lines to drive brand loyalty and provide a ‘one stop shop’ approach

  • Helping reduce the burden of brand choice (highlighted above) by creating food lines for distinct breeds of dogs and cats, with imagery of the breed front and centre on packaging

  • Supporting the brand experience by providing extensive supporting information on product benefits and practical advice such as tips on how to prepare the food and video content and buying guides. It also demonstrated that Chinese consumers are comfortable sharing photos of their pets eating the food or interacting with the products, and providing online feedback about their and their pets’ experience.

The feedback after the session was positive, and we really enjoyed meeting the Association members, a passionate and determined group of people who are succeeding in growing NZ’s pet food exports. Our thanks to the Association for having Penrose Data contribute to the session.