According to the Zhitong Finance APP, China International Capital Corporation (CICC) released a research report stating that the global pet food industry has prospered for a century, with a dazzling array of stars. The firm found that even though the global pet food market has reached a trillion-dollar scale, its growth rate continues to exceed expectations, and new leading players in niche segments are emerging, with concentration and profitability levels higher than those in the infant formula and beauty industries. As we welcome the golden era of domestic pet food, the firm recommends domestic pet food leaders GAMBOL PET (301498.SZ), CHINA PET FOODS (002891.SZ), and Petpal Tech. (300673.SZ).
<h2>CICC's main viewpoints are as follows:</h2>
From a global perspective, pet food is a big business, a good business, and a perennial business, with trends of cat economy, onlineization, premiumization, and personalization strengthening.
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Big business: The trillion RMB market is steadily expanding, with the global cat and dog food market reaching USD 147.3 billion by 2024, and a projected CAGR of 5.7% from 2024 to 2029.
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Good business: The competitive landscape is favorable, and profitability is strong, with the CR3 for global pet food/infant formula/cosmetics companies in 2024 being 46.7%/39.5%/25.4%; from 2010 to 2024, the average EBIT margin for Nestlé's pet business/Nestlé's other businesses/L'Oréal/Estée Lauder is 20.5%/15.4%/18.0%/15.1%.
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Perennial business: From 2000 to 2024, the CAGR for the pet market in the U.S. and Japan is 8.2%/3.2%, exceeding GDP growth by 3.8%/2.8%; the proportion of pet income within Mars/Nestlé continues to rise to 60%/21%.
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Trends: The cat economy, onlineization, premiumization, and personalization innovations support the vigorous development of the global pet food sector.
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Mars and Nestlé build a matrix ecosystem, while Hills, Blue Buffalo, and Freshpet break through with differentiated innovations.
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Mars: In 2024, pet revenue is USD 32.8 billion (ranking first in pet food market share at 21.4%), building mass-market brands and acquiring premium brands, successfully empowering Royal Canin to become a global leading prescription diet brand;
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Nestlé: In 2024, pet revenue is USD 23.3 billion (ranking second in pet food market share at 20%), forming a strong alliance through the acquisition of Purina, creating a full range of products, price points, and global channel layout;
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Hills: A pioneer in the global prescription diet sector, with a 2024 pet market share ranking of third at 5.1%, and a prescription diet market share of 53%, with an average operating profit margin of 26% over the past decade;
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Blue Buffalo: Focused on the natural food niche, achieving a 7% single-brand market share in the U.S. in 2024;
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Freshpet: A pioneer in fresh food in North America, with a 96% market share in U.S. fresh food in Q1 2025;
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Chewy: A North American pet-focused e-commerce platform, with an average market share of 35.8% in online pet channels over the past decade, creating a one-stop ecosystem for pets.
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Insights: The Chinese pet food industry is entering a golden era, with product innovation, brand matrix, and channel iteration being key.
At the industry level, there is significant potential for growth in the scale, structure, and profitability of China's pet food market, making the golden era foreseeable; at the enterprise level: 1) Product side: General food innovation activates demand. Best-selling category leaders strengthen the deep binding between categories and brands, such as Blue Buffalo for natural food, Freshpet for fresh food, and Xianlang for baked food. Functional food elevates barriers. Prescription diets and other functional foods are the crown jewels with high prices, high profitability, and high stickiness, with a global CR3 of 97% in 2024
2) Brand side: A brand matrix is inevitable. In 2024, the global pet food companies/brands CR5 will be 52%/17%, and domestically, there may be a shift from a large single brand to multiple brands. Capital support is key. Mars/Nestlé's cumulative merger and acquisition investment reached USD 8.3 billion/16 billion. 3) Channel side: Local characteristic channels are crucial for the rise of brands in various countries, shifting from efficiency-oriented to balancing efficiency and experience may be the direction of domestic channel changes.
Risks
Fluctuations in raw material prices, food safety risks, and intensified competition in the domestic market

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CICC released a research report indicating that the global pet food industry continues to grow, with the global market size expected to reach USD 14.73 billion in 2024, with an average annual growth rate of 5.7%. It recommends domestic brands such as GAMBOL PET, believing that the pet food industry has good profitability and market concentration, and is expected to usher in a golden age in the future

CICC: The pet food sector continues to grow at an above-average rate, recommending GAMBOL PET and others