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The Japanese market for pets and associated products is estimated to exceed the ¥800 billion level in 2002 with pet food products accounting for almost half this sum. 2002 however stands as a watershed year for the Japanese pet food industry as year-on-year sales increases fuelled by the decade long ‘pet boom’ of the 1990’s quickly subsided.
Trends in increasing pet ownership, the narrowing of the prepared/non prepared food gap and a more general upward movement of the standing of pets in relation to the Japanese family unit all served to boost value sales by over 200% since 1992. Market conditions in 2002 have however changed markedly from even those witnessed in 2001 with economic stagnation turning rapidly into an ever-deepening deflationary spiral with a knock-on effect on job security, household income and ultimately trends in pet ownership.
The departure of Heinz from pet food manufacturing in Japan although not wholly unexpected was certainly a signal flare highlighting the toughening market conditions. With year-on-year growth now largely a thing of the past, the Heinz withdrawal heralded a new era of ‘survival of the fittest’ or success to those who take advantage of changing market conditions.
According the annual survey by the Japan Pet Food Manufacturers Association (JPFMA) the Japanese pet population declined significantly in 2001. Cat and dog ownership declined from its 2000 peak by roughly 5% to total just under 18 million animals, this rapid decline came largely as a consequence of the first wave of Japan’s modern ‘pet boom’ which broke throughout the country in 1992. Like Japan’s human population, the pet population is rapidly ageing in the new millennium, providing both constraints and opportunities to manufacturers. Economic stagnation and its current influence on consumer markets through widespread retrenchment in family spending have in 2001/2002 lowered the likelihood of owners replacing lost pets. With economic recovery some way off, pet food manufacturers now have to come to terms with a declining consumer base although the ageing of the pet population has provided opportunities for some manufacturers.
Both Iams and Hills with their health focus have benefited from selling value-added products that cater for older animals. Demand that had been developing slowly over the last decade for premium life style specific pet foods (especially in the dry format such as Iams Eukanuba) has soared in recent years by some 60% in the case of dog food to some ¥100 billion. The same trend is true for cats although many premium brands in this segment are sold in wet tinned format on the basis of quality somewhat befitting to the choosy image cats have in Japan. In Japanese culture cats are considered lucky and there is no luckier pet than a Japanese cat offered a range of dinners from tuna fish to mackerel. There is no doubt that Japanese pets are on the whole well provided for and considered part of the family. On the basis of this emotional bond, despite the worsening economy and falling pet populations there still exists many opportunities for premium products launched on a health, nutritional or luxury format.
Whilst everyday pets such as cats and dogs have declined in popularity over recent years there has been rising interest in the unusual, exotic and also the bizarre. Keeping pet birds in particular has enjoyed something of a renaissance with budgerigars, parrots and mynah birds all proving popular pets. The boom-age of plumage saw sales of bird food grow by 30% since 1998 and stimulated pet care products sales where cages and related goods have taken the slack from declining sales for cat and dog sales. Ferrets proved an unconventional but highly popular pet in 2002 with something of a craze boosting the population above that of rabbits to become Japan’s third most popular pet. The suitability of ferrets to apartment life proved a great selling point for what had largely been an animal used for pest control in rural areas. Industry commentators suggest that the ferret is likely rival the cat as the first choice of domestic pet over the next decade bringing with it the opportunity to sell a range of ferret-related goods. Other interesting developments have seen the keeping of jellyfish in ultra-violet lit tanks providing the keeper with something akin to a biological lava lamp in the front room.
Since the great pet boom in 1992, the keeping of pets has become increasingly commercialised in Japan. In keeping with trends in the Wild West, large scale retail outlets specific to home and garden have developed throughout Japan which have served to give wider access to pets and pet care products in spacious out of town surroundings. Advertising in local press combined with petting-areas for children and plentiful car parking has seen the share of sales taken by these ‘home centre’ outlets escalate in 2001 and signal the beginning of the end for the traditional pet store. With the arrival of larger retail outlets, local pet stores have largely been forced to close down or diversify into niche areas where the ‘home centre’ has not yet moved into.