(Last updated: 24 Nov 2011)

Trends and opportunities

The market

The pet industry in Japan is a real growth industry, with a marked social trend of an increasing number of Japanese people choosing to keep pets at home, particularly dogs and cats.

The Japanese lavish attention on their pets, buying only the best quality products and paying attention to their nutrition and health as well as their comfort.  In 2010, the whole industry (ie. food, care products, accessories, live animal sales, pet insurance, clinic, salon, animal medical devices) was valued at $15.6 billion. The total sales of pet food, pet care products, and accessory products market was $5.1 billion. This represents a slight decrease of 0.8 per cent over 2009, mainly because of the decrease of the sales of live animals and the economic downturn. (Source: 2011 Pet Kanren Sijyo Marketing Soran – Fuji Keizai).

The sales value of pet care products was $923.7 million which represents an increase of 2.1 per cent over 2009, on the back of an increase in the number of indoor pets.

The sales value of pet food was $3,673 million, a slight decrease of 1.3 per cent over 2009.

The pet accessory products market has also grown by 2.1 per cent to $518.6 million since 2009.

The amount of feed per meal has decreased as a result of the popularity of smaller breeds of dogs. Smaller dogs have been popular for a considerable time; therefore the large percentage of small dogs is expected to remain stable.

In terms of sales volume, there has been a continual decrease. However, the actual value of dog food sales has slightly increased due to the solid expansion of the demand for high quality premium foods.

Specialised food/supplements for dogs remain at the same level of growth as for cat food, and premium, higher priced products support the market growth in the snack and diet therapy category.

Opportunities

Food (eg. dry/wet/treats)

In contrast to the expanded demand for budget products that we are seeing in other sectors of the Japanese market, there has been an increase in sales in the high value added pet food category such as:

• premium food
• age-specific products
• weight-specific products supplements

This phenomenon is due to the fact that the number of pet owners who treat their pets as a family member has increased and their attention to their pet’s health is now higher than ever before.

The snack market achieved sales of $564.3 million, increasing by 10 per cent over 2008. The causes are the expanded demands particularly for cat snacks, and the recovery of some leading manufactures’ sales after they experienced a big drop in sales in 2008.

Pet care products (eg. shampoo/toiletry products/body towels, etc)

Due to the increased number of indoor pets, the importance of animal house training has grown. Therefore, the size of the market for house training tools and methods to divert pets from certain behaviours, especially used for house training, is steadily expanding. In addition, the number of owners who are concerned by the smell of their pet’s mouths, and ear hygiene have also increased due to the close proximity of owners to their pets as a result of keeping them indoors. The sales of dental care products and ear cleaning have prospered accordingly.

Pet accessory products (eg. collars/leashes/clothes/carriers/houses/ heaters/toys, etc)

The size of the market for collars, harnesses, leashes, houses, and carriers has been shrinking for the last three years.

For the last few years, the product line-up of high functional toys such as those for intellectual training has broadened to include imported products from abroad. Those products have higher price setting than more basic toys (eg. stuffed toys), thereby contributing to the value of sales.

Pet clothes have become diversified in design in the last few years. As a result, pet owners can choose the clothes for their pets that are in tune with their own tastes. In addition, each company produces high priced products with high functionality. Such products have thereby stopped the declining price of pet clothes and become one element of the market’s expansion.

Food: Cat food, premium food, snacks, supplements, specialised food/supplements (special therapy food)
Pet care products: Toilet sheets, diapers, wet tissues, fresheners/deodorants, dental care products
Pet accessory products: Beds, mats, toys, clothes

Competitive environment

In 2009, Japan imported 347,107 tonnes of dog and cat food for retail sale with a value of $1,023 million. Australia was the third largest supplying country after Thailand and USA. Australia’s share was 22.2 per cent (81,967 tonnes) based on total volume and 15.6 per cent ($159 million) in terms of export value.

While the total volume Japan imported decreased from 380,604 in 2007 tonnes to 347,107 tonnes in 2009, the value increased from $1,018 million to $1,023 million in 2008.

Although cheaper products are still selling well in Japan, the statistics provide evidence that the market tends to emphasise more quality products than price. Wording on products, such as ‘healthy’, ‘natural’, ‘premium’, and ‘balanced’ have become very common as end users prefer quality products.

(Source: Fuji Keizai)

Tariffs, regulations and customs

Some tariff examples are listed below, however the tariffs on imported pet products vary due to the ingredients, the materials or its use (medical or not), and it is controlled by the Ministry of Finance.

Supplements and medical products are distinguished by their ingredients and effectiveness, and customs will determine whether it is to be considered a supplement or a medical product. The individual tariff rates can be found on the Ministry of Finance website.

• Food – free (general)
• Dog food (biscuits and treats) – ¥60yen/kg (general)
• Dog leads – 6.6 per cent (general)

Pet Food Safety Assurance Law – a new law enforced on 1st June 2009 www.env.go.jp/nature/dobutsu/aigo/2_data/rule.html.

With regards to the Ministry of the Environment’s ‘Ensuring of Safety of Pet Animals Feed’ Act – the details need to be discussed with the importer to comply with the regulations.

Marketing your products and services

Before entering the Japanese pet industry, companies must gain a thorough understanding of issues such as pricing, packaging, and distribution options.

Local partnering is the key to market entry. Australian companies should find and appoint local agents, importers, or partners. Due to high start-up and maintenance costs, establishing your own channels (stores and sales personnel) is not recommended. Instead, test your market success first with local representation.

There is an emerging trend towards joint ventures with a Japanese manufacturer, to develop and manufacture products in Australia that may be worth investigating. Representatives can be engaged to target two options for market entry:

• Conclude sales contracts with import agencies and wholesalers, and market products through their sales routes.
• Conclude sales and partnership contracts with Japanese manufacturers, and market products through their sales channels.

Japan's pet industry is characterised by strong competition between domestic and foreign brands. To be able to compete, a brand and its product must be unique - clearly distinguishing themselves from others. These factors could be functional characteristics or a marketing characteristic, such as package design and brand logo.

To market your product effectively, consider:

• Pet food – prepare ingredients list and a process flow chart as they are considered necessary information for Japanese importers to judge if they are allowed to import the products or not. The majority of pets in Japan are small; therefore the package size/product size will be requested to be small. Be prepared to be flexible and be able to adjust based on the request from the customers.
• Pet supplements/medicine/pet care products – prepare the documentation requested by the customer. Japan’s customs offices or the Ministry of Agriculture, Forestry and Fisheries (MAFF) will advise the detail guidelines only to an importer – the regulations differ from one product to another. Therefore, your priority may need to be to find an importer with whom you feel comfortable working with. Without the documentation required by the government, the customer cannot judge if they can handle the products or not. Through your importer, you can get concrete advice from Japan customs or MAFF. Please note that no product registration can be done from Australia, and the application must be carried out by the importer in Japan.
• If you need assistance to find an importer, it is recommended that you work with and be guided by your local Austrade representative to ensure a customised market entry strategy is implemented, and that products meet the specific needs of the Japanese consumer.
• Monitoring the Japanese pet industry in order to detect changes and growing trends that may affect your marketing strategies.
• Developing relationships with local partners and/or distributors to facilitate ease of entry into Japan.

Distribution channels

The distribution of pet-related products is broadly classified into five areas (2009):

• Home centre – 47.1%
• Pet shop – 16.6%
• Supermarket – 15.1%
• Drugstore – 6.8%
• Mail order– 5.3%

Links and industry contacts

Pet-related resources

Food and Agricultural Materials Inspection Centre – www.famic.go.jp/english/index.html
Japan Pet Food Association – www.petfood.or.jp/English/message/
Ministry of Agriculture, Forestry and Fisheries – www.maff.go.jp/e/index.html

Contact details

The Australian Trade Commission – Austrade – is the Australian Government’s trade and investment development agency.

Through Austrade’s network of offices in over 50 countries, we assist Australian companies to succeed in international business, attract productive foreign direct investment into Australia and promote Australia's education sector internationally.

For more information on how Austrade can assist you, contact us on:

Australia ph: 13 28 78 | Email: info@austrade.gov.au

A list of Austrade offices (in alphabetical order of country) is also available.

Source

Fuji Keizai – www.group.fuji-keizai.co.jp/index2.html