STA Pet Food Trends In UAE 2021 (1)

MARKET ACCESS SECRETARIAT Global Analysis Report Type of report Title of report Publication month & year Executive summary The pet population in the United Arab Emirates (UAE) has increased by around 10,000 animals each from 2016 to 2020, with the large dog population growing fastest, by around 6,000 animals. Total retail sales of dog food increased 12.4% annually from 2016 to 2020, lead by premium dry dog food, which increased 15.1%, followed by premium wet dog food (9.6%). Total retail sales of cat food increased 11.2% annually from 2016 to 2020, lead by mid prices dry and wet cat food. Wet cat food accounts for 68.9% of all cat food sales in the UAE. In addition to pet “humanization”, demand for healthier products is also driven by the country’s new pet protection law designed to protect against pet abandonment and maltreatment, primarily by nomadic expatriates. Foreign companies (Mars, Nestlé) dominate the dog and cat food categories in the UAE, making up over 50% of retail sales over 2016-2020, mainly because consumers know and trust these brands from their home countries. In 2020, hyper markets (32.0%) and pet shops (29.3%) sold the most dog and cat food in UAE. Ecommerce also performed well with a 14.3% share, an increase of 61.0% over 2019. The UAE is a growing export market for Canadian dog/cat food, by 6.2% annually during 2016-2020, Canada’s exports of pet food to UAE are valued at C$855K (2020). From 2016 to 2020, Ontario has been the largest exporter at 80.6% of total exports, followed by Alberta (18.1%), and New Brunswick (1.3%). New product launches in the UAE are focused on dog snacks and treats, followed by wet cat and dog food, lead by adult, no additives/preservatives, and vitamin/mineral fortified claims. Sector Trend Analysis Pet Food Trends in the United Arab Emirates May 2021 Related reports • Sector Trend Analysis - Pet food trends in India 2019 • Sector Trend Analysis – Pet food trends in South Korea 2019 Contents Executive summary .........................1 Dog and cat population and ownership ........................................2 Retail market size ............................3 Dog food .......................................3 Cat food ........................................4 Distribution channels .......................5 UAE imports ....................................6 Opportunities for Canada ........... ....6 Product launch analysis ..................7 Conclusion .......................................8 For more information ..................... .9 Resources ..................................... .9 Page | 2 Dog and cat population and ownership The dog and cat populations in the UAE increased by around 10,000 animals each from 2016 to 2020, with the large dog population growing fastest, by around 6,000 animals. Growth in the dog and cat populations is forecast to slightly decrease from 2021 to 2026. There are twice as many cats as there are dogs in the UAE. Cats are the UAE’s preferred pet, as approximately twice as many households in the UAE own cats. Small dogs are the most common dogs in the UAE, partly due to the fact that many shopping centres, parks and restaurants allow small dogs onto their premises. As most people in the UAE live in apartments or villas with limited outside space, small dogs are also more convenient. Pet ownership has been in decline since 2016, with dog and cat ownership falling around 1.0% each annually between 2016 and 2021. Pet ownership in the UAE is mainly driven by the country’s expatriate residents, which make up an around 87% of the UAE population (2020), who work in well-paid jobs and mainly live in rented dwellings in Dubai and Abu Dhabi. Couples with children are the predominant household type in the UAE, accounting for nearly 60.0% of households in 2019. However, their share is projected to contract as the number of single-person and child free households are expected to increase during 2020-2040. Pet protection law A new pet protection law was implemented in 2018 and is believed to be having a positive effect on pet food sales. The law specifically targets pet abandonment as many expatriates abandon their pets, particularly cats, when they leave the UAE to take up jobs elsewhere. Pet owners are now obliged to properly care for their pets or face penalties or imprisonment. As a result of this new legislation, many pet owners are feeding and looking after their animals properly to avoid sanctions and this means that sales of pet food and pet care products are rising accordingly. Dog/cat population in UAE: historical and forecast in ’000s Category 2016 2020 *CAGR % 2016–2020 2021 2026 *CAGR % 2021–2026 Total dog population 66.0 77.9 4.2 81.6 88.3 2.0 Small dog (up to 20 lbs/9 kg) 33.0 38.0 3.6 39.5 42.3 1.7 Medium dog (20-50 lbs/9-23 kg) 13.2 13.9 1.3 14.3 14.8 0.9 Large dog (Over 50 lbs/23 kg) 19.8 26.0 7.0 27.8 31.1 2.8 Total cat population 124.7 134.1 1.8 136.1 141.1 0.9 Source: Euromonitor International, 2021 *CAGR: Compound annual growth rate Dog/cat ownership in UAE Category 2016 2017 2018 2019 2020 2021 e *CAGR % 2016–2021 % Households owning a dog 3.9 3.9 3.8 3.8 3.7 3.7 -1.0 Households owning a dog ('000 Households) 60.9 63.0 62.7 63.1 56.6 56.6 -1.5 % Households owning a cat 6.3 6.3 6.2 6.2 6.1 6.1 -0.6 Households owning a cat ('000 Households) 98.4 102.3 102.2 103.5 93.3 93.8 -1.0 Source: Euromonitor International, 2021 e: Estimated *CAGR: Compound annual growth rate Page | 3 Retail market size Dog food Total retail sales of dog food increased 12.4% annually from 2016 to 2020, lead by premium dry dog food, which increased 15.1%, followed by premium wet dog food (9.6%). Premium dry dog food accounts for approximately half of all dog food sales in the UAE. All dog food categories are forecast to grow from 2021 to 2026, lead by premium dry and wet dog food. Royal Canin, along with Mars’ Pedigree, Rodeo and Cesar brands, have strong positioning within the expatriate population who know of their brands and products from their home countries. Sales of dog treats and mixers is approximately equivalent to wet dog food sales in the UAE and show strong historical and forecast growth of 15.8% and 16.7%. Dog food in UAE: historical and forecast market segmentation in US$ millions Category 2016 2020 *CAGR % 2016–2020 2021 2026 *CAGR % 2021–2026 Total dog food 22.2 35.4 12.4 39.0 69.2 15.4 Dry dog food 13.0 21.4 13.3 23.6 44.2 17.0 Economy dry dog food 0.3 0.3 0.0 0.3 0.3 0.0 Mid-priced dry dog food 2.4 3.0 5.7 3.1 4.5 9.8 Premium dry dog food 10.3 18.1 15.1 20.1 39.4 18.3 Wet dog food 4.8 6.1 6.2 6.4 8.3 6.7 Economy wet dog food 0.2 0.1 -15.9 0.1 0.1 0.0 Mid-priced wet dog food 3.7 4.6 5.6 4.9 6.4 6.9 Premium wet dog food 0.9 1.3 9.6 1.3 1.8 8.5 Dog treats and mixers 4.4 7.9 15.8 9.0 16.7 16.7 Source: Euromonitor International, 2021 *CAGR: Compound annual growth rate Premium dog food Sales of premium dog food have performed best in the UAE, despite the introduction of a 5% VAT in 2018. Given that most UAE citizens work in well-paid jobs, the price increase has not had an effect on demand. Premium dog food is expected to experience significant sales growth as UAE consumers can afford high quality food for their pets and are showing greater interest in their dogs’ health. Health and wellness products such as organic and grain-free products are likely to grow in popularity as owners become increasingly concerned about what packaged dog food contains. This is demonstrated by a shift towards organic, natural and healthy products. Flavours such as duck, rabbit and lamb are popular and there is a rising demand for chicken, salmon and trout variants (new product launches). with Lily’s Kitchen tapping successfully into growing demand for organic, gluten-free and grain-free dog food. Brand shares The top brand, Royal Canin by Mars Inc. has dominated the pet food market in UAE since 2016, with a market share of 22.7% in 2020, followed by Pedigree (Mars Inc) at 16.8% and Taste of the Wild (Schell & Kampeter Inc) at 8.4%. These brands have strong positioning within the expatriate population who know of their brands and products from their home countries. Royal Canin is premium and available in both mousse and dry formats, although it is best known for its dry variant, whereas Pedigree is mid-priced in both wet and dry formats. Mars Inc. is the largest player in the UAE dog food market, with a market share of 41.1% in 2020, followed by Nestlé SA at 10.7%. Page | 4 Top ten brands of dog/cat food in retail market share % breakdown Brand 2016 2017 2018 2019 2020 Royal Canin (Mars Inc) 22.8 22.7 22.8 23.6 22.7 Pedigree (Mars Inc) 19.2 18.7 18.7 18.1 16.8 Taste of the Wild (Schell & Kampeter Inc) 7.5 8.0 8.2 8.5 8.4 Jerhigh (Charoen Pokphand Group) 1.6 3.4 3.6 3.8 3.8 Beneful (Nestlé SA) 2.6 3.1 3.2 3.3 3.2 Pro Plan (Nestlé SA) 2.9 2.7 2.6 2.7 2.6 Dog Chow (Nestlé SA) 3.3 3.2 3.1 2.9 2.5 Lily's Kitchen (Nestlé SA) - - - - 2.3 ZiwiPeak (ZiwiPeak Ltd) 3.1 3.1 2.1 2.0 1.8 Arden Grange (Arden Grange International Ltd) 0.2 1.0 1.3 1.2 1.3 Source: Euromonitor International, 2021 Dog food in UAE: Top five company retail market share % breakdown Company 2016 2017 2018 2019 2020 Mars Inc 43.5 42.9 43.2 43.4 41.1 Nestlé SA 10.0 9.0 8.9 8.9 10.7 Schell & Kampeter Inc 7.5 8.0 8.2 8.5 8.4 Charoen Pokphand Group 1.6 3.4 3.6 3.8 3.8 ZiwiPeak Ltd 3.1 3.1 2.1 2.0 1.8 Source: Euromonitor International, 2021 Cat food Total retail sales of cat food increased 11.2% annually from 2016 to 2020, lead by mid prices dry and wet cat food. Wet cat food accounts for 68.9% of all cat food sales in the UAE. All cat food categories are forecast to grow from 2021 to 2026, lead by mid-priced dry and wet cat food between 2021 and 2026. Sales of cat treats and mixers in the UAE is insignificant to dry and wet cat food sales but shows strong historical and forecast growth of 12.5% and 12.2%. Cat food in UAE: historical and forecast market segmentation in US$ millions Category 2016 2020 *CAGR % 2016–2020 2021 2026 *CAGR % 2021–2026 Total cat food 30.9 47.2 11.2 52.9 97.2 12.9 Dry cat food 10.1 13.9 8.3 15.1 24.1 9.8 Premium dry cat food 1.2 1.3 2.0 1.3 1.4 1.5 Economy dry cat food 6.4 7.8 5.1 8.2 10.3 4.7 Mid-priced dry cat food 2.4 4.8 18.9 5.6 12.3 17.0 Wet cat food 20.4 32.5 12.3 36.8 71.6 14.2 Premium wet cat food 1.5 1.7 3.2 1.7 1.9 2.2 Economy wet cat food 9.2 11.0 4.6 11.2 14.0 4.6 Mid-priced wet cat food 9.7 19.8 19.5 23.9 55.7 18.4 Cat treats and mixers 0.5 0.8 12.5 0.9 1.6 12.2 Source: Euromonitor International, 2021 *CAGR: Compound annual growth rate Page | 5 Mid priced cat food Mid-priced cat food enjoys robust growth thanks to increasing humanisation and the new pet protection law. Humanisation is particularly beneficial for wet cat food. Wet food is also considered healthier and higher quality than dry cat food, and pet owners are willing to accept higher prices. New variants, such as tuna and chicken, chicken fillet and cheese, ocean white fish and potato and chicken and shrimp, have also stimulated sales as cat owners are willing to try different products to see if their cat enjoys them and create a greater bond between cats and their owners. Organic and grain-free options are also expected to be popular. Company shares Cat food in UAE: historical company retail market share % breakdown Company 2016 2017 2018 2019 2020 Mars Inc 41.2 41.1 41.6 42.2 42.0 Nestlé SA 39.9 40.2 39.8 39.2 38.8 Schell & Kampeter Inc 1.7 2.0 2.2 2.4 2.5 Tropical Canning Corp Sdn Bhd 1.9 1.8 1.7 1.6 1.5 ZiwiPeak Ltd 1.1 1.1 0.8 0.8 0.8 Source: Euromonitor International, 2021 Foreign companies dominate the cat food category in the UAE, mainly due to the fact that consumers know and trust these brands from their respective home countries. The top two companies (Mars and Nestle) have made up around 80% of retail sales from 2016 to 2020. Mars carries a wide range of brands across all price points, from Whiskas in mid-priced wet and dry cat food to Sheba in premium wet cat food. The economy price band is also well catered for with the Kitekat brand, which is present in both economy dry cat food and economy wet cat food. Distribution channels In 2020, hyper markets (32.0%) and pet shops (29.3%) sold the most dog and cat food in UAE. Ecommerce also performed well with a 14.3% share, an increase of 61.0% over 2019. According to Euromonitor, companies’ choice of distributor is very important to succeeding in the UAE, with most companies importing cat food products. An example of this is ZiwiPeak, which experienced distribution problems with its partner, resulting in limited stock in the UAE, despite continued demand for ZiwiPeak air-dried cat food. Small manufacturers are also competing for shelf space in grocery retailers and getting exposure in pet shops and other specialist retailers. This has led to leading e-commerce retailers, such as Amazon and Carrefour, to expand the amount of pet care products available online, which could also help small retailers. According to Euromonitor, pet shops have capitalised on the popularity of ethical and health and wellness dog food products. One example of this is Pet’s Delight, which has opened a new store with an in-house pet nutritionist, sponsors dogs at a local dog rescue centre, promotes adopting pets, and sells only ethical, organic and sustainable pet food brands. Page | 6 Distribution channels in % share, 2016–2020 Channel 2016 2017 2018 2019 2020 Hypermarkets 41.4 37.6 36.0 34.4 32.0 Supermarkets 12.8 12.2 11.6 11.1 10.9 Pet superstores 2.1 2.4 2.6 2.7 2.6 Pet shops 27.3 30.0 31.4 32.4 29.3 E-commerce 6.9 7.8 8.3 8.9 14.3 Veterinary clinics 9.5 9.9 10.1 10.5 10.8 Total 100.0 100.0 100.0 100.0 100.0 Source: Euromonitor International, 2021 UAE imports In 2020, UAE imported C$54.4 million worth of dog/cat food from the world, with imports growing 13.9% annually between 2016 and 2020. The top five supplier countries are also growing strongly, with imports from Hungary growing the fastest, by 71.6% annually. Imports from Canada, the UAE’s twelfth largest source country, grew by 6.2% annually from 2016-2020. UAE Dog/cat food imports from top five countries in C$ (HS: 230910) Country 2016 2017 2018 2019 2020 *CAGR % 2016–2020 Total 32,284,211 32,655,112 34,503,474 39,750,716 54,360,732 13.9 Thailand 7,207,943 8,571,916 9,690,873 11,007,130 14,134,083 18.3 France 8,997,242 8,167,185 8,250,487 10,185,134 13,190,536 10.0 U.S. 5,297,887 5,722,769 3,383,050 4,575,778 5,533,770 1.1 Hungary 505,645 601,649 986,114 1,286,463 4,385,078 71.6 UK 2,599,459 2,388,324 2,973,584 2,956,737 3,994,206 11.3 Canada (12) 671,864 594,044 884,638 975,471 855,093 6.2 Source: Global Trade Tracker, 2021 *CAGR: Compound annual growth rate Opportunities for Canada The UAE is a growing export market for Canadian dog/cat food, by 6.2% annually during 2016-2020, Canada’s exports of pet food to UAE are valued at C$855K (2020). From 2016 to 2020, four provinces exported dog/cat food to UAE, Ontario being the largest exporter at 80.6% of total exports, followed by Alberta (18.1%), and New Brunswick (1.3%). Dog/cat food exports to UAE by province in C$ (HS: 230910) Province 2016 2017 2018 2019 2020 *CAGR % 2016–2020 Total 671,864 594,044 884,638 975,471 855,093 6.2 Ontario - 3,213 - - 689,204 - Alberta 664,894 590,831 875,786 963,781 154,528 -30.6 New Brunswick - - - - 11,361 - British Columbia 6,970 - 8,852 11,690 - - Source: Global Trade Tracker, 2021 *CAGR: Compound annual growth rate N/C: Not calculable Page | 7 Product launch analysis Between 2016 and 2020, 138 dog/cat food products were launched in UAE; which represents an annual decrease of 42.9%. New product launches made up the bulk of launch types in 2020 and have been consistent over 2016-2020. Most new launches were dog snacks and treats, with 36 releases, followed by wet cat food (13), wet dog food (10), and dry cat food (7). Dog/cat food launch types in UAE, 2016–2020 Launch type 2016 2017 2018 2019 2020 Total sample *CAGR % 2016–2020 New product 19 15 7 18 16 75 -15.8 New variety/range extension 14 31 5 2 3 55 -78.6 New formulation 2 1 1 0 0 4 -100.0 Relaunch 0 1 0 0 1 2 0.0 New packaging 0 1 0 1 0 2 - Total sample 35 49 13 21 20 138 -42.9 Source: Mintel, 2021 *CAGR: Compound annual growth rate Top five sub-categories versus launch types in UAE, 2016–2021 Sub-category New product New variety/range extension New formulation relaunch New packaging Total sample Dog snacks and treats 36 13 1 1 2 53 Cat food wet 13 29 1 0 0 43 Dog food wet 10 7 0 0 0 17 Cat snacks & treats 8 4 2 0 0 14 Cat food dry 7 2 0 1 0 10 Dog food dry 1 0 0 0 0 1 Total sample 75 55 4 2 2 138 Source: Mintel, 2021 Among the 138 pet food products launched from 2016 to 2020, adult pet food was the top claim (46), followed by no additives or preservatives (40), vitamin/mineral fortified (33), free from added/artificial colourings (32), and ethical - environmentally friendly package (32), and ethical - recycling claims (32). Page | 8 Top ten claims versus top five sub-categories in UAE, 2016–2021 Claim Dog snacks & treats Cat food wet Dog food wet Cat snacks & treats Cat food dry Dog food dry Total of all sub- categori es Pet - adult 8 17 6 6 8 1 46 No additives/preservatives 20 8 5 4 3 0 40 Vitamin/mineral fortified 15 7 5 2 4 0 33 Free from added/artificial colourings 16 7 4 3 2 0 32 Ethical - environmentally friendly package 5 20 5 0 2 0 32 Ethical - recycling 5 20 5 0 2 0 32 Free from added/artificial flavourings 11 7 5 2 3 0 28 Social media 16 3 0 4 4 0 27 Free from added/artificial preservatives 10 7 4 3 2 0 26 Low/no/reduced allergen 19 5 0 1 0 0 25 Total sample 53 43 17 14 10 1 138 Source: Mintel, 2021 Conclusion Demand for healthier and ethical products is expected to continue to increase in the UAE as consumers become increasingly concerned about providing an adequate diet for their pets. In addition to pet “humanization”, demand for healthier products is also driven by the country’s new pet protection law designed to protect against pet abandonment and maltreatment, primarily by nomadic expatriates. Growth in the UAE dog/cat food markets is expected to continue, especially in mid-priced wet and dry cat food. Sales of premium dog food are expected to continue to perform best in the dog food category, despite the introduction of a 5% tax in 2018. New product launches in the UAE are focused on dog snacks and treats, followed by wet cat and dog food, lead by adult, no additives/preservatives, and vitamin/mineral fortified claims. Page | 9 For more information The Canadian Trade Commissioner Service: International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice. • Find a Trade Commissioner More agri-food market intelligence: International agri-food market intelligence Discover global agriculture and food opportunities, the complete library of Global Analysis reports, market trends and forecasts, and information on Canada’s free trade agreements. Agri-food market intelligence service Canadian agri-food and seafood businesses can take advantage of a customized service of reports and analysis, and join our email subscription service to have the latest reports delivered directly to their inbox. More on Canada’s agriculture and agri-food sectors: Canada’s agriculture sectors Information on the agriculture industry by sector. Data on international markets. Initiatives to support awareness of the industry in Canada. How the department engages with the industry. Resources Euromonitor International: - Country Report | May 2020. Pet care in the UAE. - Country Report | May 2020. Cat Food in the UAE. - Country Report | May 2020. Dog Food in the UAE. - Country Report | Oct 2020. Consumer Overview in the UAE. Global Trade Tracker, 2021. Mintel, 2021. Page | 10 Sector Trend Analysis Pet Food Trends in UAE Global Analysis Report Prepared by: Kris Clipsham, Market Analyst © Her Majesty the Queen in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2021). Photo credits All photographs reproduced in this publication are used by permission of the rights holders. All images, unless otherwise noted, are copyright Her Majesty the Queen in Right of Canada. 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