As the largest economy in Southeast Asia and the fourth most populous country in the world, Indonesia's pet industry has developed rapidly in recent years. According to the 2022 Global Pet Market White Paper, Indonesia led the global top pet market with a year-on-year growth rate of 46% in 2021.
1、 Market size and development potential
With the increase of disposable income and living consumption level of middle class in Indonesia, as well as the increase of local pet ownership, the consumption of Pet food, supplies and services continues to grow. This has invisibly driven the continuous expansion of the Indonesian pet market. At present, the Indonesian pet market is still in a rapid development stage.
According to a research report released by Future Market Insights (FMI), the size of the Indonesian pet market is expected to reach $2.2984 billion by 2023. By 2033, the market is expected to exceed $5.8832 billion, with a compound annual growth rate of 9.5% from 2023 to 2033. It is expected that Indonesia will contribute nearly 1.5% of the demand share in the global pet market.
Image data source: FMI
According to a survey conducted by iPrice in 2021, Google searches related to pets in Indonesia have also increased by 88% in Southeast Asia.
Driven by several key factors, Indonesia's pet industry has experienced significant growth. The main driving forces for the growth of the industry include the growing number of pet owners in the country and the high consumption capacity of pet related products and services driven by the trend of pet humanization, which creates new opportunities for enterprises providing Pet food, supplies and related services.
We have observed that in recent years, influenced by rapid urbanization, younger and healthier pet owners, and social media, people's attitudes towards pet owners have begun to change. This has led to a growing population of pet owners in Indonesia, and the pet market has always maintained a high-speed development trend.
Of course, the rapid development of the Indonesian pet market is also driven by the following factors:
1. Demographic dividend
According to data.ai, the total population of Indonesia in 2022 has reached 278 million, ranking fourth in the world. In addition, the labor price of Indonesia is very competitive in Asia. More than 50% of the population is Young adult under the age of 30. Indonesia is a country where the supply and consumption of young labor are growing very fast.
2. Cultural Background
The traditional beliefs and cultural background of Indonesians towards animals are relatively gentle and kind, which also makes the development trend of the local pet industry relatively stable.
3. Business environment
Indonesia is not only the largest economy in Southeast Asia, but also an important economy in Asia. Especially as a member state of the ASEAN and G20 group, its status can be said to be crucial, and it is mutually beneficial for the development of countries.
4. Internet popularization
According to relevant data statistics, as of the beginning of 2023, the number of internet users in Indonesia has reached 212.9 million, and the internet penetration rate has increased to 77.0%. It is worth mentioning that in some small and medium-sized cities, and even remote rural areas, it has been basically covered. The continuous increase in internet penetration rate has accelerated the economic development of various fields in Indonesia.
5. Favorable policies
On January 2, 2023, the Regional Comprehensive Economic Partnership (RCEP) has officially entered into force for Indonesia, which may have multiple impacts on the development of Indonesia's pet industry, such as tariff concessions, trade facilitation and industrial cooperation opportunities. The combined effect of these factors will help promote the sustainable development of Indonesia's pet industry.
The above data is sufficient to indicate that the Indonesian pet market has great development potential. In the future, with the continuous development of the market, production enterprises and service providers will explore more new opportunities.
2、 Family pet ownership rate and pet preference
The pet ownership rate in Indonesia has steadily increased with the rapid development of the country's economy, thanks to the acceleration of urbanization, where more and more people consider cats and dogs as part of their families. The structure of pet owners is also undergoing changes, with millennials with stronger consumer willingness and ability having more pets and a greater sense of loneliness prompting the younger generation to choose pet owners as partners.
However, it is worth noting that approximately 87% of Indonesia's population believes in Islam, making it a Muslim in the world
Image source: Statista Data source: Rakuten Insight Same below
From the perspective of pet types, Rakuten Insight survey data shows that 69% of Indonesian respondents say they have cats. On the other hand, only 13% of respondents choose to keep a dog. As of January 2022, the proportion of people in Indonesia who own pets is shown in the following figure:
Compared to the data as of January 2021, let's take a look at the main types of pets, mainly cats, dogs, aquatic animals, birds, and rabbits, with increases of 22%, 3%, 9%, 6%, and 1%, respectively. From this perspective, cats still dominate pet raising, with the highest ownership and growth rates.
More and more single families and small households in urban areas are also prompting more people to choose cats over dogs, as the latter require larger activity space, more time and energy to take care of.
The high ownership rate of Indonesian cats has promoted the development of the country's pet industry. We understand that according to FMI data, by 2022, cats have accounted for approximately 36.3% of the Indonesian pet care market share. Due to the fact that cats are easier to take care of than dogs, Indonesia's cat adoption rate has been increasing, and this trend is expected to continue. The cat segment is expected to grow at a compound annual growth rate of 7.8% during the forecast period.
03. Related expenditures and consumption trends
In Indonesia, due to the popularity of cats, the consumption of products and services related to them is the highest, followed by aquatic and bird species, while dog related products and services have also increased in recent years, but the growth rate is relatively small.
In terms of product expenses, Rakuten Insight survey data shows that 42% of Indonesian respondents say they spend as much as 100000 Indonesian rupees on pet products, while 38% of respondents say they spend approximately 100000 to 300000 Indonesian rupees on pet products. As of January 2022, Indonesia's monthly expenditure on pet products is shown in the following figure:
Image source: Statista Data source: Rakuten Insight Same below
In terms of products purchased, Pet food and pet products (such as household products, cleaning products, cat nests, etc.) are the products most consumed by pet owners. According to data from Rakuten Insight, 88% of Indonesian respondents said they would buy Pet food and snacks for their pets, 43% bought housing related items or bedding (such as cages, Aquarium, terraces, cat beds, etc.), and 41% bought beauty and hygiene products (such as cat litter, pet shampoo, etc.). As of January 2022, the products purchased by Indonesian pet owners are shown in the following figure:
Among the above mentioned products, Pet food is the most purchased product by Indonesian pet owners:
In the past few years, as pet owners increasingly understand the adverse effects of synthetic food on pets, the demand for organic Pet food began to surge. It is reported that most middle - and low-income groups in Indonesia prefer affordable Pet food. Their growing demand for nutrition and delicious food to meet their daily feeding needs is the main driving force behind the growth of Pet food.
Previously, the Indonesian Pet food Association (AMHKI) had issued a forecast that the Indonesian Pet food industry would grow at an annual rate of 20%, with 60% of the market in Java, Jakarta and other major cities.
Let's look at a set of new data. According to the report updated by Statista in May this year, by 2023, the income of Indonesia's Pet food market is expected to reach 1.85 billion dollars. It is expected that the market will grow at a Compound annual growth rate of 7.54% during 2023-2028.
Image data source: Statista, the same below
In terms of per capita consumption, by 2023, the per capita consumption of Pet food in Indonesia is expected to reach 4.04 kg.
In terms of sales, it is expected that sales will increase by 5.2% by 2024; By 2028, it is expected that sales will reach 1.44 billion kilograms.
In terms of price, in 2023, it is estimated that the price of Indonesian Pet food per unit will be US $1.62; By 2028, it is expected to rise to $1.85 per unit.
In terms of competition pattern, the international Pet food brand is the leading brand. According to the data of Ourui International, Mars, Colgate-Palmolive and Nestle Purina will rank in the top three in 2021, accounting for more than 70% of the Indonesian Pet food market share, leading other competitors.
It should be noted that Indonesia has very strict requirements for importing Pet food. Therefore, if you want to export Pet food to Indonesia, you must comply with the relevant regulations and standards of that country. For example:
1. Pet food inspection institutions in countries or regions recognized by the Indonesian agricultural department have conducted inspection and certification, such as Halal certification
2. Comply with the standards and specifications stipulated by the Indonesian Food and Drug Administration
3. Have correct labels and packaging, including information on ingredients, usage, production date, shelf life, etc
4. Meet the requirements of relevant Indonesian laws and regulations, such as import and export licenses
These requirements may change from time to time. It is recommended to consult the local importers and exporters association or relevant agencies for the latest information before exporting Pet food.
04. Distribution Channels&Industry Investment Opportunities
The distribution channels of pet products in Indonesia are diverse, involving online, offline, traditional, and wholesale markets. The types, prices, and services of pet products provided by different channels vary. Pet owners usually choose appropriate purchasing channels based on their own needs and preferences.
Taking Pet food as an example, the data of Ourui International shows that in 2021, Pet food in Indonesia will be mainly distributed through physical store retail, accounting for 64.0%. However, from the trend, the compound annual growth rates of different channels from 2017 to 2021 will decline, and e-commerce will have the highest compound annual growth rate of 92.7% in all channels.
The data from FMI also shows that the modern retail industry based on trade still dominates, with a share exceeding 31.5% in 2022, mainly due to the increasing supply of pet care products provided.
Online retail is seen as a potential growth driver for the pet care industry, and a wide range of product choices on platforms such as Lazada Indonesia, Shopee, Tokopedia, Blibli, Amazon, and TokTik will continue to drive online sales.
In addition to traditional online and offline channels, the popularity of social media has further promoted the development of Indonesia's pet industry. According to data statistics, as of January 2023, Indonesia has 167 million social media users, equivalent to 60.4% of the total population.
In terms of industry investment opportunities, the Indonesian pet industry is in a rapid development stage, with many new opportunities but also facing many challenges. The opportunity is a good pet market environment, while the challenge is that there are many international participants and the competition is relatively fierce, especially in the Pet food market. Therefore, investors who want to enter the Pet food market should pay special attention.
Here are some possible investment opportunities that businesses can focus on:
High quality pet products: natural, organic and non additive Pet food and high-quality care products become the first choice of pet owners, because these products can provide healthier diet and better quality of life.
Emphasis on pet care: The improvement of pet hygiene awareness such as dental hygiene and oral care has driven the demand for pet oral care and beauty related products to grow.
Pay attention to pet health: The medical and health issues of pets are receiving increasing attention, such as paying attention to preventive veterinary care and regular pet checkups.
A wide range of pet services: pet grooming, pet hotels and foster care, pet cafes, and pet friendly places are becoming increasingly popular. The professional environment related to veterinary care and clinics is constantly increasing, and it is expected to usher in new growth.
05 written at the end
Overall, the development prospects of the Indonesian pet industry are broad, with increasing demand from pet owners for various pet products and huge market growth potential. At the same time, with the continuous development of the market, the demand for products will also become more diversified, which will bring more opportunities to production enterprises.
Investors can seize opportunities, choose suitable investment directions and partners based on market demand and their own conditions, and carry out related investments and business expansion. However, it should be noted that sufficient market research and risk assessment are required before investing.