Unicharm leads growing pet market

Pets are big business in Japan, with the market already the sixth largest in the world. Major international players like Mars and Nestle do well, but domestic companies are waking up to the potential. Unicharm entered the market late, having realised the need for disposable sanitary products for pets, but it is already the leader and expanding rapidly into pet foods too.

With so many people and its massive urban jungles, pets don‘t always stand out the way they do in some less densely populated countries, but Japan is the sixth largest market for pet supplies in the world, with an estimated value of around ¥347 billion in 2013, double that of 2000, and is expected to grow to ¥600 billion a year by 2020. Just over a quarter of all households are believed to own a dog or cat, and, although the number of dog owners fell marginally in 2014, the market continues to expand.

Mars Japan and Nestle Japan are two of the biggest players, but domestic companies are increasingly active. Sumitomo Shoji acquired the US brand Hartz Mountain in 2009 and since then has been expanding pet food ranges, which make up around a third of its total sales.

The largest player is Unicharm, a company better known for its disposable nappies. Back in the early 2000s, Unicharm tied with Toyota to develop pet sanitary sheets for cars. It never looked back and now has a 37.2% share of the pet toiletries market and, with new ranges of pet snacks, it even leads the pet food market with a 12.7% share, about one point higher than Mars Japan (see Chart). This latest business grew out of food processing technology designed to make beef jerky easier to chew for older humans.

Pet snacks not only play on owners‘ desire to pamper their pooches, but, unlike many of the human snacks sold in convenience stores, are actually designed to keep pets healthy, with everything from diet snacks through to foods that help clean teeth and alleviate bad breath.

Pet owners spent an average ¥4,260 a month on their animals last year and pet health will be the main focus to encourage them to spend even more. A recent survey showed that a 10% increase in consumption of pet food would boost the market by an estimated ¥11 billion, but extending pet lives by a single year would add a more considerable ¥20 billion to the market.

With fewer marriages and more single seniors, pets are also increasingly popular as substitute family members too, a trend companies expect to exploit further.

In addition to pet food, pet care products including sanitary products, are becoming big business too – all to the delight of Unicharm. Its core business in disposable baby nappies continues to decline with the population, and while important, growth in sanitary products for the elderly remains much higher in other countries. Unicharm has made some headway in international markets, but domestic pet supplies is set to become its second largest business over the next 5-10 years.