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You are here Business Data Year of the Dog: Korea Pet Industry Review 2018

Year of the Dog: Korea Pet Industry Review 2018

dog-300pxAccording to the Korean zodiac, 2018 is the Year of the Golden Dog, however based on the current trend in Korea  it may be right to redefine it as the year of the Pampered Dog. While walking around the streets of big cities in Korea, such as Seoul or Busan, it is hard not to notice small and well cared puppies that walk with their owners with great pleasure. In many cases, they are seated in a stroller or carried by their owners in a carrier very much like babies. At first glance, it seems strange, but it shows the special treatment pets get in Korea, especially the smaller ones.

ItsDog
Hanbok for pet, traditional Korean dress. Photo by ItsDog

Data provided by the South Korean Ministry of Agriculture show that in 2010 about 17.4% of the Korean households owned at least one pet, while in 2015 the rate increased to 21.8%. Similar data were found in a survey conducted by the world's fourth largest research firm, GfK, in 2015. The respondents were asked to report which pets they have, if any. It turned out that dogs are the most popular pet followed by fish. Some of the respondents own more than one pet.

chart-pets-ownership-Korea-GfK

This means that in South Korea, a country of 51 million people, every fifth person is a happy owner of a pet, about ten million people. According to the Korean Animal and Plant Quarantine Agency, the number of pets in 2015 was about 7 million, and in 2017 it increased to about 10 million pets. About seventy percent of them are dogs

The increase in pet-owning households naturally led to an increase in the pet industry market size. While in 2012, the Korean pet industry market size was around US $790 million, three years later by 2015 the market doubled to US $1.7 billion. According to forecasts by NongHyup, The National Agricultural Cooperative Federation, the pet industry in Korea is expected to triple its size to US $5.1 billion in about three years.

chart-Korean-pets-market-size2

The adoption and ownership of pets has been reinforced by the emerging demographic changes in Korea - aging, world's lowest birth rate and late marriage. This situation has accelerated the development of single person household category. The category has been increased sharply from 1995 to 2016 by 216.9% and is currently the largest household category in Korea with a rate of 27.2%. While in European countries there is a direct correlation between the number of children in a household and the rate of ownership and adoption of pets, South Korea has the opposite or nonexistent of such correlation. As a substitute for a spouse or child, it was found that the rate of adoption and ownership of pets among single person households was the largest compared to other household categories.

Among pets in Korea, as mentioned above, there is a preference for dogs, or to be precise for puppies. The most popular dog breeds with 24.9% is the Maltese dog, followed by Shih-Tzu dogs (15.3%), Miniature Poodle (9.7%), Yorkshire Terriers and Jindo a local Korean breed. One of the reasons for the preference of small dogs derives from the common living conditions in South Korea - dense cities with high rise apartment buildings.

Korean-Maltese-Dog
Maltese dogs in Seoul

Another, equally important, reason is that medium and large dogs are still perceived by the general population as deterrent, frightening, and sometimes dangerous, either because of their size or because of the intensity of their barking. So while smaller dogs gain affection and sympathy by pedestrians on the city's streets, large dogs can cause unpleasantness or fear and in a rare cases even aggressive responses from pedestrians

According to combined data from the Korea Association of Pet Industry, the Korean Statistics Authority and the Korean Animal and Plant Quarantine Agency, the main sectors of the pet industry are the food and medical care. In 2016 the food products sector generated US $591 million a year (33%), while the medical and health care sectors reached to $555 million (31%). Other sectors include supplies (about 20%), services (about 10%) and other transactions, including pet sales (about 6%).

chart-pets-market-by-sectors-Korea

Pets in South Korea are considered as family members and therefore get special treatment and care. According to the Korean Consumer Agency, on average, Korean household spend about US $120 on pets, 40% of it spent on food.

Pet Food Sector

Traditionally, the food intake of dogs is divided into wet and dry categories, while the dry food category being the largest and the most important with over 80% of market share. Wet food is still considered as a premium product and its price is higher than dry food. However, the trend is changing and wet food, together with other premium food products such as organic food, started to accumulate a larger market share each year, thanks to the marketing activities by the pets' food suppliers and distributors

The pet food sector in Korea is mainly controlled by foreign companies with 70% market share, led by Mars Petcare (owned by the US company Mars), which holds 25% of the sector through the brands: Royal Canin, Cesar and subsidiary company brand Pedigree. Next is Nestle Purina, which holds 11.5% of the sector, TFP Nutrition (formerly known as Texas Farm Products) with 6.9% of the sector and the old company Pet ANF with 6.9% of the sector. Among the local Korean companies is CJ CheilJedang with 6.1% of the sector.

Korean-pet-food-market-brands

The import volume of dog and cat food products is on the rise and in 2016 was about $171.3 million, an increase of almost 30% compared to 2014. The four leading countries in exports to Korea are China, United States, France and Thailand, which account for 75% of pets food products export to Korea. The import tariff rate is 5%, but countries that have signed a free trade agreement (FTA) with Korea enjoy a zero tariff rate.

Pet Food Import to Korea by County

While the pet food sector is dominated by foreign brands, the Korean manufacturers are still operate and sale, however they suffer from brand inferiority compared to foreign brands, and therefore find it difficult to increase their market share. The problematic status of Korean manufacturers is also clouded by a food affair involving Dear My Pet, a company whose products were removed from shelves last year due to claims of death and illness among dogs who ate from its products. A government investigation found there was no connection between the death and illness to the company's products, but the affair caused distrust and suspicion of consumers to local manufacturers and brands.

Recently, local large corporations have started to put focus on the pet food sector and began launching various premium products. Among the Korean manufacturers are the veteran Erebon, which has been operating since 1981 and produces a series of organic food products. Harimd, on the other hand, develops food products that have same quality and standards as human food. CJ Cheiljedang, a member of the CJ Group, mainly deals with human food production, but not long ago identified the growth potential of the pet food sector and launched a brand of pet food called OFresh.

Ofresh
Ofresh brand by CJ

The entry of Korean conglomerates into emerging markets that are usually dominated by small and medium-sized companies is not new phenomenon in Korea, and the more profitable the market is, the more conglomerates aggressively scale their way into it. Another example of a conglomerate that has recently entered the pet market is LG. With its subsidiary - LG Household & Health Care, which mainly deals in cosmetics and house goods consumer products, it launched earlier this year the Sirius Will brand, a line of food products based on organic ingredients. A year ago, the company launched O's Sirius brand, which includes a series of pet care products made of natural ingredients such as shampoo, conditioner body mist and deodorizers.

Sirius-pick-LG
Sirius Brand by LG

Supplies Sector

Other sector that is active and no less interesting is the supplies sector which mainly deals with equipment and accessories for pets. As mentioned earlier, this sector accounts for about 20% of the pet industry and in 2016 had a market size of about $358 million. Beside the basic and common products, in Korea there is a demand for premium and niche products, indicating the openness of pet owners to innovative and advanced products. These products are mostly developed and manufactured by local start-ups and due to its popularity they are even been exported globally. In other cases, companies that originally develop and sell baby products identified the potential in the pets industry and launched special products line pets

For example, Petfit (http://www.wepetfit.com) has developed a wearable device for pets that monitors its activity and health status while updating the owner through a designated application for smartphone.

Another company named BallReady (http://ballready.com) has developed an automatic feeding device for dogs that also serves as a game in which the dog receives food only after returning the tennis ball back to the device. The facility is designed to relieve boredom in dogs that stay indoors for a long time.

Ballready
BallReady food dispenser

In the field of pet grooming, J&K has developed Mong Spa (http://mongspa.com), a portable bathing and Jacuzzi equipment for pets. The equipment is used by private customers as well as by service providers who come to the customer's home to wash and treat the pet.

In the same field, Vuum (http://vuum.co.kr), which originally develops cleanroom facilities for relevant industries, has developed a small drying and sterilization unit for pets. The Company's units and products can be purchased and rented.

Eden Bliss (http://eden-bliss.com) believes that our little friends need warmth, love and comfort just like us. The company develops premium comfort products for pets. The current line of products includes Sling carriers, cozy blankets and scarves for cats and small dogs.

Edenbliss-744
Pet sling carrier by Eden Bliss

It turns out that in Korea dogs need to be up to date on the fashion line just like their owners. P&P Creative (http://pnpsale.com) has launched a brand called It's Dog that includes clothing to suit every occasion, such as pajamas, cool day jackets, skirts, organic cotton clothes, and even traditional Korean dress for the holidays.

Coel has taken a step forward and launched the KRONO (http://www.krono.co.kr) strollers brand for pet pets. The goal is to make it easier for a pet to walk in densely populated places, but also to allow the owner better control over the pet.

Service Sector

The services sector is also developing rapidly, with many companies working to meet the growing demand from pet owners for various and special services that give pets an important and respectable status, almost like that of a person.

For example, Pet Me Up (https://www.petmeup.co.kr) provides pet taxi services and actually collects pets from their homes to various locations around Seoul.

PetMeUp
Pets taxi by Pet Me Up

Other company called Pet Friends (http://pet-friends.co.kr) supply cats and dogs products with fast and special courier service to customer's home. Pets should also receive medical advice and treatment in case of emergency. Petdoc (https://www.petdoc-korea.com) allows pet owners to receive immediate advice from a qualified veterinarian via telephone.

Like small children, pets need a babysitting when their owner is not around and the Dog Mate platform (https://www.dogmate.co.kr) has been developed to match pet owners and babysitter.

Very much like human being, the lives of Korean pets are time-limited, and a company called 21Gram (http://www..21gram.co.kr) offers funeral and burial services that include a regular ritual and conjugal ceremony for the deceased pet's family.

For those who cannot separate from their deceased pet, Soam BioTech (http://en.sooam.com) offers artificial cloning and creates a live reproduction of the deceased dog. The company's services are very popular in England, where there is also a lottery for free replication for participants. The average cost is $100,000 per pet.

Sales and Distribution Channels

In South Korea, the main distribution channels for pet products are the large retail chains and online stores, with the latter benefiting from larger volumes. In fact, this is not surprising. In 2016, for the first time, online sales reached $ 55.9 billion, bypassing total purchases made in regular stores, shopping malls, supermarkets, and commercial centers. This is an increase of 33% compared to 2014, when total sales over the Internet were $ 42 billion.

More information about the special aspects of the e-commerce market in Korea can be found in our December 2015 review - "South Korea e-Commerce Market" at: http://www.koisra.co.kr/en/business-data/362-south-korea -e-commerce-market.html

As noted, this trend does not skip the pet industry and the largest sales sites in the country, not only offering products for sale, but also developed sales interfaces dedicated to only for pet sector. For example, InterPark which ranked fifth in the online index (as of September 2017, Nielsen Korea) with an average of 6.13 million unique visitors per month and 19.4% exposure, set up a dedicated sales site called InterPark Pet (http://pet.interpark.com) and also launched a mobile app (Android and iOS) that leads the pet category apps.

Interpark
InterPark Pet App and Website

The commerce site Auction which owned by eBay Korea, rank third with an average of 9.28 million visitors a month and a 29.3% exposure rate (Nielsen Korea, September 2017), is trying to differentiate itself with a sales site called Pet Plus (http://petplus.auction.co.kr) that integrate a curated commerce concept. The site already has about 60,000 permanent customers.

Accurate identification of demand and timely adjustment of e-commerce sites to the pet market led to an average increase of 45% sales volume in 2016. The largest e-commerce site in Korea – 11treet - reported that in 2016 the sales volume in the pet category grew by 40% compared to 2015, trend that continued in 2017.

Traditional retail chains, which these days find it difficult to increase their sales, have seen a special increase in pet products sector. Lotte, one of the largest retail chains in Korea with more than 45 department stores and supermarkets, reported that the total sales in 2016 increased by 1.8% compared to 2015, but the pet sector grew by 22.5%. As a result of such growth Lotte decided to launch a special pet products brand and new retail stores that will provide not only products but also comprehensive services such as medical treatments, grooming and cleaning, pensions, veterinary counseling and burial services.

Unlike Lotte, which is just currently planning its entry into the pet market, E-Mart, which belongs to Shinsegae group and run Korea's largest supermarket chain with 160 branches, already identified the pet market potential in 2010 when it opened a dedicated pet store called Molly's Pet Shop. Today, there are 29 Molly's stores offering more than 1,700 food products, accessories, clothing, hygiene and complementary services such as veterinary treatments, cleaning and spa care, pensions and hotels, fitness rooms as well as coffee shop to enhance the time of the pet owners while their pets play and treated.

MollyPetsShop
Molly's Pet Shop, Seoul

Another dominate player in the sector, GS Retail, which belongs to the conglomerate GS Group and owns a chain of convenience stores - GS25, the second largest in Korea with approximately 10,486 stores throughout Korea, reported that sales of pet products was increased from 20.6% in 2013 to 31.8% in 2015. As a result, the company decided not only to distribute products of other companies but also to develop and market – "You", a private brand of pet food. The brand "You" is produced for GS Retail by the Korean company CJ Cheiljedang. The move was right as the chain enjoyed an increase in sales in the pet category. In 2016 the pet products sale increased in 47.3% compared to 2015.

Business Opportunities in the Korean Pet Market

The pet market in Korea is an active and developing market, with high service awareness and a wide range of products. The market is growing consistently each year, with a preference for premium products and services in various categories.

The market offers diverse business opportunities to foreign companies who wish to enter and sell in the Korean market. Most of the international known brands already in Korea and enjoy surplus demand over the local companies that still suffer from a low reputation by local consumers.

We believe that with right market penetration plan even niche products can become popular products in Korea. Importers who want to find manufacturers and suppliers of new products in the Korean market will find an abundance of special and innovative products at very high qualities and competitive prices.

Companies that wish to work in Korea or to find Korean pet products suppliers are welcome to contact our Head of Business Development Mr. Sean Jung at This e-mail address is being protected from spambots. You need JavaScript enabled to view it ; +82-2-947-9443