With population ageing and the declining birthrate, a growing
number of Korean households are opting to own pets. As such, the
domestic pet market is expected to expand from a scale of KRW
1.43 trillion (USD 1.27 billion) in 2014 to over KRW 6 trillion in
2020, and pet-related industries, too, will see a steep growth.
Also, while pet-related industries had previously been limited to the sales of pets, pet foods and healthcare, the pet industry is now being diversified, merging with a variety of other industries, such as pet grooming and insurance. As such synergy continues to grow, the industry is expected to account for a bigger chunk of the economy.
However, although the current Animal Protection Act deals with pets, the Act only focuses on the protection of animals, making it inadequate for cultivating and developing pet and pet-related industries. That is, compared to how fast they are growing in scale and importance, support policies and institutional assistance are still insufficient. There is an increasing need to nurture the pet industry through systematic and practical policies and legislative support.
The demand for pets is rising in Korea as the number of one-person households continues to grow. According to a 2015 public
opinion survey on animal protection, 21.8 percent of all households owned pets as of 2015, a 3.9 percent increase from 2012.
From this, it is estimated that some 4.57 million households own
pets. Cat owners raise an average of 1.74 cats, while dog owners
raise an average of 1.28 dogs. Based on this estimate, there are
about 5.12 million dogs and 1.89 million being raised as pets in
Korea—a 16.6 percent and 63.7 percent increase, respectively,
from 2012 figures.
Pet-related industries are estimated to have accounted for about
KRW 894.75 billion (USD 794.54 million) in 2012. As the
increasing demand in pets vitalizes related markets, the average
annual spending for each household is on the rise. In particular,
spending on pet-related products has been surging since 2010,
despite the global recession. This is typical of the pet industry,
which is affected little by changes in the economy.
Pet-related industries have been recording two-digit growth rates every year, and are expected to contribute to the creation of new markets and jobs. Pet-related markets are anticipated to continue on a steady path of growth and reach a scale of about KRW 6 trillion (USD 5.33 billion) by around 2020.
Looking at the market trends in each sector, it is estimated that
the pet food market was worth about KRW 150 billion (USD
133.2 million) USD in 2012, and about KRW 250 billion considering the retail value (including 40 percent margins). As consumers
look for increasingly high-quality goods, the retail market for pet
and pet-related products witnessed rapid growth in sales from
KRW 168.7 billion in 2009 to KRW 267.4 billion in 2011, a 1.7 time increase in two years. Also, the relationship between the pet
product retail industry and services industry is growing more complex as more shops sell products for pets as well as provide vet
care and grooming services.
Unlike feeds for industrial livestock, pet foods are seeing a
growing trend of products targeting aging and obesity. In particular, as health care for pets continue to grow in importance, it is
expected that the vaccination, medical treatment and diagnosis
market will further develop and flourish
As of December 2014, there are some 4,000 vet clinics across
Korea, a 40.5 percent jump from 2008, and of which 2,792 are for
pets, 771 for industrial livestock and 416 for both. A total of 5,745
veterinarians work at such clinics. Recent vet clinics not only provide medical facilities.
The majority of medical device makers for pets in Korea are
small enterprises that each produce a wide range of items on a
modest scale. Recently, however, as the number of pets grow and
interest mounts in veterinary medicine, veterinary medical device
markets are starting to thrive with increasingly specialized and
high-end products. Lately, various medical devices, even expensive, cutting-edge equipment designed for humans, are being used
to treat animals. In 2002, there were merely 15 Korean companies
making 11 types of devices, but the number of registered companies started to surge in 2007, and the number of items has exceeded 40 since 2008 and stayed over 60 every year since 2011. Since
then, permission for manufacturing started to exceed those for
imports. As of March 31, 2013, a total of 703 items were registered
by 98 manufacturers and 74 importers. Of these items, registrations
for 41 items at 18 companies were terminated, leaving the current
number at 662 items at 154 companies.
The domestic market for animal drugs is also continuing on an upward trend for both domestic-made products and imported finished goods, while exports as well are seeing
every year for both raw materials and finished goods.
The Korean pet insurance market is largely uncharted territory
that has yet to be formed on a large scale. Several companies had
attempted to provide insurance for pets in 2008, but ultimately
gave up in 2010 due to the difficulty of setting standards for coverage and low profitability. Later, when the Companion Animal
Registration System came into effect in 2013, several companies
launched new insurance products for dogs. However, due to the
lack of variety in insurance products, most pet owners still have little choice but to shoulder the burden of expensive veterinary care
As veterinary care expenses continue to mount, the pet insurance market, too, is expected to set out on a new path of growth. It is likely that products covering congenital or genetic diseases, cancers and injuries will be developed, along with policy riders that cover regular checkups, death benefits, pregnancy complications and compensation for medical expenses. In addition, the rising demand for pets is also increasing the number of cases where owners have to compensate for any loss inflicted by their pets on another person (Civil Act Article 759-2), creating another growth factor for the pet insurance industry.
Compared to the United Kingdom, where 20 percent of pet
owners have pet insurance, less than 0.1 percent of Korean pet
owners can say the same, with only two companies offering pet
insurance in the country. However, because medical expenses are
higher for pets than for people, as there is no equivalent to the
National Health Insurance system for pets, the pet insurance market has a high potential for growth. In the United Kingdom and
Japan, pet insurance markets are growing at an average annual rate
of over 17 percent, and have the highest growth potential among
all pet-related industries.
Markets for service businesses such as companion animal training schools, modeling agencies and grooming shops are expected
to break down into more subdivisions and undergo further specialization. While the main purpose of pet grooming is currently for
maintaining hygiene and cleanliness, greater importance will be
placed on aesthetic factors in the future. In addition, various new
businesses are expected to emerge, such as pet hotels and vacation
packages for travelers with pets.
For the past 30 years, Korea’s pet food and product manufacturing market has achieved both significant internal and external
growth. However, individual companies can only do so much in
their efforts to enter foreign markets, making it crucial for the government to support the Korean pet industry as a whole through
related policies. The massive Chinese market is a blue ocean when
it comes to pet industries. While the number of pets owned in
China is 20 to 30 times the scale of Korea, Chinese pet owners
have relatively little trust in pet products or foods
made in the
country. Therefore, there seems to be sufficient opportunity for
Korean companies to benefit from the Korean Wave and enter
China’s pet industry market.
There are, however, also real obstacles to achieving that goal, including those regarding export customs. For
instance, for a
Korean company to export pet food to China, it has to go through a
two-and-a-half-year customs process, and if there happens to be a
change in the Chinese buyer, the company will have to repeat the
process and wait for another two and a half years. Although the
chances of having restrictions imposed are low, as long as companies go through the customs process and take the necessary precautions, there still remain practical difficulties of operation. If
such matters could be improved through intergovernmental agreements, Korea’s pet industry can see an explosive surge in opportunities for entering foreign markets.
In the case of the United States, pet products are beneficiary items of the Korea-U.S. Free Trade Agreement, meaning Korean pet product companies have the opportunity of enjoying customs free access to U.S. markets as long they can prepare the necessary documentation for proving the country of origin.
Around 70 to 80 percent of pet-related products in the U.S. market are characteristically supplied by Chinese, U.S. and Mexican
companies. Of these, the more expensive products that require a
higher level of technology to make are usually made in the U.S.,
Canada and Germany, while most of the cheaper accessories and
clothes are made in China and Mexico. Although several Korea
pet product design brands have entered the U.S., Korea still has a
weak presence in the country.
Therefore, rather than engaging in a simple competition with China’s low-cost products, Korea has a greater chance if it targets premium U.S. markets, focusing on eco-friendly or organic pet foods and health products. Korean companies should also come up with differentiated products that combine innovative ideas with wi-fi or other new technologies.
Thus, as it is now easier for Korea’s small and medium companies to apply, enhance, and converge their current businesses that have suffered fierce competition, and switch over to the pet industry, it is time they try making inroads into the “super pet market” of the U.S. by merging differentiated technologies and ideas.
Late last year, Korea Dog News, which operated its own booth as a communication channel
for Korean companies at the China International Pet Show (CIPS) held in Beijing in
November 2014, signed a Korean agency contract with the organizing committee of
Shanghai’s Pet Fair Asia. At the last three fairs, it set up a Korea promotion center to help a number of
Korean pet-related companies export pet products to foreign countries.
In the U.S. as well, Korean companies are actively taking advantage of pet fairs to expand exports. They should also pay greater attention to the world’s largest Global Pet Expo, presented every spring by the American Pet Products Association (APPA) or Super Pet Expo.
|Name||Location||Industries (product types)||Scale||Frequency|
|Interzoo||Europe, CIS||- Pet products: pet food, toys,
grooming products, health
products, cages, funeral goods,
- Installations, equipment: display stands, pet store equipment
- Pet food technology: raw materials, production technology, packaging and preservation technology, production machinery, packaging machinery
- Healthcare and treatment
1,698 companies in 2014 (1,390 foreign)
Only open to business persons
|China International Pet Show||China||Pet food, clothing, toys, cages, training tool, healthcare, grooming, medical devices and medicine, funeral goods||1,157 companies in 2015||Annual|
|Pet Fair Asia||China||Pet foods, pet products, aquariums, small pets||700 companies in 2015||Annual|
|Daegu Pet Show||Korea||- Pet products, accessories: pet
foods, medicines, healthcare
products, grooming products,
hygiene products, fashion items
- Installations, equipment: display stands, pet store equipment, medical devices, car products, outing products, toys, training facilities
- Services: vet clinics, grooming parlors, theme parks, shopping malls, institutions, schools, applications, insurance, funeral services, franchising
- Companion Pet Pavilion
|Thailand International Dog Show||Thailand||Dog food/diapers, shampoos/lotions, grooming tools, cages, beds, collars/leashes, toys, healthcare products (medicine), purebred breeding farms, related services (hotels training), dog clothing, souvenirs||200 companies||Annual|
|Pet South America||Central and South America||Medical, health (healthcare, sanitation industry, sanitation products), hygiene/grooming, accessories, equipment, services (installations, equipment displays for shops)||350 companies in 2015||Annual|
|National Pet Show||Europe, CIS||Pet dog products and pet dog adoptions||140 companies||Annual|
|Zoosphere||Europe, CIS||Pet products, grooming services||200 companies in 2015||Annual|
|Pet Expo||Japan||Pet products (collars/leashes,
carriers, hygiene products,
bathing products, grooming
products, insurance, toys,
Pet clothes and fashion items Pet foods (including snacks, baby formulas)
Various events (field days for dogs, grooming classes, pet counseling, dog matchmaking, etiquette lessons)
An estimated 60,000 visitors
* The opinions expressed in
this article are the author's own and
do not reflect the view of KOTRA.