Investors bet on pet food maker to feed your cat and dog

China's dogs and cats get plenty of love from their owners, but it appears there's also plenty of interest from investors with Fullpet planning to use its Series B funding to expand its pet food business.

It seems China's younger generation are put off having children and instead opting to devote their energy and care on their pets. And this trend is helping the pet industry gain the attention of the capital market.

Fullpet, a Shanghai-based pet food maker, said on Tuesday that it had completed its Series B fundraising of about $43.6 million.

Proceeds from this fundraising will be used to build a fully automated factory near Shanghai, in addition to building a pet food brand under its own name. Addor Capital, Shenzhen Capital Group and Jinding Capital were among those who joined the round of fundraising.

After this round of fundraising, Fullpet aims to become the biggest pet food manufacturer in China, with the new factory aiming to begin operating in 2020.

For years, Chinese cats and dogs relied heavily on imported pet food. In 2018, the market value of the Chinese pet food industry exceeded $8.6 billion, according to research firm Qianzhan. More than 60% of the market share was owned by international brands such as Nestle Purina PetCare and Mars.

To date, Chinese pet food brands haven’t built enough trust to win local customers. Market leaders in the industry, such as China Pet Foods, only manufacture processed pet food for international brands. But the Chinese pet industry is evolving so fast that different demands have created a market gap for newcomers to join, according to Fullpet.

Fullpet's chairman Wang Yingchun said the company wants to become “the Foxconn in Chinese pet food industry”. The company would like to evolve from a pure manufacturing plant to offering self-developed pet food for clients.

Creating its own brand would also help the company improve its profit margins. “Making pet food has a very low gross profit rate,” an unnamed scientist working in the US pet food maker Natural Polymer International Corporation said. “Most US pet food makers are aggressive about mergers and acquisitions, to grow big in the market. It is the most effective way to acquire market share.”

About 17% of Chinese families now have a pet, and the number is still growing. That is why Fullpet’s investors see a 30% year-on-year growth in the pet food industry. And it seems that there's also plenty of love for pets when it comes to capital markets.

¬ Haymarket Media Limited. All rights reserved.
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