Export Q & A: U.S. Pet Food Exports Continue to Break Record Highs

Strong Momentum for Food Export's Global Pet Expo Buyers Mission

Q: Last month it was noted that managing the global economy was like “trying to walk 12 dogs on a leash at the same time”. Since I make pet food I took notice, and then it was reported that the U.S. is forecast to have a trade deficit in agricultural and food products in Fiscal Year (FY) 2023. Then I was notified that there is a Pet Food Buyer’s Mission at the Global Pet Expo next March. My questions are does the U.S. export much pet food, do we have a trade deficit or surplus in exports, and based on that should I consider attending this Buyer’s Mission?

A:  Much may be too modest of a word, but in 2021 U.S. exports of pet food were just over $2 billion, and about 928.8 million kilos. At 50,000 pounds on average per 40’ container that would be 18,576 containers. The larger cargo vessels can hold about 11,000 40’ equivalent units (FEUs), which would mean the exported weight of pet food would fill almost full-size container 2 ships.

U.S. pet food exports have historically been one of our enduring positive export aggregates and job creators for many years now. Since 2016 they have reached a record high value every year, growing a phenomenal 57% during that time, and show no signs of slowing up based on the current export data. Through October 2022 U.S. exports of dog and cat foods have grown another 22% to a whopping $2 billion which was the prior year’s record high total, and growth of 21%. That is a lot to bark about! 

Top U.S. export markets include our USMCA partners of Canada and Mexico who together imported about $1.1 billion or 55% of the total. Japan, Australia, and China also round out the top 5 markets. Since the “Phase One” agreement had been ratified with China which lowered non-tariff trade barriers, they have become the fastest growing pet food market from the U.S. As recently as 2018, China had imported only $5.5 million from the U.S. Since then, exports have grown 1,135% (not a typo) to $72.3 million in 2021, and YTD 2022 they have grown another 331% to $192 million.

The top 10 markets are rounded out by South Korea, Colombia, Philippines, Costa Rica and New Zealand. The markets certainly have some tariff reduction/elimination advantage as 7 of the top 10 are in Free Trade Agreements (FTAs) with the U.S. Only China (with duties between 29% and 34%), Philippines and New Zealand with modest duties of 5% make are not in FTAs with the U.S. but still more attractive to import. 

Do We Have a Trade Deficit in Pet Food Trade?
Last month we did note that the forecast for the FY 2023 year shows a trade deficit for the overall agricultural category. A deficit means you import more from a country than you sell to it. The U.S. has enjoyed an overall trade surplus (you sell more than you buy) in agricultural products with only a couple of exceptions, and 2023 looks like it will be one, but it is a forecast and not a fact yet.  We also pointed out that among the top U.S. export markets we also imported a lot of the same products as well, which we refer to as “Intra-Industry Trade”. It turns out that with pet food we do import a lot of it as well, from some of the same countries we sell to, but we do enjoy an overall trade surplus in the category as well as most of the markets.

In 2021 the U.S. exported $2 billion in pet food, and also imported $1.5 billion, so the surplus was just over $500 million, or 26% higher. The top exporter of pet food to the U.S. is actually Thailand who sold $536.1 million in 2021, which added up to 35.3% of the total. Does Thailand import pet food from the U.S? Yes but only $11.1 million in 2021, so we certainly have a trade deficit with them, we only sell them 2% of what they sell us. Other top exporters of pet food to the U.S. whom we have a trade deficit with include China who exported $199.7 million to our $72.3 million (-36%), Vietnam who exported $63.8 million to our exports of $544,000 (-91%), Germany who exported $52.8 million to the U. S. and imported only $8.5 million, (-84%) although that figure is likely higher as they receive a lot of product via Netherlands as well on a 3rd party basis. New Zealand is a good market for U.S. exports of pet food, ranking 10th at $39.9 million in 2021. But they rank 6th as an exporter to the U.S. and in 2021 we imported $49.5 million from them, a deficit of 19%.  The U.S. imported $35.8 million worth of pet food from Brazil in 2021 and exported only $1.3 million, for a deficit of $34.5 million or nearly 96%. Other countries of note that the U.S. imports pet food from include Cambodia, Nepal, Turkey, Serbia, Romania, Azerbaijan, Mongolia and even Ukraine.  Pet food manufacturing and trade is truly a global industry.

And as a perfect example of intra-industry trade between nations we look to the total amount of countries the U.S. exports pet food to, as well as how many nations it sources it from. According to the Global Agricultural Trade System, or “GATS” located in the FAS website www.fas.usda.gov the U.S. exported pet food to over 112 destinations in 2021. They also imported pet food from 59 different countries as well, and many of them were the same, serving both as an export market and a source of product at the same time.

Global Pet Food Retail Sales
According to Euromonitor, retail sales of pet food will reach $123.4 billion in 2022. This represents period growth of 37.1% since 2018, or 8.2% on a compound annual growth rate or “CAGR”, and $33.4 billion. The U.S. is by far the largest market with 2022 sales forecast at $45.4 billion, or about 37% of the total. There are 21 other countries with over $1 billion in retail sales of pet food, including China, Brazil, U.K., Japan, Germany, France, Canada, Italy and Mexico among others.  By 2027 Euromonitor forecasts that the global retail sales market will reach a whopping $174.6 billion. That represents growth of 30.5% or nearly 7% CAGR and $40.8 billion.  

High growth markets in the period included Argentina, Indonesia, Turkey, Philippines, Ukraine, India, Romania, and Brazil, as well as China and Vietnam. The size of their retail markets indicates production prowess and helps explain why many of these countries are significant suppliers of pet food to the U.S.

Cat and dog food take up nearly 97% of the pet food total, or about $119.1 billion. The remainder is made up of reptile, fish, and small mammal (rabbit, hamster) foods. The top specific type of food is led by premium dry dog food at $21.3 billion, followed by mid-priced dog food at $15.2 billion, and then dog treats and mixers at $14.8 billion. The highest growth specific products are cat treats and mixers with period growth (2018-2022) of 58.1% or $1.5 billion, premium non-therapeutic premium dog food with growth of 57.1% and $1.4 billion, and then premium dry cat food with growth of 45.1% and $3 billion.  

Attending the Pet Food Buyer’s Mission
Attending Buyer’s Missions is an effective low-cost way to get direct feedback on your products potential in a respective market. Missions that are industry focused such as pet food and pet ingredients provides even more opportunity as those products are specifically what the buyers are looking for. If you are exhibiting at or even just attending the 2023 Global Pet Expo, it should be worth considering. Many of the U.S. suppliers attending this annual event have come from years now since they know they can depend on being introduced to high quality importers of U.S. pet foods.

About half the buyers are from top market countries we have outlined above and are in Free Trade Agreements (FTAs) with the U.S. Hong Kong is a free port as well so there is no duty on pet food. 9 of the buyers are from markets within the Top 20 from the U.S. All are very active importers of pet food and nearly all are in double digit millions with nice growth patterns. This is another well-organized opportunity with a long history of success. But for you to succeed you will need to meet the buyer’s expectations and be export ready to establish a supply chain into their markets.  

Food Export has a number of resources for export preparedness for suppliers to develop competence and confidence in their export operations. There are some recorded webinars that focus on exporting pet food as well. They include “How to Stock Your Toolbox with Resources for Successful Pet Exporting”, and “Top Dog: Pet Food Exports Continue to Grow”. Recorded webinars are located under the “Export Education” section at www.foodexport.org Also for a deeper dive into export training and education you can take advantage of the 11 interactive “Export Essentials” training tutorials.

One quite important webinar that is done live more often and is updated in the recorded webinar bank is titled “How to Prepare for Meetings with Foreign Buyers”. This webinar would be beneficial in advance of the Pet Food Buyer’s Mission at the Global Pet Expo or any other Mission as well. It focuses on getting organized to be able to make a good impression on the buyers in the meetings, so you can “speak their language” and demonstrate your level of commitment and reliability. Topics include:

  • Selecting the Right Markets & Buyers: This involves research to select buyers from the highest potential country based on compliance and costs as well as specific product/industry interest from the buyers.
  • Analyzing a Buyer Profile: Discusses steps to properly discern buyer interests as well as abilities and compliance issues.  
  • Market Research and Regulations from FAS: Introduction to the Foreign Agricultural Service “GAIN” or Global Agricultural Information Network reports including Exporter Guides, Retail Market Segments, and Food Import Regulations and Export Certificate reports.
  • Establish the Correct HS Code and Run Export Data: Shows how international trade is based upon a nomenclature called the “HS” or Harmonized System, and all of the uses of it including tariff analysis, export data, (value and volume of pet food to market), qualifying products for Free Trade Agreements (FTAs) and their importance to the potential buyer.
  • Check Duties and Taxes and Free Trade Agreements: How to use the HS to examine the “landed cost” to the buyer and how to qualify your products for various FTAs including the United States, Mexico, and Canada FTA or “USMCA”, the U.S. Korea
  • Advance Contact Best Practices: Discussion on how to merge all this information into your marketing materials.
  • Develop an Export Policy: This covers creating awareness of how your company intends on doing business internationally, and how it may adjust over time or with different scenarios such as shipment size and value. This includes direct contact for inquiries; Sample shipments; Length of Fulfillment; Minimum Order Quantity or “MOQ”; Terms of sale and payment; Shipping and Logistics; and policy on awarding Exclusive distribution.
  • Export Pricing, Quoting and Terms of Sale in Metric System: Every export transaction is the result of a quotation, often using a “proforma invoice”. Learn how to create timely and accurate quotations using the International Commercial Terms of Sale, or “Incoterms 2020”.
  • Key Information: Materials to Have at the Table: How to present the “4 P’s” of export marketing including product, price, placement, and promotion. Learn what buyers have the most interest in learning from you and what to take away.
  • Meeting Tips & Tricks: How to best operate during the meetings and the importance of diplomacy and undivided attention to each buyer individually.

To summarize your initial questions, yes, the U.S. exports a tremendous amount of pet food, nearly 2 full sized container vessels each year. And in fact, we do import a lot of pet food as well, but at $500 million more we do have a trade surplus in this category. Many of the countries we export to we also source from, which is called “Intra-Industry” trade. Global retail sales of pet food are also breaking yearly records and the increase in demand for high quality products makes U.S. product lines all that more attractive. And certainly, all this demand for product will be on display at the Global Pet Expo, where there is also an opportunity to meet pre-qualified buyers face to face and show them you mean business by using Food Export’s training materials to enhance your potential for success.

Register to attend Food Export’s 2023 Pet Food Buyers Mission at the 2023 Global Pet Expo in Orlando, Florida, March 21, 2023!