Consumer demand remains weak over major shopping day

Sales during the recent November 11th online shopping day in China look to be down year on year, although this is difficult to assess as major retailers like Alibaba didn’t provide sales data. Previously, the companies would publicize the data due to strong growth. 

A potential proxy for the level of demand is the number of daily packages shipped by the postal service. 2020 and 2021 both saw year-on-year growth despite the pandemic, however, 2022 has seen a large decline. 

One area that did see strong growth despite the slowdown was sales in pet food, with analytics firms estimating sales of pet food on major online platforms on November 11th rose 94% year on year. 

Imports of pet feed have remained relatively strong despite a weaker economy. January through September 2022 saw the value of pet feed imports rising 13% year on year to 5.6 billion yuan. Volumes rose 14% to 287k tons following a 22% increase in 2021. Demand for imports should continue to grow due to consumer worries about the safety of domestic brands. 

Increases in pet ownership have mostly been driven by urban consumers born after 1990. Total spending on pets in China is estimated to rise 25% in 2022 to 494 billion yuan, with about half of that spending going to pet food.