In the future, pet hospitals will be chained, and The Gen Z crowd will be "money burners"
Text/Xin Na Wang Wei Ning
Editor/Wang Xiao
Photo/ Unsplash
"The first time I got a cat to see a doctor, I cried out in fear."
It was the first time she had cried in front of her elders since she was older. Li Yiyi (pseudonym) does not care about how much it will cost, she only wants her cat to be safe. As a post-95 generation, she regards her cat as her friend and a child worthy of love.
Now, she put a collar engraved "Peace" around the cat's neck. "A wave of superstition." Lee teased one by one.
These "Gen Z" people, born between 1995 and 2009, are rapidly pushing up demands for pet medical care. Compared with thousands of yuan in medical expenses, they care more about the health of their pets, even if they have to live a tight life.
A statistic from the American Pet Products Industry Association shows that in 2020, the largest proportion of pet owners in the United States is 25-40 years old, accounting for 32%. More than half of the 18-34-year-olds see pets as children, and they are willing to spend more money on "children".
Pet hospitals in the United States have formed a stable chain pattern. A number of industry insiders mentioned in an interview with Caijing Health that China's pet hospitals are still in the early stages of the industry, and the future will also be dominated by chain development.
<h1 class="pgc-h-arrow-right" data-track="20" > spent almost a month's salary on a visit</h1>
In mid-to-late August 2021, Wang Mu (pseudonym) trotted all the way into a pet hospital in Beijing's Datun area. When I learned that the dermatology department only had 300 yuan left in the registration fee, my heart was somewhat broken. "This dermatologist is very senior." The staff at the front desk of the pet hospital explained to her with a smile.
The registration fee of 300 yuan is equivalent to the special needs of experts in Beijing Top 3 Hospital. "Dogs are more expensive than people", in the 5th month of raising Corgi, she began to seriously appreciate the connotation of this sentence.
This little corgi, who was just seven months old, had a patch of lentil-sized hair on the side of his mouth that had fallen out, revealing a fresh pink skin. Wang Mu was checking the information again, and asking experienced friends. Finally, after seeing photos of pets on the Internet that were tossed around by various skin problems, she decided to go to the hospital to see anything.
This is Wang Mu's first pet. Although she also had experience with dogs when she was young, "it wasn't a cub that she raised by her own hands", in her words, this is her first pet. As a post-90s person, the entire youth is immersed in American dramas such as "Friends", and pets are one of the family members, which is not a new concept.
"I have to be good to him for the rest of my life," she warned herself in her heart, and also regarded this visit to the hospital as a "conscience" examination of herself. Registered, describing Corgi's condition to the doctor, was recommended to do a biopsy, after examination, the diagnosis was confirmed to be caused by demodex mites, which is a very common pet dog disease.
More than two hours later, Wang Mu left the hospital with a box of medicines and a payment receipt of more than 1,000 yuan. This experience made her have a clearer understanding of taking her pet to see a doctor, and she prayed that her pet would not be sick, and "it is really despised to be sick."
Photo: A pet is being treated in a hospital Photo by Wang Weining
In China's pet hospital market, both the scale and the customer fee are growing rapidly. According to a data, its scale is about 20.2 billion yuan in 2019 and is expected to reach 37.6 billion yuan in 2023.
Also a common skin problem in Corgi, another pet owner paid a higher price. Li Ming's (pseudonym) Corgi first got ear mites, which then spread throughout the body. "There are a lot of small red envelopes on the body, and it is still itchy", Li Ming took it to the hospital to see a doctor, take medicine, take medicine, take a medicinal bath, "before and after two months, spent more than 10,000 yuan." Li Ming sighed, I looked at it and felt uncomfortable, "I have to give him a medicinal bath every other day."
For Li Ming, who has just worked for a few years, the money has caught up with a month's salary. "What can I do, I can't be cured", she teased herself, she can't buy new clothes in the future, "shopping has nothing to do with me from now on."
Another two-year-old Bear who had only diffuse peritonitis also left Liu Ning (pseudonym) physically and mentally exhausted and expensive. In the summer of 2019, this bear continued to vomit, did not eat, and first took it to a small hospital near home to see a doctor, the doctor judged that it was a digestive problem, and the infusion lasted for four or five days. However, it has not been good, and the doctor recommends going to the Animal Hospital of China Agricultural University.
When I arrived at the hospital, "I checked enough, blood, urine, stool, ultrasound, vomit, etc.", Liu Ning recalled, and injected three or four days of fluid. A total of more than 8,000 yuan was spent on both occasions.
When Wang Mu learned that there were friends around him who spent thousands or tens of thousands of yuan on pet medical treatment, his heart was happy and surprised. "Small money is free from disaster." She meditated.
According to the statistics of Guolian Securities, the average cost of seeing a pet is about 500 yuan, and it costs more than 5,000 yuan when it comes to surgery.
At present, the cost of pet hospitals is self-priced. Liu Lang, vice chairman of Xinruipeng Pet Medical Group, explained the consideration behind the project pricing, "The pet medical industry is now a completely market economy, and hospitals rely on operation to recover investment. "This means that in the process of pricing, both the price of the market as a whole and the return on investment will be considered."
"If you can get your money back in three years, it's a very good project." Liu Lang said that there is no comparison between the number of pets who come to the hospital for medical treatment and the number of people who need to see a doctor. This also means that the return on investment for large equipment is not high.
At a large pet hospital where he works, he can only do about 30 CT programs a month, averaging only one case a day. Liu Lang explained that this equipment needs six or seven million yuan, the annual maintenance cost is about 100,000 yuan, plus the required labor costs, although the current fee is 5 times - 6 times higher than the cost of people to see a doctor, it may not be able to recover the cost in time. The best-case scenario is to be able to recover the cost in three years, because the average equipment has depreciation problems in five years.
Such detection equipment is necessary in the development of pet hospitals. "Without such advanced testing methods, it is difficult for veterinarians to find regularity in complex conditions." Liu Lang said.
<h1 class="pgc-h-arrow-right" data-track="126" > Gen Z population will become pet "money burners"</h1>
Pets are becoming a part of young people's lives. Liu Lang, who has been practicing medicine for more than ten years, clearly feels the enthusiasm of the younger generation for pets, and most of the people who bring pets to the hospital are young people.
At present, China does not have an authoritative data survey for pet owners, and it is a good way to predict the changes in the US pet market.
The Pet Products Industry Association (APPA) is the largest trade association in the pet sector in the United States. Its disclosed 2020 data shows that 70% of U.S. households own pets, which is equivalent to 90.5 million households. In 1988, the first year of the survey, 56 percent of U.S. households owned pets.
Among them, the proportion of post-80s, post-90s, and even Generation Z people is becoming larger. APPA data shows that in 2020, among the pet owners in the United States, 32% of the 25-40-year-old population became the largest group, and 14% of pet owners were less than 25 years old.
A Survey of the New Age Pet Industry at Morgan Stanley found that 65 percent of people between the ages of 18 and 34 plan to buy or add pets over the next five years, projecting a 14 percent increase in pet ownership by 2030.
As millennials and Gen Z consumers enter adulthood, they are more receptive to pet-owning and pet-loving lifestyles than their elders, and are in turn willing to spend more money and energy on their pets.
Morgan Stanley's above survey results show that in the attitude towards pets, the largest proportion of people who treat pets as children is 18-34 years old, 54%.
There are even people who are willing to go into debt to pay for pet medical expenses. In this population, the age group of 18-34 years old also accounted for the highest proportion, at 43%.
Bob Vetere, president and CEO of APPA, believes this generation is more willing to pay more for quality products and services to improve the physical condition of pets.
Capital began to center on the pet market. Morgan Stanley found in the survey that the average annual household spending per pet could grow from $980 in 2020 to $1,292 in 2025 and further expand to $1,909 in 2030.
This is similar to Liu Lang's observations in recent years. He found that compared with the past when it was simply regarded as a pet, today's young people have regarded it as a companion, and regarded it as a family member, which is more of a spiritual sustenance, "In the past, everyone treated it as a pet, and it was reluctant to spend more."
According to the APPA survey, in the United States, the growth of pet health-related medical services has outpaced other categories. This is also supported by morgan Stanley's investigation, which found that after pet food, pet healthcare is likely to be the fastest-growing segment of the industry over the next decade.
<h1 class="pgc-h-arrow-right" data-track="127" > pet hospitals will be mainly chained</h1>
Optimism about the future market has made capital favor the pet market in recent years. In October this year, Meng Veterinary Medical Center completed the B2 round of financing and received hundreds of millions of yuan in capital injection. According to the incomplete statistics of "Finance and Economics", this is already the 23rd financing of the pet industry since 2021, with a total financing amount of nearly 2 billion yuan.
According to the data previously released by Qichacha, since 2011, there have been 358 cases of investment and financing in China's pet track, with an amount of more than 11 billion yuan.
"The development time of pet medical treatment is relatively short, and the status of pets in the family has only improved in recent years." Xu Chao, chief operating officer of Meng Veterinary Medical Center, believes that China's pet medical industry is still in a period of development.
The pet medical industry in the United States, which can be compared, has entered a mature period. The upstream of the industry is dominated by drug research and development, vaccine research and development, and testing equipment manufacturers, and the downstream channels are pet hospitals, as well as online and offline pet pharmacies. The pattern of pet hospitals in the United States is basically stable, and the industry brands are highly chained.
If you look back at the history of pet hospitals in the United States, you will find two different development paths.
Banfield and VCA are both the largest pet hospital chains in the United States and representative of the development paths of the two hospital chains. The former is lightweight and opens all its stores in pet food and supplies retail stores, while VCA relies on the acquisition of new stores to expand rapidly, from a single pet hospital to a chain brand. The early acquisition funds mainly rely on financing, when the volume reaches a certain scale, the profit margin begins to stabilize, and the continuous expansion is driven by the company's own funds.
VCA landed on nasdaq 20 years ago and then entered the intensive acquisition phase. In 1995, VCA had only about 70 pet hospitals, but in 1996 it doubled to 154 pet hospitals.
This expansion model of VCA seems to be more in line with today's Chinese pet hospital market. At present, in China's pet medical market, the top two brands in market share are Xinruipeng and Ruipai, the former of which has more than 1,000 hospitals. The size of the latter hospital is close to 400.
The new Ruipeng Pet Medical Group was established less than three years ago, and its predecessor can be divided into two parts, one can be traced back to the companion animal hospital established in 1993, and gradually developed into the Ruipeng Group; the other part is the Zhenyu Group formed through capital integration.
Both have undergone rapid expansion. In 2015, Ruipeng Group had only a few dozen stores, and before the merger, there were already hundreds of stores. During this period, Gaoling Capital also invested in pet hospitals with multiple funds and integrated the merger and acquisition of more than 700 chain pet hospitals.
Photo/Pexels
After the integration of the two in 2018, it became the largest pet hospital chain in China. As of September 2021, there are more than 1,600 hospitals under the umbrella of New Ruipeng, an increase of more than triple in three years.
However, Xu Chao believes that the chain rate of pet hospitals in the United States is 30%, and the chain pet stores in China account for nearly 12%. Relatively speaking, the degree of chaining is still relatively low, and it is bound to develop in the direction of chaining.
According to a research report by Ping An of China, as of August 2021, there are about 22,800 pet hospitals in Chinese mainland. According to this figure, the market share of New Ruipeng is about 7%. Another Ruipai has a market share of less than 2%.
The chaining of pet hospitals will make the diagnosis and treatment behavior more standard. In Liu Lang's view, China's pet medical development is only 30 years, and there is still much to be improved. Chain agencies will first make some normative content to promote the industry to withstand the beating.
A securities analyst believes that China's pet hospital head chain enterprises have been greatly improved, the volume of other chains is small, the industry market is scattered, and there is still room for the market.
In any case, it is still relatively easy to pay for a pet in the pocket of the Gen Z crowd.
Seeing a sick person spends a month's salary, and the "money-burning" pet Z generation is the new leek?
#Pet Medical ##萌兽医馆获数亿元B2轮融资 #