Voluntary Report - public distribution

**Date:** 11/20/2006

**GAIN Report Number:** TW6046

TW6045

**Taiwan**

**Market Development Reports**

**Pet Food**

**2006**

**Approved by:**

![](media/image1.wmf)Keith Schneller, Director

ATO Taipiei

**Prepared by:**

Sarah Hutt

**Report Highlights:**

U.S. exported US\$23 million of pet food to Taiwan in 2005, a 53 percent
increase over 2004 exports. In 2005, Taiwan's total pet food imports
totaled US\$57 million, a nearly 14% increase from 2004. Although BSE
restrictions have limited U.S. exports to Taiwan, the 40% U.S. market
share could continue to grow with renewed effort from U.S. pet food
exporters.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Taipei ATO \[TW2\]

\[TW\]

**I.** **Market Analysis**

U.S. exported US\$23 million of pet food to Taiwan in 2005, a 53 percent
increase over 2004 exports. Although the U.S. leads the pet food pack,
constantly in close heat with Australia, Taiwan still imports pet food
from a diverse range of countries. In 2005, Taiwan's pet food imports
totaled US\$57 million, a nearly 14% increase from 2004. U.S. pet food
imports continue to recover from an 80 percent fall due to BSE concerns
in 2003; rebounding in 2006 is expected to continue over the next few
years and market size expected to increase. With renewed effort from
U.S. pet food exporters, the 40% U.S. market share could continue to
grow, solidifying the U.S. position as chief pet food exporter to
Taiwan.

#  Social trends 

Taiwan's rapid globalization has led to an increased focus on health and
nutrition for everyone -- including household pets. Traditionally,
Taiwan household pets have been fed mealtime leftovers, but rising
income and western influence has led to increased demand for
specifically manufactured pet food. Pets are a symbol of affluence in
Taiwan, heavily focused on dogs. Breeds range widely from
apartment-friendly, easily portable toy breeds to irresistibly happy
large-breed dogs. Puppy and kitten prices range from around US\$300 to
over US\$1,000, exponentially higher for purebreds. Internationally
savvy, Taiwan pet owners are readily exposed to a wide array of
pet-friendly mass media. On the whole, Taiwan generally follows pet
trends set in the U.S. or Japan.

Pet ownership as a concept is well established in Taiwan, beginning with
family watchdogs. As a result of marrying comparatively late, many
Taiwan citizens seek companionship from pets, especially females. Most
owners are small families with young children, economically independent
singles, and double-income-no-kids (DINK) couples. Also, Taiwan's aging
society may stimulate new pet ownership. Providing quality activities
and meaningful companionship for aging relatives is rapidly become a
society-wide challenge for Taiwan.

Taiwan's pet food paradox is such: despite a recent decline in pet
population, demand for high quality pet food is growing. This suggests
that Taiwan's pet food market's rapid growth is slowing as it completes
a shift to a mature, well-established market, as these shrinkages are
widely expected to stabilize. According to a 2005 survey conducted by
Taiwan's Council of Agriculture, the dog population has declined to 1.13
million dogs, down 37% from 2001. Likewise, from 2003 to 2005 the cat
population shrunk by 12%. Currently, around 12% of Taiwan families raise
a dog, whereas 2% own a cat.

Overall, signs of pet diversification are showing. According to a 2005
Council of Agriculture survey, cats are becoming especially popular for
Taiwan's tight living spaces. Alternative and exotic pet ownership is
growing too -- fish, turtle, rodent, rabbit, sugar glider, ferret, and
hedgehog ownership have all increased. Pet piglets have even been seen
trotting the streets of Taipei. Increasing numbers of these animals will
create unique niche markets for U.S. pet food suppliers.

######  Market Sector Analysis

####### Trade and competition

There is no official data on domestic pet food manufacturing, but it is
estimated that domestic production yields less than 20% of total pet
food supply. Taiwan's local production is limited to Fwusow and
Uni-President brands.

From 2001 to 2005, the pet food import market nearly doubled in size.
Excitingly, U.S. pet exports reflect that trend -- U.S. market share has
increased from 26% in 2000 to 40% in 2005. Although the U.S. currently
leads Taiwan pet food imports, Australia is still a major competitor.

The sharp drop in 2001 imports is a consequence of flat local economy
growth, thus forcing many Taiwanese to give up their pets, leading to a
sharp increase in stray dogs. In 2004, Council of Agriculture released a
low estimate of 180,000 strays island-wide.

![](media/image2.wmf)

Although U.S. pet food exports to Taiwan suffered in 2003 due to BSE
concerns, the next chart shows a healthy rebound. The 2004 Pedigree food
poisoning scandal also resulted in a major shakeup in company rankings
of dog food, causing a few top pet food importers to shift away from
U.S. brands. Manufacturers were forced to recall Pedigree dog food and
Whiskas cat food manufactured in Thailand in March 2004 after cases of
canine renal illness surfaced among dogs that had consumed the products.
Some of the dogs died of kidney failure.

![](media/image3.wmf)

According to industry sources, the ratio of dog to cat food sold is
70:30. Popular U.S. brands include Pedigree, Natural Choice, IAMs,
Hill's, Eukanuba, Precept, Royal Canine, Optima, Friskies, and Cesar. On
the shelf, consumers are exposed to dizzying arrays of canned and bagged
food; labeling languages include English, Mandarin, Japanese, and even
French. Pet foods sales typically slump during hot summer months and
resume during fall and winter.

**Distribution channels**

Pet food importers prefer to sell directly to retail outlets to avoid
costs associated with wholesalers and distributors. Five most important
retail outlets for pet food and snacks are as follows:

1.  **Supermarkets** supply the largest quantities and selections of pet
    food. This is by far the most important distribution channel,
    capturing the majority of Taiwan citizens shopping for weekly
    groceries.

2.  **Convenience stores** carry small quantities of pet food. Don't
    underestimate this retail outlet: Taiwan has one of the world's
    highest convenience store densities with over 8,000 outlets
    nationwide.

3.  **Pet specialty stores** sell every pet related commodity
    imaginable, from toys, snacks, accessories, and pet clothing to
    actual animals. Taiwan has about 2,500 such shops.

4.  **Animal hospitals** are turning into pet mega-stores, offering
    great opportunities for pet niche foods, high quality snacks, and
    luxury pet items. Taipei alone has 5 such hospital megaplexes.

5.  **Veterinarians** sell a limited quantity of pet food, but over time
    have been squeezed out of competitive pet food sales. As a result,
    Taiwan vets have an unspoken agreement only to carry one brand of
    pet food. Formerly Hill's (U.S.), the brand is now Royal Canine
    (U.S.), due to an extensive, vet-targeted promotion campaign.

# Marketing Opportunities

Pet ownership concepts do differ between northern and southern Taiwan.
Northern Taiwan (primarily Taipei) has already adopted many pet trends
such as acknowledging a need for pet nutrition, supplying proper
healthcare, and engaging in some degree of coddling. Taipei's pet
industry includes such services as pet boarding, obedience trainers, pet
portrait stores, and pet restaurants/play areas. In contrast, central
and southern cities of Taichung, Tainan, and Kaohsiung are still
developing their respective pet markets, providing U.S. companies a
significant opportunity to develop this export market.

In Taiwan, well-planned promotions strongly dictate the rise or fall of
new-to-market pet food products. Recently, brand promotions have tightly
focused on cultivating a demand for premium pet food. Pushing
attractively packaged wet food over bulky, dry, bagged perfectly
illustrates this trend. New pet food product advertisements typically
tout customized nutrition content, all organic, or vegetarian faire.

Many pet food importers conduct marketing activities, usually by
advertising products in local pet lovers magazines. Occasionally,
in-store promotions and live pet shows are sponsored by specific brands.
For more information on these activities, U.S. suppliers should contact
Taipei ATO for a current list of pet food importers, who will then refer
you to their retail outlets.

# III. Market Access

#  Overview 

![](media/image4.wmf)Detection of BSE in December 2003 led to a ban on
U.S. pet food imports, except for those derived from fish, poultry, or
dairy (no animal origin materials). In 2004, Taiwan relaxed pet food
import requirements by allowing pet food that do not contain U.S.
ruminant products or use imported ruminant ingredient. Also in 2004,
U.S. pet food facilities began to regain market access after Taiwan's
plant-by-plant visit and approval process. In 2005, USDA's Animal &
Plant Health Inspection Services (APHIS) established a Taiwan office.
Industry group Pet Food International (PFI) currently coordinates
applications for plant inspection through the Taiwan APHIS office in
conjunction with Taiwan's Bureau of Animal & Plant Health Inspection &
Quarantine (BAPHIQ). At the time of writing, 18 U.S. facilities have
been approved.

For HS code 2309.1000.02 "Dog or cat food, put up for retail sale,"
there is a 2% tariff.

## Requirements Specific to Pet Food

According to Taiwan's Feed Controls Act, which was promulgated in 1973
and amended in 2002, as well as "Enforcement Rules of the Food Controls
Act," amended in 2003, feed or feed additives, without containing
veterinary pharmaceuticals, must specify on the package or container, in
Chinese characters, the following information prior to sale.

> ‑‑Name and address of the manufacturer or the seller
>
> ‑‑Classification, category and name of the product.
>
> ‑‑Composition
>
> ‑‑Major ingredients
>
> ‑‑Usage, dosage, and precautions in use.
>
> ‑‑Net weight
>
> -- Manufacture or import permit code
>
> -- Date (year/month/day) of manufacture and processing or repacking
>
> -- Any other information that may be required by the Taiwan
> authorities for specific products.

The Chinese language label for animal and plant feed must be affixed
prior to retail sale. Pet food is still allowed to clear Taiwan Customs
without a Chinese label, provided that the label is affixed prior to
entering the retail sales channel. There is a significant penalty for
retail products sold without the Chinese label.

Feed or feed additives that contain veterinary pharmaceuticals should
refer to \"Veterinary Drugs Control Act.\" (See Section VI regarding
certification requirements for pet food).

For more information on Taiwan import regulations, per refer to GAIN
report TW6027 "Food and Agricultural Regulation & Import Standards,"
published annually.

###### Contact information

There are three USDA offices based in Taipei to assist with your
agricultural trade/export needs to Taiwan.

The **Agricultural Trade Office (ATO)** works with more than 20 US
producer associations represented in the Taiwan market and is constantly
developing new marketing activities for Taipei and other key cities in
Taiwan. Please contact the ATO for basic market information reports and
updates on promotional activities including food shows and buyer
missions:

# 

# Agricultural Trade Office, Taipei

Rm. 704, 7^th^ Fl., Lotus Bldg.

No. 136 Ren-ai Rd., Section 3

Taipei, Taiwan

Office (P): (886-02)2705-6536

Office (F): (886-02) 2706-4885

Email: <ATOTaipei@usda.gov>

Website: <http://www.ait.org.tw/en/agriculture/ato/>

The **Agricultural Affairs Office (AAO)** is located in the American
Institute of Taiwan and is responsible for reporting and dealing with
market access issues. Please contact the AAO for any regulatory or
market access type questions:

# American Institute in Taiwan

# Agricultural Affairs Office

No. 7, Lane 134, Hsin-Yi Rd., Sec. 3

Taipei, Taiwan

Office (P): (886-02)2162-2316

Office (F): (886-02) 2162-2238

Email: <AGTaipei@usda.gov>

Website: <http://www.ait.org.tw/en/agriculture/ato/>

The AAO also hosts two representatives from USDA's **Animal and Plant
Health Inspection Service (APHIS)**. This office deals with bilateral,
sanitary and phytosanitary issues related to agricultural trade.

# American Institute in Taiwan

# Animal and Plant Health Inspection Service

No. 7, Lane 134, Hsin-Yi Rd., Sec. 3

Taipei, Taiwan

Office (P): (886-02)2162-2221

Office (F): (886-02) 2162-2215

Email: elia.p.vanechanos@aphis.usda.gov