The business of pets

by Eriko Arita

Japan’s pet boom over the last decade has brought considerable benefits to the nation’s economy. At the same time, however, it has led to problems involving both unscrupulous breeders and traders.

While consumer sales in general have remained stagnant through Japan’s protracted economic downturn of the last two decades, the pet-related market has been expanding, according to data from market-research firm Fuji Keizai Co.

In fact, according to Shinpei Iwama, a researcher at the company’s Osaka branch, the pet industry nationwide topped ¥1 trillion in turnover in 2006 and has now reached ¥1.2 trillion. In comparison, the market for health supplements is now estimated to stand at ¥1 trillion.

“The pet market has been growing by 2 to 3 percent annually in recent years. And even despite the overall business downturn, we expect the market growth in 2009 to have been 1 percent,” Iwama said, explaining that the company is currently checking and compiling last year’s data. “The market has probably been able to maintain its positive growth because people have stopped going out as much and are spending more time with their cats and dogs at home,” he said.

Reflecting this, the value of the pet-food market reached ¥290.8 billion in 2008, up 10 percent from 2006, according to Fuji Keizai. In particular, Iwama noted that among the various foods for animals, sales of value-added “premium food” for pets with special needs have posted a significant rise.

For example, Unicharm Petcare Corp. sells food especially for dogs that are 13 years of age or older, and which contains extra vitamin E and vitamin C to help the dogs maintain a healthy immune system, according to the company.

Demand for such food for older pets is expected to grow further, as — like the human population — Japan’s cats and dogs are also an aging lot, similarly in part due to advances in veterinary medicine. In fact, according to JPFA data, dogs more than 6 years old accounted for 45.8 percent of the total canine population in 2008, while cats aged over 6 made up 37.8 percent of all felines.

The rise in the number of animals kept indoors has also brought brisk sales to makers and retailers of toiletry goods such as cat litter and toilet sheets for dogs, according to Fuji Keizai. Indeed, the firm estimates this market was worth ¥64.8 billion in 2008 — up 10 percent from 2006.

However, it’s not only daily commodities but also financial products for pet owners that are selling. Several companies offer veterinary insurance for cats, dogs and other small animals, which generally covers 50 to 100 percent of costs. Fuji Keizai estimates there were around 391,500 such insurance policies in 2008.

Toru Furukawa, president of the Tokyo-based Hoken-Mammoth insurance-consultancy company, said that although only 1 percent of pets are currently insured, the potential market is huge and the company is promoting the benefits of insurance to pet owners.

In light of all these positive pet-market indicators, though, it is worth noting that sales of cats and dogs themselves are believed to have peaked last year and are now on a downward track, according to Iwama of Fuji Keizai. Specifically, sales of cats and dogs amounted to ¥85 billion in 2008, but the figure for 2009 is expected to be down to around ¥70 billion.

“Because of the depression, fewer people are buying cats and dogs, and so the price of the animals is coming down,” Iwama said. Nonetheless, he pointed out that though overall prices may be trending down, popular breeds still tend to command top dollar.

Among pedigree dogs registered with the Japan Kennel Club, the most popular breed in fiscal 2009 was the toy poodle. Prices of these furry puppies, however, vary wildly — from ¥60,000 being sought for one by a shop in Omiya, Saitama Prefecture, run by the Kojima pet-shop chain, to the ¥700,000 price tag presented by a breeder advertising on the Web site Toypoodle Breeders.

Commenting on the huge price disparities that exist, Osami Ueda, an official with Kojima, said most of its customers want puppies between 50 and 60 days old, and the chain often lowers its price for puppies when they get older than that.

Pricing aside, many Japanese people’s choice of breed seems influenced by Web sites and TV shows ranking the current popularity of cat and dog breeds. That, however, can cause unfortunate mismatches of owners and breeds. One tragic example of this was the boom in sales of Siberian huskies around 1990 when one of these dogs featured as a main character in a best-selling comic book titled “Dobutsuno Oishasan” (“Doctor of Animals”). According to the Japan Kennel Club, the Siberian husky ranked second among all the breeds registered with it in fiscal 1990 (behind the Shih Tzu).

But Siberian huskies are big animals originally bred to haul loaded sleds in Arctic conditions, and sadly many soon proved too powerful for their owners as pets. Consequently, they were often simply abandoned far from home, according to the Animal Welfare and Management Office of the Environment Ministry.

“A lot of people buy pets as a kind of status symbol, being influenced by the mass media,” said Junichiro Nishi, vice chief of the Animal Welfare and Management Office.

There have been problems with pet dealers, too. Because of unscrupulous trading in cats and dogs, and the mistreatment of animals by some dealers, the Act on the Welfare and Management of Animals was revised in 2005.

After that, pet shops were allowed to sell animals only after they satisfied specified standards for their treatment, and local-government officials were also empowered to enter such businesses and make inspections when it was deemed necessary.

Despite the revision to the law, however, many experts say there are still cases of inappropriate selling and breeding of pet animals.

For instance, although the revised law stipulates that breeders must not breed animals at known risk of having or transmitting a hereditary disease, it fails to be specific in its details. So, although the Japan Kennel Club on its Web site urges breeders to learn about the breeds they are producing from books it publishes, and clearly states they should not breed dogs from between close relatives, those rules presently carry no legal authority.

Yorimasa Abiru, a dachshund breeder in Fukuoka, said many of that popular breed in Japan are not healthy in terms of global standars for the breed. “A lot of breeders don’t know enough about the hereditary disorders of the breed,” Abiru said. “As a result, many puppies with deformities are born and sold.”

While deformities may not be immediately apparent, Abiru explained that they may result in the dogs having difficulty walking when they get older.

Similarly, although the revised Act on Welfare and Management of Animals says animal traders should raise puppies or kittens with their parents and siblings for the certain period of time that the young animals need for their socialization, it again fails by not specifying how long that should be.

In addition, to raise a healthy dachshund, Abiru said the puppies need to live in a spacious room with sunshine until they are 60 days old. But many pet shops sell much younger puppies that have been kept in small, artificially-lit compartments.

“People buy dogs because they are cute,” Abiru said. “But they must learn about the dogs and buy them from good traders.”