中国宠物食品行业：宠物食品专家会议核心纪要

China Pet Food SectorKey takeaways on pet food expert meeting Food & Beverage Analystnina.jang@ubs.com+852-2971 5681Christine Peng, CFAAnalystchristine-y.peng@ubs.com+852-2971 7571 leading domestic pet food brand. The main takeaways are as follows: China's pet food industry continues to evolve along a distinctly online-led structure, with over 85% of sales occurring on digital platforms. The channel landscape has stabilized,with Tmall as the largest, Douyin surpassing JD to become the second largest, and JDnow third. Douyin's growth is driven more by content-driven discovery than pricing,changing how brands build education and acquire users.Offline channels remainsupplementary: traditional pet shops and product focused stores suffer from low traffictouchpoints that enhance brand credibility. 2)Intensifying CompetitionCompetitive intensity is rising as industry growth visibility improves. New entrants- across industries and demographics-are leveraging online platforms toshortenproduct launch cycles. Top brands remain resilient with strong growth while mid-tierplayers face the greatest challenges due to weaker differentiation and rising customeracquisition costs. Competition is shifting decisively toward product innovation, R&Dcapabilities, and functional differentiation. Meanwhile,structural fragmentationpersists: pet owners rarely stay loyal to one brand and instead purchase across SKUs thatmeet specific functional needs. This makes deep product pipelines essentialbrandsrelying on one to two hero SkUs tend to hit a ceiling near Rmb1bn per product, andsuperficial line extensions cannot sustain long term growth. 3) Continued Consumption UpgradingConsumption upgrading continues to reshape demand, with mid to high end products growing faster as experienced pet owners trade up toward higher quality, moreASPs through credibility and efficacy. Looking ahead, brands that can broaden productdepth, expand across thefull pet lifecycle,and reinvest in R&D through scale and cashflow are positioned to capture sustained growth. China Pet Foods as toppickWecontinuetofavourChinaPetFoodsforitsoverseasexpansionacrossOEMand owned brands, alongside strong momentum in domestic owned brand growth andmaintain our Neutral rating on Gambol on a fair valuation. brands, pet food safety issues, worsening profitability due to potential price wars fromincreasingly fierce competition, drastic price hikes in raw materials such as chicken and grains,to the US market. methodology. Potential risks for Yantai China Pet Foods include: 1) worse-than-expecteddevelopment in the domestic market due to fierce competition among pet food firms; 2)further losses from the domestic business due to significant expenditures to accelerate sharegains in the face of no earnings contribution from the business in the short term; and 3) widerFX losses if the renminbi appreciates further, as FX changes could have a significant effect onearnings due to substantial overseas business exposure. profit erosion due to aggressive marketing expenditures; 3) wider FX losses if the renminbiappreciates further, given the company still has considerable exposure overseas; and 4) tariffsrisk for overseas business. Potential upside risks include: 1) better-than-expected GPMexpansion due to the more favorable product mix; 2) wider FX gain if the renminbidepreciates further; 3) faster-than-expected sales growth driven by improved customerrecognition on proprietary brands; 4) better competitive landscape to help lower themarketingexpense. This document has been prepared by UBS Securities Asia Limited, an affliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates, including former Credit Suisse AG and its subsidiaries, branches and affiliates are referred to herein as "UBS"For information on the ways in which UBS manages conflicts and maintains independence of its UBS Global Research product; historical performance information; certain additional disclosures concerning UBS Global Research recommendations; and terms andconditions for certain third party data used in research report, please visit https:/www.ubs.com/disclosures. Unless otherwiseindicated, information and data in this report are based on company disclosures including but not limited to annual, interim, quarterlyreports and other company announcements. The figures contained in performance charts refer to the past; past performance is not areliableindicatoroffutureresults.Additional information will bemadeavailable uponrequest.UBs Securities Co.Limitedis licensedtoconduct securities investment consultancy businesses by the China Securities Regulatory Commission. UBS acts or may act as principalin the debt securities (or in related derivatives) that may be the subject of this report. This recommendation was finalized on: 18 January2026 10:20 PM GMT. UBS has designated certain UBS Global Research department members as Derivatives Research Analysts wherethose department members publish research p