18 July 2023

Japan’s demographic landscape is undergoing a significant shift, characterized by a declining birthrate and an aging population. While these changes present unique challenges, they also bring forth new and promising opportunities.

One such opportunity is in the rapidly growing pet market, which has witnessed a rise in demand for pet-related goods and services. In this article, we will explore the potential of this emerging market and why it deserves the attention of every discerning investor.

The demographic shift in Japan is well-documented. According to the Ministry of Health, Labor & Welfare, the Total Fertility Rate in 2022 stood at 1.26, significantly lower compared to other nations such as France (1.8), the USA (1.66), Germany (1.58), and the UK (1.56).

In 2022, the number of births decreased by 5%, reaching 770,747. This, coupled with the impact of COVID-19, led to a natural population decline of 798,214 in the same year.

However, amidst this demographic transition, a thriving market has emerged—the pet industry. Japan’s pet market is experiencing steady growth, with an estimated 18.5 million companion animals (dogs and cats) in the country. Sales of pet-related goods have been consistently rising in recent years, especially during the COVID-19 era. As people spend more time at home, the need for outdoor activities such as dog walks has become a significant aspect of their routines.

This delightful trend extends well beyond a specialized circle of pet enthusiasts, capturing the hearts and wallets of consumers all across Japan. Imagine a typical Japanese family, such as my own: our children have grown up and ventured into the world, and we now have two endearing dogs. My wife now allocates a substantial portion of our budget to cater to our pets’ needs and desires, occasionally exceeding what’s set aside for myself. This trend is mirrored in the growing number of pet pictures shared on social media platforms.

The escalating pet economy in Japan presents a distinctive business opportunity. As the population continues to age and the birthrate declines, the demand for pet-related goods and services is expected to persistently rise. For investors and business leaders, this burgeoning market holds the potential for a promising return on investment.

While Japan’s demographic shift poses challenges, it also opens up new avenues for growth. The pet economy stands as one such avenue that warrants exploration. As the adage goes, every cloud has a silver lining, and in this case, that silver lining may just be a golden opportunity for astute investors and business leaders.

About the Author:

Shinichi Nakamoto, Senior Consultant, AIMS International Japan

Shinichi Nakamoto joined AIMS and started his career as Executive Search consultant in 2016. Prior to AIMS, he had worked at Nomura Securities for 34 years, mainly in Investment Banking Area, engaged in various transactions of M&A and fund raising for Japanese listed companies.