China pet food 2Q26 sales growth remained stable but brand divergence intensified, with China Pet Foods leading

Overview

This is a monthly tracking report on China’s pet food industry, primarily covering domestic online demand, changes in product and channel structure, pricing and competitive dynamics, overseas demand, and Goldman Sachs’ proprietary cost index. The report notes that industry online GMV improved significantly in June, driven by strong Douyin growth, while overall 2Q26 growth remained stable. However, divergence among brands widened further, with some unlisted domestic brands becoming more aggressive, while listed companies faced competitive and profitability pressure.

Core views

The core views are: first, industry demand has not materially slowed, with combined Tmall/Taobao/Douyin GMV growing 14% year over year in 2Q26, unchanged from 1Q26; second, growth was mainly driven by Douyin, while Tmall/Taobao remained relatively weak; third, domestic brands continued to expand but divergence intensified, with China Pet Foods outperforming Gambol and Petpal; fourth, overseas order indicators recovered somewhat, but tariff sharing, foreign-exchange losses caused by RMB appreciation, and raw material costs may continue to weigh on pet OEM companies’ profits; fifth, social media discussions related to food safety may raise industry quality awareness and drive tighter regulation and industry consolidation.

Analysis framework

The report uses a monthly tracking framework that combines e-commerce platform GMV, brand share, category share, Douyin followers and sales conversion, US import data, and raw material cost indices to assess industry demand, the competitive landscape, and listed companies’ earnings sensitivity. For valuation, the report uses a sum-of-the-parts approach for the covered companies, valuing domestic and overseas businesses separately using forward P/E multiples and discounting them.

Methodology notes

• channel_trackerTmall/Taobao/Douyin online GMV tracker

  online GMV tracking

  Observes domestic pet food demand, platform migration, and changes in brand competition through GMV on Tmall, Taobao, and Douyin.

• Valuation methodsSOTP

  sum-of-the-parts valuation

  Separately divides the domestic and overseas businesses of Petpal, Gambol, and China Pet Foods, values them using different forward P/E multiples, and discounts them to derive target prices.

• cost_trackerGS proprietary cost index

  Goldman Sachs proprietary cost index

  Tracks price changes in raw materials such as chicken, PET, starch, and duck, and assesses their impact on pet food companies’ gross margins.

• factor_profileGS Factor Profile

  Goldman Sachs factor profile

  Compares stocks with the market and industry peers from the perspectives of growth, financial returns, valuation multiples, and composite factors.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China Pet Foods (002891.SZ)

  Covered company; domestic listed company in China’s pet food sector

  Strengths

  Improving domestic momentum, strong global supply chain, 29% year-over-year combined GMV growth in May and June, and outstanding performance by Wanpy.

  Weaknesses

  Increasing domestic competition, overseas tariff sharing, foreign-exchange losses, and raw material pressure may weigh on profitability.

  Comparison

  Recent online GMV performance was stronger than that of Gambol and Petpal, with market share gains in 2Q26.

  Risks

  Domestic revenue growth below expectations, food safety issues, foreign-exchange volatility, and changes in freight and raw material costs.

• Gambol Pet Group Co. (301498.SZ)

  Covered company; one of China’s leading pet food companies

  Strengths

  Maintains a leading position in the Chinese market, with strong growth in Balance Nutrition.

  Weaknesses

  Combined GMV declined 4% year over year in May and June, with Myfoodie and Fregate performing weakly and competition in premium cat food remaining intense.

  Comparison

  Weaker momentum than China Pet Foods, with deterioration from 1Q26 and market share losses in 2Q26.

  Risks

  Changes in foreign exchange, freight, and input costs; changes in the intensity of online competition; and execution deviations in domestic brand building and channel expansion.

• Petpal Pet Nutrition Technology (300673.SZ)

  Covered company; pet food company with domestic brands and overseas business

  Strengths

  Performance could improve if overseas competition eases or domestic brand building or channel expansion exceeds expectations.

  Weaknesses

  Meatyway’s combined GMV declined 4% year over year in May and June, with Douyin down 13%; domestic and overseas profitability remains under pressure, and bargaining power is weak.

  Comparison

  The most cautious rating among the three covered companies, with Goldman Sachs maintaining Sell.

  Risks

  Changes in major customer orders and receivables collection, overseas competition, execution of domestic branding and channels, and changes in tariffs on pet food exports to the US.

Key data

• June online GMV growth17% yoyA significant improvement from the 8% year-over-year decline in May, mainly driven by 40% year-over-year growth on Douyin.
• Combined online GMV growth in May and June12% yoyDouyin grew 35% year over year, while Tmall/Taobao declined 1% year over year, representing the full picture of the 618 Shopping Festival.
• 2Q26 total GMV growth14% yoyUnchanged from 14% in 1Q26; Douyin grew 34% year over year, while Tmall/Taobao grew 3%.
• China Pet Foods combined GMV growth in May and June29% yoyWanpy performed best, growing 41% year over year; Zeal and Toptrees grew 19% and 21%, respectively.
• Gambol combined GMV growth in May and June-4% yoyMyfoodie and Fregate declined 10% and 6% year over year, respectively, while Balance Nutrition grew 95%.
• Petpal Meatyway combined GMV growth in May and June-4% yoyTmall/Taobao declined 1%, while Douyin declined 13%.
• May growth in US dog and cat food imports from China50% yoyImports declined 30% year over year in April, followed by a significant recovery in May.
• June raw material cost trend1-3% MoM decline in cost indexThe cost indices of the covered companies declined from May, but PET and chicken prices remained 31% and 5% above their 2025 averages, respectively.
• Petpal target price and ratingRmb12.7; SellThe domestic business is discounted using 26X 2027E P/E, while the overseas business is valued using 16X 2026E P/E.
• Gambol target price and ratingRmb44.3; NeutralThe domestic business is discounted using 25X 2027E P/E, while the overseas business is valued using 10X 2026E P/E.
• China Pet Foods target price and ratingRmb29; NeutralThe domestic business is discounted using 20X 2027E P/E, while the overseas business is valued using 15X 2026E P/E.

Impact & implications

For investors, the report signals the coexistence of resilient industry demand and pressure on individual companies’ profitability. Douyin continues to be the primary growth channel for pet food, benefiting domestic brands with strong content, shelf presence, and brand conversion capabilities. However, intense competition, food safety sentiment, foreign exchange, tariffs, and raw material prices may constrain profit realization. Accordingly, Goldman Sachs recognizes China Pet Foods’ domestic momentum and global supply-chain advantages but maintains a Neutral rating; maintains Neutral on Gambol due to valuation and competition in premium cat food; and maintains Sell on Petpal due to pressure on domestic and overseas profitability and bargaining power.

Risks

• Further intensification of online channel competition, particularly on Douyin and in the premium cat food segment.
• Public sentiment related to food safety and cat food health issues may affect demand and brand trust.
• RMB appreciation may result in foreign-exchange losses for pet OEM companies.
• Tariff sharing, freight, and raw material price volatility may weigh on overseas business margins.
• Changes in major customer orders and receivables collection risks may affect companies with high overseas business exposure, such as Petpal.
• Changes in e-commerce platform data definitions may affect the comparability of GMV, average order value, and ROI tracking.

What to watch

• Whether Douyin GMV growth continues to exceed that of Tmall/Taobao, and changes in the shares of Merchant and E-shelf.
• Whether pet food demand in July and 3Q26 after 618 continues the improvement trend seen in June.
• Changes in the market shares of China Pet Foods, Gambol, and Petpal in 2H26.
• Whether social media discussions of food safety lead to tighter regulation, industry consolidation, or shifts in brand share.
• Whether the recovery in US pet food imports from China is sustainable, and whether improving orders can translate into profitability.
• The impact of prices of chicken, PET, starch, duck, and other raw materials, as well as USD/CNY movements, on gross margins.