Pet Food Taxes in Latin American Countries Restricting Consumers

Published By : 26 May 2016 | Published By : QYRESEARCH

The global market for pet food is a billion dollar industry. It is a widely known fact that pet lovers spend vast amounts for fulfilling their pets’ needs against expenses such as food, medicines, and grooming products. The sense of care and responsibility that pet lovers nurture for their beloved pets make them spend even higher amounts for high quality products. While North America is currently the leading regional market for pet food, the market for pet foods in Latin America is a highly lucrative one. Many manufacturers and marketers of pet food have focused on Latin America market with a view to exploit the vast growth opportunities that this region always offered.

However, the scenario has changed to a certain extent after the sales tax on pet food came into action in Mexico. Starting January 2014, the federal government in Mexico started levying a 16% sales tax on a variety of pet food. This negatively impacted the pet food industry in the country and the overall Latin America pet food market. The taxes made it difficult for low-income groups to purchase their pet food of choice. Animal rights groups have pointed out that the taxes also led to the increased abandonment of pets in the country.

In Brazil too, which is the second largest dog food market of the globe after U.S., with 36 mn pet dogs, increased taxes on pet food have prompted pet owners to switch to human food leftovers as the preferred choice of pet food in the past years. For the pet market to witness substantial traction in the country, tax reductions on pet food will play a major role.

Other Latin American countries such as Chile, Venezuela, and Argentina are also considered markets with healthy growth prospects for the pet food industry. But the issue of heightened taxes are rapidly bringing a change to consumer preferences. In such circumstances, the market is at the potential threat of witnessing a decline in the consumer base, even if there must not be a very substantial reduction in market’s revenue as product prices have risen. 

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