The pet care business is booming – but for how long?

It is not just the increase in the number of pets worldwide that is driving the growth of the pet care sector, but a range of other factors has also contributed to a push in spending. The most influential of these factors are humanization, health and well-being, sustainability and digitalization. Is the sector resilient enough to face a world where inflation is fast becoming the name of the game?

Humanization

Euromonitor International’s Voice of the Consumer Lifestyle survey revealed that 71% of pet owners worldwide considered their pets as family members. This has contributed to an increase in spending, especially on premium products.

In recent years we’ve seen luxury fashion brands branch out into pet wear and we’ve witnessed the introduction of food treats that mimic human snacks, such as cookies and doughnuts. Pet owners are now spending their disposable incomes on their companion animals in much the same way as parents spend on their children.

The American Pet Products Association (APPA) projects that US pet parents will spend close to $109.6 billion on their pets this year.

“The fundamental driver of longer-term growth in the pet industry is the humanization of our new companions. So, while the number of pets sky-rocketed during the pandemic, we have been also willing to spend more on them,” says Sophie Lund-Yates, lead equity analyst at financial services company Hargreaves Lansdown.

Health and well-being

The pet care market has seen an increase in products for specific conditions, such as digestive, joint, heart, dental and skin health, as well as ‘free-from’ ranges. There is also a growing consumer trend towards natural and organic components in pet care products as owners become more aware of the impacts of artificial additives.

Sophie Lund-Yates says that owners are happy to spend more money on boosting their pets’ health. “This can be on things like supplements, healthy treats, bespoke food for different intolerances, and anything that relates to wellness and comfort.”

It’s not just physical health that is concerning pet owners. The rise in the number of products aimed at improving the mental health of companion animals, such as calming treatments designed to help combat pet stress, is indicative of pet owners’ concern regarding pets’ mental health.

Ongoing advances in veterinary health are improving pets’ lives and enabling them to live longer. Innovations such as screening tools and imaging are aiding diagnosis and treatment, and an increase in spending on pet insurance is enabling pet owners to take advantage of cutting-edge veterinary care.

Sustainability

Companies are responding to consumer concerns regarding the origins of products and packaging. In fact, across the industry, more recyclable materials are being used in packaging and the use of plastic is decreasing.

According to Euromonitor, North America, Australasia and Western European regions are leading sustainability in pet care: ‘Whilst Western Europe tends to lead the world in sustainability more broadly, thanks to its green macroenvironment, innovations in the pet care industry still tend to stem from the US, given the market’s sheer size and scale.’

The agency points out that these regions have sustainability claims that echo the needs and wants of both society and business. Such claims have almost become a prerequisite for being able to survive the grueling competition.

Ranked by country the US comes first, followed by New Zealand, Australia, Sweden, Poland, France, the Netherlands and Spain. The market research company also focuses on those markets that are actively investing in sustainability, like South Korea or Malaysia.

Digitalization

It is believed that as much as 23% of global pet care retail sales were done through online channels in 2021.

The option to bulk buy online with easy delivery, as well as pet food subscriptions that offer a more personalized service, have become popular with pet owners. This trend is likely to continue.

The veterinary sector is also increasing its online business. Earlier this year, Brazil approved a resolution allowing vets to perform online consultations. This has prompted new products and online platforms to emerge nationwide.

A case in point is Brazilian retailer Petz, owner of animal health company Seres which operates 12 veterinary hospitals and 126 health centers. Recently, a new telemedicine service became available. The service offers online assistance with a choice of 1,000 veterinarians.

The challenges

While some areas of the sector are more resilient than others, the pet care market as a whole remains buoyant despite recent challenges.

Amanda Sizer Barrett, director general at the International Trade Association of Pet Equipment Suppliers PetQuip believes that pet suppliers and manufacturers can remain optimistic as the humanization of pets “should be reflected in steady, future spending on products.”

“The pet industry is pretty resilient. It will rise to the challenge and continue to innovate,” she says to PETS International.

But Sophie Lund-Yates from Hargreaves Lansdown reminds us that the effects of the inflation in household incomes may impact the pet care segment.

“We are likely to see customers strip back spending on non-essentials, and to behave similarly as they have done in supermarkets, which is to swap to value-for-money offerings,” she concludes