Regional report: DACH – Pet industry grows as pet spending holds up

Pet populations in Germany (D), Austria (A) and Switzerland (CH) – in short, the DACH region – continue to grow slightly. And despite the inflationary pressure, pet owners are sparing no expense when it comes to providing for their pets.

Household pet ownership stable

In 2022, Germany was home to an estimated 15.2 million cats, living in 24% of the country’s households. This makes the domestic feline by far the most popular pet.

The latest data from the German Pet Trade & Industry Association (ZZF) and the Industrial Association of Pet Care Producers (IVH) shows that there were 10.6 million dogs last year, followed by 4.9 million small mammals.

According to Euromonitor, 45% of German households owned a cat or dog in 2022. The forecast for 2023 is that this remains stable, at 45.1%. The numbers are very similar in Austria and Switzerland, with 44% and 42% of households owning a cat or dog. For this year, pet ownership levels are expected to remain flat in Austria and increase by 0.6% in Switzerland.

Pet food turnover on the rise

The German pet industry had a turnover of almost €6.5 billion ($7B) in 2022, a significant growth from 2021’s €6 billion ($6.5B) mark.

Pet food made up the largest part of the turnover and the increased growth, accounting for nearly 8 out of 10 sales according to the ZZF and IVH.

In Austria and Switzerland, the same trend is being seen. “Basically, it has to be said that pet ownership – and pet nutrition – is an extremely stable and steady market,” Bernd Berghofer, CEO of Austria Pet Food GmbH and Managing Director of the Austrian Pet Food Association (ÖHTV) told the Austrian journal Die Ernährung.

Pet food is one of the least likely categories that shoppers will spend less on. Despite seeing slightly more focus on the price of products, the industry in the DACH region does not expect any dramatic changes in the near future.

According to Euromonitor, the pet food market will grow by 7.6% this year in Germany. In 2022, the increase was 3.5%. The market is also expected to grow – although at a slower pace – in Austria (3.6%) and Switzerland (2.4%).

Big players

Europe’s largest pet retailer Fressnapf once again managed to increase its total sales in 2022 – by more than 11% to over €3.5 billion ($3.8B). The German firm is the dominant player in its home market, with good prospects, and also has a strong presence in Austria and Switzerland.

However, its online sales are still significantly lower than those of its German online pet retailing competitor Zooplus.

Premiumization? Definitely!

The current trends in Europe’s biggest pet market and its 2 neighboring countries are similar to most other countries on the continent, with pet parents showing great interest in buying high-quality, healthy and ecologically sound food. Bernd Berghofer says that in Austria there has been a “massive trend” toward premiumization in pet food in recent years.

Examples also seen in Germany and Switzerland include regional sourcing, the use of local products in pet food formulation, and recipes with functional benefits such as a shiny coat.

Popularity of non-essential products

Accessories, healthcare and other non-food products have also become increasingly popular items on the shelves of pet stores, although their sales slightly declined in Germany last year.

Pet accessories are big business. The margins and gains in this sector are lucrative, as customers are prepared to pay high prices – their buying decisions tend to be based on emotional rather than rational choices.

Alongside clothing and home furnishings, accessories should also reflect the lifestyle of the pet owner. This is especially true for millennials, who make up 19% of all German pet owners. The same applies in Austria, according to analytical reports.

Specialized manufacturers such as Dogstyler are targeting these often affluent customers in a very competitive environment.

However, the statistics show that specialist pet trade outlets do still have most of the market share.

The role of sustainability

The attitudes of pet owners themselves have changed over time.

“People want to know more about the animals they keep at home, and have become more responsible when it comes to choosing their pets and taking care of them. Sustainability has grown greatly in importance over the years,” says Antje Schreiber from the ZZF. According to her, this is also reflected in the increase in personalized services offered by pet shops and tailored to each pet’s needs, routine and diet.

The increasing importance of sustainability has led to mounting pressure on businesses to respond. “Many companies have no alternative but to develop new products and services if they want to keep ahead in the market,” Antje Schreiber points out.

Facing pressure from disruptive business models, some players are going in new directions and trying to accelerate innovation to address consumer needs and future challenges.

Optimism for the future

Looking to the future, industry representatives are cautiously optimistic. Despite high inflation, dog and cat owners seem to be still willing to spend on their pets and this will create new business opportunities. On the other hand, price increases for electricity and gas, as well as for raw materials due to the war in Ukraine and its economic consequences, are directly affecting the pet food sector in the DACH region. And there might also be operational drawbacks caused by labor shortages.