The number of pets and the money spent on them have been steadily increasing in recent years. The Covid-19 pandemic has further reinforced this tendency to cope with stress and isolation during the health crisis. Even if pet care companies have largely benefited from the pandemic, it should be remembered that this sector was experiencing strong growth before the arrival of the coronavirus: the world market is growing by an average of 5.8% per year.
Sales of pet products in the United States (the world’s largest market) in billions of dollars:
Source: APPA & Statista
Three engines of growth
This market is driven by the megatrend of demographic change and societal changes on a global scale. On the one hand, in a developed world, life expectancy is increasing and pets have become an important source of companionship. On the other hand, the world population tends to study longer, to have children later. The new generations therefore devote themselves to his “baby animals”. As proof, generation Y (also called “millenials”) is the generation that owns the most pets. It is in this context that pets occupy an increasingly important place in human life.
Another engine of growth: emerging markets. With the increase in the standard of living, the number of pet adoptions is increasing. In China, for example, the number of households owning a pet is close to 100 million, for a sector that is worth more than 25 billion dollars. This is three times more than five years ago, in 2017. These trends have resulted in an increase in the number of pets and an increase in spending on them.
Our friends the animals
Animals help us lead healthier lifestyles. When you have a dog, you have to take it out for a walk several times a day. Having a pet is therefore good for our mental health, but also for our physical fitness. Studies show that dog owners are much more likely to meet daily physical activity recommendations. Walking a dog or riding a horse allows us to get out of our homes, which is great for our health. Owning and caring for a pet therefore helps us to take care of ourselves.
It goes even further than that since pets have now become full members of the family. While in the past they only lived outside, they are now settled inside our homes. This development is explained by what is known as the “pet effect”: numerous scientific studies have shown that pets have a positive effect on our mental health. Service dogs have saved the lives of many soldiers suffering from post-traumatic stress disorder (PTSD). Pets also help their owners to better manage their emotions and help people with mental health problems to think about something else. Cynotherapy (therapy with dogs) is sometimes used to help students reduce stress.
By sharing presence and affection, humans and animals help each other. It’s no surprise that 98% of pet owners consider their pet a member of the family. And this link seems above all to benefit their health. Scientific studies have shown that cats and dogs can lower blood pressure and the level of cortisol, the stress hormone. Their presence also stimulates the production of oxytocin, serotonin, and dopamine, molecules that help the body relax. Some studies have even shown that dogs can lower the risk of schizophrenia in adults. This is also what pet owners think. A survey found that 74% of people surveyed felt their mental health had improved since adopting a pet. In addition, 75% of respondents indicated that their friends and family members had made the same observation.
Investing in the animal economy
Overall, this is a long-term growth trend with many positive spin-offs. For investors, this means that demand for pet food, toys, medical monitoring, accessories and even fashion should remain constant. It is a sector that can offer stable returns over the long term and which should continue to be on the rise. The pet economy has also held up well to shocks, posting fine performances during the last three recessions (2001, 2008 and 2020). This is because pets are part of the family and as such they are guaranteed food, medical care and insurance regardless of the state of the economy. An adopted animal generally represents 10 years of companionship; this ensures recurrent benefits to this market.
Many companies are aware of this and have invested heavily in this sector to take advantage of its strong growth. Zonebourse experts have created a thematic list that aims to identify players around the world taking advantage of the prosperous and buoyant pet market.
Discover the thematic list by clicking here
Sources:
Johns Hopkins Medicine (December 18, 2019), Early-life exposure to dogs may lessen risk of developing schizophrenia, ScienceDaily.
Equities News (December 9, 2020). Freshpet Inc. (FRPT) Breaks into New 52-Week High on December 09 Session.
Newman, K. (May 24, 2018), More Than Horseplay, US News.
Evans, J. (October 18, 2020), Petcare market booms as lockdown loneliness drives sales, Financial Times.
Agne Blazyte (2020), China’s pet industry market size 2010-2019.
Zooplus AG Capital Markets Day, 17 November 2020 (November 2020).
Human-Animal Bond Research Institute (April 16, 2018), 2016 Pet Owners Survey, HABRI.
Beetz, A., Uvnäs-Moberg, K., Julius, H., & Kotrschal, K. (2012), Psychosocial and Psychophysiological Effects of Human-Animal Interactions: The Possible Role of Oxytocin, Frontiers in Psychology, 3, 234.
Allianz Global Investors (February 25, 2021).
China’s pet economy surges to record highs (July 26, 2019).