Pet Care Businesses: A Comprehensive Look into the Market
The role played by pets in society changed drastically in the last decade. As family members, they earned a new status, gaining more rights in Western European countries and becoming a major subject in the political, environmental, and corporate agenda.
The steps forward were explained by the continuous humanization of pets, which intensified during the pandemic and is now visible worldwide. Data from Euromonitor International’s Voice of the Consumer: Lifestyle Survey reports that 71% of pet owners worldwide consider animals part of their family. The trend is led by the North American market but is followed closely by Latin America and Europe.
Reacting to the increasing interest in pets, companies expanded their offer by adapting products and services originally created for humans. From healthcare insurance to pretzels for dogs, the market bloomed with innovative options, leading to new business opportunities for existing and new brands.
This article looks into the current status of the pet market, providing a comprehensive overview of recent past, present, and future trends. It emphasizes how and why the business landscape is constantly changing to respond to pets and owners’ needs.
The Past: The pandemic as a driver of change
The COVID-19 pandemic is considered by many as the awakening of the pet market. When remote work became mandatory, dogs, cats, and other domestic animals became an even bigger part of people’s lives. For those who lived alone and the ones who shared their household, pets provided enjoyable company and a source of interaction during a period of stress and limited human contact.
The number of adoptions during the period is known to have increased significantly. According to Morgan Stanley Research, the pandemic led to a growth of 4% of households with pets in the United States, a trend fueled by millennial pet owners. Simeon Gutman, an analyst from the company, links it to the fact that young adults were becoming homeowners for the first time. The delay in having children and having smaller families, compared to previous generations, also explained their higher interest.
With pets becoming the center of attention, humanization intensified, and people started treating animals as family members. Data from Nielsen IQ estimates that in 2021, North American customers spent 60 million dollars in the pet care market, an increase of more than 15% compared to the previous year. This growth is followed by the rise in the amount available for pets within the family budget. During the next decade, Morgan Stanley Research expects that amount to increase by 130%.
Among pets, dogs and cats were the first and second, respectively, most preferred domestic animals. The survey also showed that, during the pandemic, pet owners became more attached to their non-human friends, a passion that translated into new consumer habits. Asked about their purchase intentions, answerers said they expected to increase their budget for premium pet food, mostly natural and healthy alternatives, and invest more in pet health, including insurance and advanced treatment services.
In addition to the search for new products and services, the pandemic brought a new light to the way consumers purchase. Frequent lockdowns led users to prefer more convenient alternatives, such as online shopping or monthly subscription models. In response, companies started investing in more robust e-commerce websites and digital experiences, a trend expected to become even more relevant from now on.
Giant brands such as Purina and Royal Canin reinforced their digital experience during the pandemic. However, investment is also being made by smaller brands that, for instance, used to sell only through social media. Again, the goal is to attract new customers, especially those under 45 who prefer to buy using their smartphones.
The Present: Growing in times of inflation
After the pandemic, the world entered and is currently living in a period of inflation. According to Nilsen IQ’s Pet Industry Trends Report, in the second quarter of 2022, prices for pet care products reached historical heights, with cat food being the category that suffered a higher increase. The price inflation is explained by supply chain issues and pricing pressures, especially in source materials used to produce pet-related products, from wood to food ingredients.
Despite the overall pricing increase, the research pointed out that pet owners are showing high resilience by keeping previous purchasing habits, an insight confirmed by a second report launched later in the same year. Pricing is still a concern while looking for basics, such as pet food. Yet, two out of three pet owners said they will stay loyal to their preferred food brands and do not expect to change for a cheaper alternative.
Non-essentials also stood their ground, with toys, treats, vitamins, and supplements being part of the monthly spending of the majority of pet owners. Online shopping, a trend more prominent during the pandemic, wasn’t affected. In addition, recent surveys revealed that the higher the inflation, the higher the likelihood of consumers using online stores. The preference is explained by how much easier it is to compare prices.
Changes were noted concerning quantities. If, in previous years, purchasers opted for larger quantities, they are now looking for smaller pack sizes, choosing to purchase more frequently rather than buying larger packs. Omnichannel pet businesses have the lowest purchasing cycle, with customers back to buy a newer product every fifteen days.
In short, though affected by inflation mainly due to macroeconomic factors, pet care businesses are managing to keep the space they conquered during the pandemic, registering growth in difficult times. Despite their financial constraints, pet owners are showing loyalty by prioritizing well-being and considering healthy food and health in general as a main priority within their monthly expenses. As a result, the pet industry is also keeping its wellness.
The Future: Trends for 2024 and beyond
As a broad and flourishing market, pet care is growing in several directions. The growth is boosted by well-established brands that continue to explore newer alternatives and small pet entrepreneurs/businesses that create healthier food solutions, innovative new technologies and toys, prosthetics, and so many other options. There are, however, recent and continuous trends that will surely catch attention in 2024 and beyond.
Nutrition, supplements, and CBD
During the last decade, the North American Veterinary Community raised attention to the possibility of an obesity epidemic. Neglecting food components and overfeeding were some reasons for the increase in pet overweight.
With customers becoming more conscious regarding health and wellness, pet brands started building more natural options, creating more balanced and nutritious meals. A study from The Canadian Pet Journal revealed that almost 44% of pet owners are more careful with the food they pick for their animals than their own. When reading labels, they look for organic ingredients and well-known nutrients, like omega 3.
The search for better pet nutrition led to Yvethe Tyszka, an invited pet business specialist from Forbes, describing the rise of biotics, gut-regulating supplements that can be categorized as pre, post, and probiotics. The same specialist also mentions the increase of Cannabidiol (CBD) products for pets. These products range from oils to supplements that reduce anxiety, stress, inflammation, and pain.
Premium and personalized solutions
Spreading across different products and services, premium and personalized solutions are highly valued by customers willing to pay more to get something exclusive or custom-made for them.
According to the World Market for Pet Care, premiumization is growing in Southeast Asia, where wet and frozen pet food is gaining momentum. In Taiwan, for instance, there is a home delivery system that allows pet owners to order a fresh meal online, which is cooked in a ghost kitchen and delivered on schedule.
On the other hand, personalization can be seen in several areas, from pet furniture to tailored nutrition and specialized meal plans. Regarding the latter, specific diets treat and prevent potential diseases, especially in animals with distinct needs, breeds, allergies, or food restrictions.
Healthcare, insurance, and veterinary relationship
With health being a major concern for pet owners, healthcare products and services are evolving fast. The evolution is particularly prominent in the insurance market, with existing companies creating services to protect pets in case of accident or disease. Besides huge insurance brands, players that solemnly focus on pet solutions joined the race. According to Stanley Morgan Research, pet insurance grew 26% per year from 2017 to 2021.
Veterinarians are also going through a transformative process. Though most pet owners consider appointments extremely important, they are now open to different relationships with their vet. Recent studies from Nielsen and this GMO Research article argue that more pet owners are open to experimenting with online and telemedicine services.
Remote consultations, such as video calls, can work for regular appointments, reducing the stress of visiting the vet and allowing vets closer contact after a first consultation. Balance is critical in these services since the goal is not to completely substitute in-person consultations. Instead, telemedicine allows for a better and closer follow-up.
Besides regular consultations, in more mature markets, veterinarians are receiving more requests regarding pet mental health, which got more attention after the pandemic. Such attention focuses on the need to consult veterinarians who specialize in understanding and learning how to deal with specific behaviors.
Smart technologies
In recent months, Euromonitor pointed out an increase in remotely controlled gadgets that allow humans to interact with their pets using their smartphones. Products such as treat-dispensing cameras, feeding systems, or tracking collars are now starting to flood the market, leading to the appearance of more affordable solutions.
These products focus on interaction, allowing humans to monitor, see, or even speak with their pets during the day. Specialists argue that, as more people adopt pets, advanced technology products will get traction and be incorporated into more and more households.
Continuous digitalization
There is no going back when it comes to digitalization. With people spending substantial portions of their day online, having a professional digital presence became fundamental to building strong customer relationships and driving sales. In the post-pandemic world and during an inflation period, creating loyal customers will make pet care businesses survive and prosper.
Digitalization must be seen as more than having a website or social media presence. Advanced subscription models, online personalization, contextual interactions, and customer relationship sequences are some of the endless possibilities that companies can explore to keep the conversation constantly flowing between them and their customers.
