We love them, pamper them. In return, they give us tenderness and company. The attachment of humans to their pets is at the heart of this investment theme. The number of pets and the amount of money spent on them has increased steadily in recent years. The Covid-19 pandemic has further reinforced this trend to cope with stress and isolation during the health crisis. Although pet care companies have benefited greatly from the pandemic, it is important to remember that the pet care industry was growing rapidly before the arrival of the coronavirus: the global market is growing at an average rate of 5.8% per year.
This market is driven by three growth drivers. First, the megatrend of demographic and societal change on a global scale. First, in a developed world, life expectancy is increasing and pets have become an important source of companionship.
Secondly, the world's population tends to be educated longer and have children later. The new generations are therefore devoted to their "baby animals". As a proof, generation Y (also called "millenials") is the generation that owns the most pets. It is in this context that pets are becoming an increasingly important part of human life.
Finally, emerging markets are our third growth driver. As living standards rise, the number of pet adoptions is increasing. In China, for example, the number of pet-owning households is approaching 100 million, for an industry worth more than $25 billion. That's three times more than five years ago in 2017. These trends have translated into more pets and more spending on them.
Pets help us live healthier lifestyles. When you own a dog, you have to go out walking it several times a day. So having a pet is not only 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 gets us out of the house, which is great for our health. So owning and caring for a pet helps us take care of ourselves.
It goes even further than that, as pets have become full-fledged members of the family. Whereas in the past, they only lived outside, they are now settled for good inside our homes. This evolution is explained by what is called 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 other things. Cynotherapy (therapy with dogs) is sometimes used to help students reduce stress.
By sharing presence, love and affection, humans and animals help each other. It's no wonder that 98% of pet owners consider their pets to be family members. And this bond seems to benefit their health above all. Scientific studies have shown that cats and dogs can lower blood pressure and the stress hormone cortisol. 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 reduce the risk of schizophrenia in adults. This is also what pet owners think. One survey found that 74% of respondents felt their mental health had improved since adopting a pet. In addition, 75% of those surveyed said that their friends and family members had felt the same way.
Overall, this is a long-term growth trend with many positive implications. For investors, this means that demand for pet food, toys, medical care, accessories and even fashion should remain constant. It's a sector that can offer stable returns over the long term and is expected to continue to grow. The pet economy has been resilient to shocks, performing well during the last three recessions (2001, 2008 and 2020). This is because pets are part of the family and as such are guaranteed to receive food, medical care and insurance regardless of the state of the economy. One adopted pet typically represents 10 years of companionship; this ensures recurring profits for this market.
Many companies are aware of this and have invested heavily in this sector to take advantage of its strong growth. This thematic list aims to identify the players around the world taking advantage of this thriving market.