Why pets are investors’ best friends
Dog, cat and mouse not only bring joy, they can also spice up your stock portfolio. The growing pet supplies market can be very interesting for investors.
All over the world pets are loyal companions for many people: inside in life and mean everything to them. So it’s not surprising that the entire pet industry has grown massively in recent years. This trend means that investors, too, can be “wildly” happy thanks to the good returns. And an end to the boom does not seem to be in sight.
Germany is also part of this trend: According to one evaluation of the Central Association of Zoological Companies in Germany and the Industry Association for Pet Supplies (IVH), the stationary retail trade turned over 4.5 billion euros in pet supplies in 2020. But online retail is also growing: its market share is currently 14 percent and a sales volume of around 822 million euros in 2020. If we look around other parts of the world, a similar picture emerges. The industry has grown by 70 percent worldwide over the past ten years.
Today the pet care market is valued at $ 232 billion and is projected to grow to $ 350 billion by 2027. And there’s reason to be optimistic: even a global pandemic couldn’t stop the growth of the pet industry. Regardless of the corona crisis, the area has even grown. Maybe because pets are loyal companions and people feel less alone with them.
In Germany, according to current figures, 34.9 million pets of all kinds live under one roof with their mistress or master; an increase of 3.3 million animals compared to 2016. That means 47 percent of German citizens have one or more pets. According to the associations, cats are particularly popular; they live in 26 percent of households.
And people love their pets, because in many cases they are a central and important part of the family. Pet owners: inside pamper their loved ones, because they are no longer a one-time investment that they feed with leftover food and food from the discounter. No, many families with pets have become bulk consumers of care products, health care offers and luxury items. And that’s exactly why the industry is booming across the board.
A lucrative luxury market
For a full 93.5 percent of German pet owners, the quality of the pet food is the most important purchasing criterion. This is a highly lucrative market for companies that adapt to the luxury needs of the animal – and, last but not least, of the owner. Many new services and products are therefore being brought onto the market: from expensive organic feed and pet insurance to new drugs that can prevent diseases and nutritional supplements that can extend the life of these precious companions.
Owners like to spend money on keeping their pets in good health, well-groomed, and even equipped with the latest gadgets. Among other things, pet care has seen a great revolution as many view pets as equal members of the family and therefore buy everything from dental care to chemotherapy.
The online feed retailer Chewy is one of the more interesting companies in the industry: Investors: Inside, the share price rose by more than 200 percent in the past year. Freshpet, which specializes in high-quality fresh feed, has grown by more than 140 percent within a year. Health companies like Elanco Animal Health and Zoetis specialize in the manufacture of medicines, vaccinations and special diagnostic products for pets. Their shares gave shareholders a relatively small, positive return in the past year. In Germany, about Zooplus has increased in recent years.
From an investor’s point of view, the pet industry is interesting. Because we’ve seen pet consumption proving resilient to both financial crises and global pandemics. In the short term, the question arises of how the industry boom will behave and whether it can withstand, now that the lockdown is being relaxed nationwide and more people are going to work and spending less time at home. Nobody can take a look inside the crystal ball, but it could mean that the industry will face weak headwinds for a short time. But so far the industry’s growth has shown no sign of weakness. Therefore, companies in the fields of veterinary medicine to organic animal feed can definitely be a loyal companion in the portfolio.
