The pet care industry has been growing steadily for decades, supported by greater pet ownership and the "humanization" of pets.
While the pandemic—with its social distancing and stay-at-home orders—negatively impacted many other industries, they may have also reinforced trends supporting the long-term growth of the pet care industry.
Pet ownership was on the rise well before the pandemic. In the United States, pre-pandemic, 37 million millennials owned pets, and many have fur babies before or in place of children. Additionally, between 2008 and 2018, pet adoption rates among baby boomers grew 5%.
The pandemic seems to have accelerated these trends. 2020 saw a "puppy boom" in the United States, as pets old and new provided us with close companionship and improved well-being during the isolation of the pandemic.2,3 Animal shelters reported significant increases in foster and adoption applications, and in some cases were left vacant for the first time. In fact, many people who already own pets are planning to add more.
The humanization of pets and our desire to make them happy had already led to substantially increased spending. From 2013 through 2018, Americans’ pet spending increased by 50% while annual income only increased 23%, and global pet industry sales are forecast to grow from $190 billion in 2018 to $270 billion by 2025.
During the pandemic, nearly half of pet owners report having maintained their spending level and more than one-third increased their spending to keep their pets happy and healthy.5
While many industries have been negatively impacted by pandemic-related headwinds, pet care companies, as a whole, have benefited from the increased attention on pets. Chewy, Freshpet, Nestle and Zoetis are just a few of the major companies that have cited long-term trends supportive of the pet care industry in their recent earnings releases.
As measured by the FactSet Pet Care Index, pet care businesses generated impressive earnings growth in the third quarter while the broader market saw a contraction in profits.
The pandemic may have accelerated the long-term growth trends of the pet care industry. But its performance during last year's recessionary environment has provided yet another powerful example of the industry’s resilience during periods of economic stress. The FactSet Pet Care Index actually outperformed the S&P 500 by an impressive 44% in 2020.
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1APPA 2019-2020 National Pet Owners Survey; Bureau of Labor Statistics Data
2APPA COVID-19 Pulse Study Volume 1
3Jefferies 2020 Global Consumer Virtual Conference—Bloomberg Transcript, June 23, 2020
4LendingTree commissioned Qualtrics to conduct an online survey of 2,011 Americans, which included 1,378 pet owners. The survey was fielded September 4 to 11, 2020.
5LendingTree commissioned Qualtrics to conduct an online survey of 2,011 Americans, which included 1,378 pet owners. The survey was fielded September 4 to 11, 2020.
Investors looking for industries that have shown resilience during recessionary periods may want to consider ProShares Pet Care ETF (PAWZ), which tracks the FactSet Pet Care Index.
The first ETF focused on the pet care industry and gives investors the opportunity to gain broad exposure to public companies in the global pet care industry—companies that stand to potentially benefit from the proliferation of pet ownership and the emerging trends affecting how we care for our pets.