From CPG to retail to insurance, companies across industries are looking to exploit the growth of the pet care sector.
Even before the pandemic hit, the pet industry was booming.
Over the last decade, Americans have doubled their spend on pet care services like training, grooming, and pet sitting, while global pet food sales have increased 61% since 2010 to just under $100B each year.
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The Covid-19 pandemic has created even stronger tailwinds for the industry. According to a survey of US consumers, since the start of the pandemic, 37% of those surveyed had adopted a pet. Covid-19 restrictions have also given life to the pet telehealth space, as they have for human telehealth.
WHAT YOU NEED TO KNOW:
- Premium, human-grade food on the rise: Consumer demand for premium and science-based pet foods is driving results for large pet food manufacturers. Recent investor interest in human-grade pet food startups such as Smalls and Sundays for Dogs, which each raised funding rounds in Q3’20, underscores the momentum behind this category.
- Virtual veterinary care takes off: Startups such as TeleVet and Small Door Veterinary have seen demand skyrocket in an era of social distancing and as people spending time at home pay more attention to their pets’ health. Pet food company Hill’s Pet Nutrition partnered with TeleVet amid the Covid-19 crisis to connect its veterinary customers with the startup’s telemedicine platform.
- Increased interest in pet insurance: The uptick in pandemic-fueled pet adoption has coincided with a surge in pet insurance interest. London-based Bought By Many raised a $98M Series C in May 2020, following a 150% increase in cat and dog policy sales year-over-year. Earnings call mentions of “pet insurance” also reached an all-time high in Q4’20.
- Bundling pet care products and services: Retailers are plotting ways to draw shoppers into their ecosystems by tapping into a range of products and services in the pet industry. For example, in addition to ramping up its assortment of pet foods, Walmart recently launched pet insurance, dog walking, and pet sitting services. Chewy introduced a pet telemedicine offering for customers that subscribe to automatic order refills.
WHAT’S NEXT?
- Consumer brand portfolio reshuffling: As large CPG companies sell off underperforming brands to refocus efforts on higher-growth businesses, anticipate more M&A and new product development within the clean ingredient and human-grade pet food categories.
- Long-term opportunities in pet telemedicine: While the end of the pandemic will likely result in fewer pet telemedicine appointments, the convenience of a virtual consultation and the potential to avoid unnecessary emergency vet bills could make these services more than a “nice-to-have.”
- Untapped potential of pet insurance: Compared to the UK, where 25% of pets are insured, the US and Canada present a largely underpenetrated market with just 1-2% of pets having coverage. Distribution will be a continued area of focus, whether through employer voluntary benefits, direct-to-consumer channels, or partnerships with retailers.
For more, check out our pet care market map, which identifies 75+ startups in the space, here.
