Humankind’s association with dogs goes back a very long time – approximately 30,000 years, when we began to offer wolves food and shelter in return for protection and help while hunting. This predates agriculture, as we only began to settle down and plant crops 12,000 years ago. The agricultural lifestyle in turn lead to the domestication of cats.
Though few of us use our dogs for hunting or our cats for mouse-catching nowadays, pet ownership is as popular as ever. In fact, the last five years have seen a steady increase across Western countries. Changing attitudes to pets together with an uptake in ownership presents a unique opportunity for companies specialising in pet food and services. In the troubled year of 2020, for example, the pet economy in the US performed better than the US economy as a whole, with a CAGR of 5.3%, according to Allianz.
In the US, 70% of households have a pet. This also includes birds and small animals such as hamsters and gerbils. With its large population and strong purchasing power, this makes the US the world’s largest pet economy. This is followed by Europe (including Britain) and the Asia market, where China’s affluent middle-class in particular is seriously getting behind the idea of companion pets. In France, the FACCO – Federation of Pet Food Producers – report that 51% of households are pet owning and this figure is broadly representative of Europe as a whole. The number of cat versus dog people varies between countries. In the US, 44% of household have a dog, compared with 29% for cats. In Britain, 34% own dogs and 28% cats, In Germany and France, however, cats are favoured – one-third of French households have a cat but only one-fifth own dogs.
Across the board though, attitudes towards cat and dog ownership have changed and this has been in the animals’ favour as younger pet owners often treat them as family members – and as a result are more likely to spend money on their health and wellbeing. Notably, while most other sectors took a pounding during the 2008 financial crisis, pet spending remained unchanged.
Bloomberg Intelligence predicts that the global pet industry could grow from $200 billion in 2023 to $300 billion in 2030 as a result of this willingness to spend more combined with pets living longer. The increased interest in pet health has created a demand for products that would not have made it beyond a brainstorming meeting twenty or thirty years ago. Examples include low-fat food ranges to prevent pet obesity and premium-grade frozen meat for dogs. Some of the world’s largest food companies are also active in the pet nutrition sector – Mars Incorporated (better known for the chocolate bars) are the owners of French dog food manufacturer Royal Canin, for example, and Nestlé count Purina (dog food) and Friskies (cat food) among their brands.
Naturally, with perceptions of pets changing from companions to family members, more pet owners are taking out health insurance. In general, this is more common in Europe than in the US, where only a single-digit percentage of pets are insured – which leaves ample scope for growth. More pets being insured will have a positive knock-on effect on other parts of the industry – notably for pharmaceutical companies. With fewer regulations and less cumbersome testing requirements than for human medicine, the research and development costs for animal medicine are lower, with higher profit margins and quicker returns.
Considering how far back the relationship between humans, dogs and cats spans, it should not come as a surprise that pet owners are willing to take out pet insurance and pay extra for healthier food. What is surprising though, is that this market demand has not been spotted until now.