How the Pet Product Market is Evolving During the Pandemic

As demand for pets & associated products surges during lockdown, we took a look at the industry's trends and what the future holds.

Pandemic Pets

The pet product market has shown great promise in recent years. Having seen no decline during COVID-19, the industry presents itself as a lucrative opportunity for investors. The market has 3 key characteristics that make it so appealing; size, growth and resilience. This magic combination paints the picture of an industry that can offer stable returns for the next 5-10 years, making it an incredibly attractive space for investors.

During 2020, whilst the world was in lockdown, people were adopting, buying and spending more on their furry friends than ever before. The Pet Manufactures’ Association claims that since the start of the pandemic, 3.2 million households in the UK have acquired a new pet. And people have not only been purchasing more pets, but have also become more attentive to pet needs, wellbeing and making them integrated members of the family.

The section of the market that has benefited most from this attitude change towards our loyal companions is pet food. People no longer want to feed their pets traditional pet food. A significant increase in the premiumisation of pet food (organic, vegetarian, ethical and sustainable) has provided companies with a new nutrition-focused segment of the market that didn’t exist before.

“Pet food trends mirror human food trends”

‍Arbolus expert and Former CEO of Europe’s largest pet retailer‍

As long as humans continue to explore new and alternative food options, these are the types of food we will be buying for our pets too.

Furthermore, pet supplements, grooming, toys and accessories also contribute to the exponential growth of the industry. According to Technavio, the pet product market is expected to grow by $11.64bn during 2020-2024.

Consumer Buying Behaviour

Spending more time with our pets at home has also fuelled a shift in buying habits. Traditional brick and mortar stores have continued to thrive during the pandemic due to continually staying open as ‘essential businesses’. However, COVID-19 has spearheaded a big change in online buying behaviour.

E-Commerce is the fastest growing channel for pet product distribution. With more online selection, better price, personalisation and variety, owners have the flexibility to source and purchase the perfect products for their four-legged friends. According to Nielson, online sales of pet products in the US increased by 51% in March 2020 alone and as with most e-commerce and direct-to-customer (DTC) models, online pet product businesses will continue to thrive.

There are a handful of key players that dominate the online pet market including Fressnapf, Pets at Home (Europe), PetSmart and Petco (US). These companies have the largest market share, revenue and due to their well-established DTC services, leave limited opportunity for smaller players to breakthrough on the large scale.

“Even the likes of Amazon won't be able to tackle these large online players due to their size, market control and dedicated focus”

Former Director at one of Europe’s largest Pet Product Retailers

This said, the market presents such an opportunity that pet startups aren’t deterred, and investors back them. Firms such as Butternut Box and Ollie are testament to this, having raised $58M and $46M respectively.

Weathering the Storm Ahead

As a recession-resistant category, the pet industry is booming and is set to have a prosperous year ahead. Owners spending more time with their pets and putting their wellbeing first, coupled with the surge of e-commerce will see the pet industry continue to digitalise and consolidate with little disruption; making it an exciting space for investment.

To learn more from our world class experts about the market, recent developments and key players in the space, click here.

Ellen Bunn

After travelling and working in South America, Ellen relocated to Spain in 2018 and was one of the first members of the Arbolus Barcelona office in January. She works as a Business Development Associate, working closely with a number of global consulting clients.

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