Key Subsectors in Pet Care
The pet care industry has grown every year for the past 30 years. According to the American Pet Products Association, over this period, pet ownership has gone from 56% to 68% of all US households. Some of this change is due to technology and our flexible lifestyles, including the advent of online purchasing. However, the majority of this growth has come from an innate change in our culture and demographics. As Millennials and Gen Z consumers have entered adulthood, they have embraced the pet-loving and pet-owning lifestyle to a far greater extent than their parents. There are now more pet owners around the world than ever before in human history. These pet owners are also passing down their health and food habits to their pets, reinforcing a strong megatrend of humanisation. Expenditure on pet foods, treats, healthcare and veterinary services and even pet leisure such grooming, day care and pet hotels is now on the rise. We have furthermore seen the introduction of pet premiumisation in key product categories. This has left owners unwilling to trade down to cheaper alternatives even during times of distress. And as our pets have become treasured members of our families, pet care companies have been taking note. We have seen innovation across pet food flavour profiles and palatants and ingredient systems that use healthier and better-quality ingredients. The pet ecommerce economy has taken off and continues to show strength as more pet parents embrace the flexible, digital lifestyle. Our loyal companions truly have become big business. To further explore this theme, in this piece, we unpack the four sub-sectors of pet economy that we seek to capture within our Rize Pet Care UCITS ETF. We believe it is companies positioning themselves along these four verticals that have the potential to benefit from the rise of the global pet economy.
- Pet Food and Consumer Products
- Pet Retail
- Pet Health
- Pet Insurance
1. Pet Food and Consumer Products
Companies in this Sub-Sector include businesses that manufacture branded and unbranded pet food, pet treats and pet consumables. An example of a company in this Sub-Sector is pure pet food player Freshpet Inc, which manufactures and markets natural fresh meals and treats for dogs and cats in the United States, Canada and the United Kingdom. This Sub-Sector also includes packaged food companies with dedicated pet products divisions. One such company is The J. M. Smucker Company in the United States.
2. Pet Retail
Companies in this Sub-Sector primarily include specialised pet retail businesses that sell pet products (including pet food, pet treats and pet consumables) and pet services via online and omni-channel retail channels. Examples of pure online businesses include Petco Health and Wellness Company Inc, which is a retailer of premium pet consumables and pet supplies, and Chewy Inc, a US based pure online retailer of pet medications, food, treats and other pet-health products and services. Omni-channel retailers in this Sub-Sector include Musti Group Oyj, which operates pet care B2C distribution channels across Finland, Sweden and Norway, and Pet Center Comércio e Participações SA, which operates a chain of stores that sells products and services for pets in Brazil. This Sub-Sector also includes companies that primarily focus on pet care services such as grooming, day care and pet hotel services. One such company is US based Rover Group Inc.
3. Pet Health
Companies in this Sub-Sector include businesses that are primarily involved in pet healthrelated products and services, supply and distribution of pet medicine, veterinary services and veterinary equipment. Examples of companies in this Sub-Sector include Zoetis Inc, which develops and commercialises animal health medicines, vaccines and diagnostic products in the United States and internationally, and Elanco Animal Health Incorporated, which offers pet health disease prevention products, such as parasiticide and vaccines that protect pets from worms, fleas, ticks and viruses, respectively. Examples of companies specialised in veterinary equipment include IDEXX Laboratories in the United States and UK based CVS Group Plc.
4. Pet Insurance
Companies in this Sub-Sector include businesses that primarily provide health and life insurance benefits for pets. An example of a company in this Sub-Sector is Trupanion Inc, which offers and administers cat and dog insurance. Trupanion Inc is a founding member of the North American Pet Health Insurance Association (NAPHIA) which educates pet owners in North America about the veterinary industry.
PETZ: Rize Pet Care UCITS ETF
 Forbes, “The Biggest Trends In The Pet Industry”, November 2018. Available at: https://www.forbes.com/sites/richardkestenbaum/2018/11/27/the-biggest-trends-in-the-pet-industry/?sh=2eeeed17f099
 Euromonitor International, “Euromonitor’s Classification for Pet Care”, Pages 5 and 6, December 2021. Available at: https://rizeetf.com/wp-content/uploads/2022/04/Euromonitors-Classification-for-Pet-Care.pdf