July 2020. 21-year-old Anushka Iyer, Founder and CEO at Wiggles.in, was in the news. Her company launched the first pet-sanitizer in the country. Priced at 330Rs for a 100ml bottle, the product is alcohol-free, vet-approved, kills 99.9% germs and is available on leading e-Commerce websites like Amazon and Flipkart. Wiggles, a pet-care startup set up in December 2018, has 24 pet-care products in its portfolio, and it has raised $1 Million in its first investment round. Anushka was quoted targeting 10x growth YoY for her company, with an aim to be a $70 Million company within the next 4 years. They’re not the only ones on the pie. Heads Up for Tails, another Indian startup in the pet-care segment, raised $10 Million in its pre-seed round in September 2019 as well. And then you have CoZo, another startup in the same vertical that raised $500K from Kunal Bahl and Rohit Bansal.
Oh by the way, did we mention there’s more money outside startups in pet-care? Big corporations cashing in billions of dollars, exchange-traded-funds based on the industry, and whatnot. Pet-care is a booming industry, one that is already riding on big money in the west and could potentially scale immensely in a market like India. Read on to find out more.
More than just Vet Expenditure
85 Million families in the USA - that is about 68% of the households - own a pet, according to a National Pet Owners Survey. With a pet, comes veterinary care. Veterinary care in America, has shot up from $4.9B in 1991 to $35B in 2015 which, for comparison is three times faster than the growth of the US GDP at that time.
Pet-care though is not just veterinary care. When you own a pet, you’d require food for your pet, a harness for it to roam around, toys, treats, grooming, medication and even insurance. After all, owning a pet is not a cheap affair per se.
Fun Fact: In the USA, the average lifetime cost of raising a dog - from adopting all the way to the end is $23,410. In India, the same is Rs. 9.75 lakhs for a Labrador with around Rs 5000 per month.
Besides, that’s not where the revenues end. GoPro has Fetch, a camera for your fur-buddies. Much like humans, more and more pets are considered family now. Pets socialize (at dog-parks, for instance), dress up and engage with social media followers, go on dates and spas, and sometimes, even have plastic surgeries! All of this only makes the pet-economy bigger and bigger. A large section of these expenses are essential: Afterall, you’d rather cut down some other expenses than have your pet eat some lower quality food. Pet-care, much like food and electricity, is a staples-business.
More ‘dog-moms’ than ever before
Urbanisation, an increasing number of nuclear families, delayed tendencies to marry and/or have kids, more disposable income at hand are few of the top reasons for more and more pets being welcome home. Globally, the pet-care industry was valued at about $225 Billion in 2019, and is expected to reach $280 Billion by 2023. However, we believe COVID might help the industry touch $300 Billion sooner. The US was a major contributor to the pet-care economy, adding about 40% of the 225 Billion dollars. While India’s contribution was lesser, its growth is amongst the highest in the world.
According to Business Wire, the Indian pet care market is expected to reach $780 Million by the end of the year 2025, growing from $325 Million in 2020 at CAGR of more than 19%, vis-a-vis global projected CAGR of 5.9%.
Dogs-per-capita, a measure to gauge dog ownership, is one way to look at economic growth in a country.
The logic is simple: more dogs would mean more disposable income with the people and better economies. Globally, India has seen the highest percentage growth in dog population in 2012-2017, registering a sturdy 77% CAGR.
The sales volumes of Pet Food have increased by 4X over the last decade. What’s better - the dollar value per ton for the same increased by 71%.
Recessions don’t bite
Like we mentioned, the economy around pets is an essential business. Unlike discretionary industries like travel, one would still require pet-food, essential grooming and vet-care at all times. So the chances of the industry going down in a recession are, safe to say, non-existent. Pet care spending even grew during the last two recessions: 29% during the 2001 recession, when the overall market tanked 50% and it grew 17% during the 2008–2009 recession when the market plummeted 56%.
Apart from the (highly unlikely) event of a pandemic arising from a cat or a dog, during a recession, you’re bound to spend more time with your pet - it gets more treats, maybe a new toy or a blanket? The pet-care industry not only generates cash, but it has also historically generated more money during times of recession. And it had to happen again, during Covid.
Figures from Neilsen show that dog and cat sales spiked more than 50% for the week ending 21 March. Sales of pet supplies rose 24% during the same stretch. Many New York City shelters and rescue organizations saw application rates increase by 1000%. At Small Door Veterinary, from February to May, there was a 1,053% increase in web traffic to their online Learning Center, as isolated pet owners look for trusted resources and remote care.
In the infographic above, notice how it took 6 years for the expenses to reach for 20 to 30 Billion dollars and practically 2 years from 60 to 70 Billion? Technology has been a big blessing to the industry. One can order any sort of consumable or non-consumable for their pet on the click of a button - food, toys, grooming sessions - everything. Pet care e-commerce sales in the US alone increased by 67% during 2018.
Oh, and don't forget social media. If you follow (or not) Nala, the cat or Tucker on Instagram, you’d know that there are millions of people like you who like watching cute pet videos on the internet. And corporations know that too. Purina, the leading pet-care brand by Nestle, spent $100 Million on paid advertising in 2019 alone. 80% of social referrals to e-commerce sites came from Facebook in Q1 2019.
Pet Economy: Dollar vs Rupee
The money in pet-care is already there in the US. Mars and Nestle, the two FMCG giants lock horns again in this industry with their leading brands, namely Pedigree and Purina. While Mars has been an early entrant in pet-care, both the companies have forayed into India and are fighting for market dominance. A lot of companies in the pet industry are listed in the west. There is even an exchange-traded fund, Pro Shares Pet Care ETF (PAWZ), that is traded on NYSE. With growing sales numbers in the pet care industry, corporate interest has intensified. More than 80 mergers and acquisitions between 2018-19 indicate that a wide range of companies are attracted to and investing in this dynamic opportunity.
As more and more pets get adopted, pet-care in India is expected to scale immensely because of an untapped penetration and increased organically inflating breadth over the coming years. As we discussed earlier as well, the sales have increased tremendously both in the volume as well as value. Not only is the growth steep, but the resultant penetration of the industry is also still in single digits. India’s exports in Pet Food grew by 489% in the decade preceding 2018. To summarise, sales and consumption, exports and costs are ALL increasing and the industry is set to flourish.
Other revenue streams - accounting for about a quarter of total revenue - are gaining traction as well. Metros now have an increasing number of dog-cafes and dog-parks. There are companies like Bajaj Allianz that offer pet insurance in India and Indian startups in Pet-tech, pet-grooming, even pet-Ayurveda.
So in case, you have a bag full of money, whether you’re a cat person or a dog-person or the unfortunate kind who doesn’t like either, you might still like the money this industry can make. As Indian pet-care grows over time, chances that you would lose all of your money in that case? Close to im-paw-ssible.
This article is contributed by Skand