People have a hard time wrapping their heads around the numbers and growth of the pet industry. Because of this, since the pandemic, investors and VCs are eagerly looking for the next big thing in the pet scene and are trying to add a pet business to their portfolio.
Some numbers to get your tails wagging
Over the last 25 years, the pet industry has grown by 450%. The pet industry is expected to reach $358.62 billion by 2027. American pet owners spent over $123.6 billion on their pets in 2021, which is a 115% increase since 2011. The millennial generation already makes up 32% of pet industry consumers as they see their pets in a whole new light compared to their parent's generation. Millennials are now three times more likely to be pet owners than they are to be parents.
The Post Covid Dog Boom
Covid-19 had a dramatic and positive effect on the industry and market. Pet ownership soared, and dog shelters across the globe emptied like never before. In the UK, 3.2 million new homes adopted pets. People under 35 accounted for 59% of new pet owners, while 56% of those buying a pet for the first time had children at home. In the U.S, the numbers are equally staggering. There are now around 108 million dogs in the United States– roughly one dog to every three humans. In the U.S., 70% of all households now own a pet (an increase from 56% in 1988), which means there are now more households with pets than children.
The COVID-19 pandemic coupled with this new younger pet ownership has led brands to realize that they have to move away from the traditional brick-and-mortar industry and focus more on data and their online presence. A tangible example is seen in the increase in online pet shopping; in the U.S., 86% of pet owners now buy their food online, compared to only 60% before the pandemic.
Data is king
Large pet brands are now trying to find ways to learn more about their customers, as well as create stronger loyalty and customer engagement with their brand. As brands focus more on their online presence, there is a unique opportunity for new pet tech to help brands better understand who their customers really are and offer a far more tailor-made experience for them.
I have spent a lot of time speaking to some of the largest pet food manufacturers in the world, who know next to nothing about their customers and their dogs. But now, pet brands are not only looking to learn more about their customers, but they are also looking to forge a stronger connection with entrenched customer loyalty. These brands are searching for new ways to connect with their customers, not just at checkout.
Dog owners want the best for their best friend
Nearly 42% of dog owners opt to buy their dogs premium food, but with so many options, dog owners often rely on friends' recommendations or alternatively seek out a brand that they truly connect to.
There have been tremendous success stories of new players in the pet food space, offering specialized and tailor-made food specifically for your dog. Millennials no longer believe in the ‘one-size-fits-all’ model but prefer to choose a brand with shared values such as sustainability and high-quality ingredients. For example, 69% of Millennials opt for their pets to have natural and organic products.
Likewise, in the health space, pet owners are seeking more information to make better decisions on their pet’s wellbeing and lifestyle. Dog owners often have a very negative connotation with visiting the vet, as it is likely to be an expensive trip. There is a lack of centralized and accessible information to find out what products or services other dog owners of similar breeds are using, and which are good or not.
A market ripe for disruption
As we know, pet brands are looking for ways to build stronger and longer-lasting relationships with their consumers, putting a much stronger emphasis on pet health and wellbeing. Covid-19 bridged the gap between humans and telemedicine, but we have not yet seen the same impact on the pet world. There are several new exciting tech startups that are focusing exclusively on telemedicine for pets and they have made some notable strides in the field, with big investments coming their way. Preventative care is also on the rise, with vets trying to push dog owners to be more active with their dogs to reduce obesity or heart disease risks. In North America, obesity is the most common preventable disease in dogs. Approximately 25-30% of the general canine population is obese, with 40-45% of dogs aged 5-11 years old weighing in higher than normal.
The pet insurance market is also set to grow from $3.2 billion in 2020 to $5.9 billion in 2025. Smart tech will help insurance companies track and monitor pet health and wellness. Today, pet insurance is based on your dog’s breed, age, and any previous health conditions. Tech companies such as YuLife, have led the way in finding smart and gamified ways to disrupt the human ‘life insurance’ industry. Lemonade has had a similar disruptive effect on the home insurance space. The future of pet insurance will be to find a smarter way of tracking health and wellness data, in a way that rewards pet owners who take better care of their dogs, with cheaper insurance premiums.
Technology is the future of pet health and wellness
To truly succeed in the pet industry, I believe you need to create a fun and engaging user experience which provides clear value for dog owners, whilst also providing rich and comprehensive data for pet brands. The secret is creating a product that helps educate pet owners to be more active with their pets and rewards them with real, tangible value and useful utility. It’s about creating a loyalty program for your pup and empowering dog owners to take control of their dog’s health and wellness. Over the last two decades, we have seen the rise of the ‘humanization of pets’. I believe the next stage in this evolution is the ‘digitalization of pets’ as we see greater integration of technology into our pets’ lives. A smarter ecosystem allows for rewards and discounts on premium pet products and the best veterinary professionals, at the touch of a button.
The future for pets is as fluffy as it is profitable
The continued growth in this market proves that there is a deep emotional connection for consumers and that the pet industry is not just a cute ‘niche’, but a truly unique industry with truly amazing metrics and unit economics. If once it was a dog's size that won the fight, today there is no doubt that it is your dogs' data that will be the best weapon in protecting their health and ultimately, disrupting this market.
Written by Alon Zlatkin, CEO of Dogiz