Rising incomes, favorable demographics, urbanization and e-commerce penetration coupled with the pandemic, has resulted in heightened pet adoption rates and humanization trends, contributing to the substantial growth in the Pet Care industry, both in India and globally. The Indian Pet Care industry at USD 600 mn (2022E), while is small, is amongst the fastest growing in the world. The industry is expected to grow ~ 20% p.a. over the next few years to reach ~ USD 2.1 billion by 2030.
Infact the ‘recession proof’ nature of the industry was apparent, with the global industry continuing to grow robustly at a CAGR of ~ 8% p.a. from USD 150 bn in 2016 to reach an estimated USD 240 bn by 2022. This momentum is expected to continue with the industry projected to reach USD 310 bn by 2027. Another testimony to the industry potential was the US which despite being the largest (at a 45% global share) and a mature market, grew at a healthy ~ 9.5% p.a. CAGR beating the global average over the said period !
In India, while pet ownership is still largely an urban phenomena (only ~ 10% of 300 mn urban households having pets), however over the past few years, not only has pet ownership increased but the growing trend of “pet humanisation”, has translated into the pet care industry witnessing a boom across all categories i.e. pet food, treats, supplements, accessories, pet services i.e. grooming, training, wellness, boarding etc. as well as pet healthcare entailing vet-care, pet diagnostics and speciality animal hospitals.
Pet food and supplements, as are consumables, are the single largest category globally, as is in India at USD 300 mn+ accounting for over 50% of the Indian market. The category was traditionally unorganised, with most pet owners giving their pets home cooked food. With the entry of large organised players like Mars Inc in India in the late 2000’s, awareness of the benefits of scientifically constituted and manufactured commercial grade pet food and supplements, drove acceptability and availability across the country. Today there is an increasing shift not only towards manufactured pet foods (MPF), but also rise in demand for variety (dry/wet/vegan/raw/freeze dried) and quality products. Pet treats and supplements which are high value purchases are witnessing demand for natural, superior quality.
In India, traditionally, pet foods and services were available mostly at generic local pet stores, vet clinics and selective general stores, mostly in Tier 1 cities. With the increase in pet ownership, particularly among the more affluent youth (the largest pet owners in India as are globally), demand, as well as the propensity to purchase online has grown exponentially. Notably, in the US online sales accounted for ~ 30% of all pet product revenues, dominated by Amazon and speciality pet product sites i.e. Chewy.com. However, in India, given that pet products are increasingly becoming a part of a household’s regular grocery purchase as well as consumer engagement needed, we believe a combination of both Offline Distribution (through speciality pet stores, vet clinics, breeders, modern retail trade, general stores and pharmacies) as well as Online Distribution (through marketplace and D2C sites) will prevail.
As the global market is continually evolving, we expect the Indian market to follow suit on key trends including demand for superior quality pet foods, natural pet supplements and pet care accessories, continued shopping preference on D2C platforms, e-tailing websites and at speciality pet store as well as a growing demand not only for services like grooming, training etc but for specialised services namely pet insurance, pet boarding, pet gyms, pet holidays etc.
Petcare health is a large, growing sector, which globally includes large vet chains and animal care hospitals and service providers, is yet fragmented in India.
The Indian petcare industry today is highly dynamic and constitutes a healthy mix of established players like Mars Inc, Drools, Nestle – Purina, as well as a host of startups/ new age companies – Heads Up for Tails, Dogsee Chew, Zigly, Crown Vet, Orange PetCare Nutrition, DogmyCats, Pet Nutrition, Supertails, Floap, Captain Zack, DCC etc.
Going forward we expect a) leading players to investment in capacity, distribution and brand building b) large FMCG/ Pharma / Consumer companies enter the fray (recent investments by leading groups including Emami, Mankind Pharma, Cosmo) c) high VC/HNI/Private capital interest in backing established/ unique StartUps and d) a consolidation play happening amongst strategics, with interest in consumable product companies and businesses with brand strength, category leadership and effective Go-To-Market capabilities. With a total addressable market of over USD 2bn by 2030, the industry is poised for exciting times ahead !