When this pandemic started, a lot of people were concerned about adjusting to a ‘work from home’ life. For me, the adjustment was not too hard, and I was able to adopt a very efficient routine. Although, there is a furry and four legged employee at Polestar that lives in my apartment rent free and makes the worst colleague.
He’s lazy, sleeps through meetings, and does not understand personal space.
I refer to him as a Polestar team member because he loves to join our 9 am team calls by stepping all over my laptop and eating my pen when I take notes during meetings. Before you call HR, his name is Casper and he is my 1 year old cat.
I adopted Casper in July 2020 when he was two months old. Weirdly enough, the pandemic was a perfect time to adopt a kitten since they require a lot of attention during their kitten phase. Since I was at home for most of last year (like most people in England), it just worked out with Casper and I. And it seemed like most people felt the same way.
When hearing the statistic about how people have reacted to pets during the lockdown, it was quite interesting to see how I checked off all the boxes. The Pet Food Manufacturers’ Association (PFMA) released its annual pet population data showing that 3.2 million households in the UK acquired a pet since the start of the pandemic (check box one). 59% of that number were Gen Z and Millenials aged between 16-34 (check box two). 74% of those pet owners claim their pet has helped their mental health through the pandemic (check box three).
From the surge in the pandemic, there are now 34 million pets in the UK.
The UK is not alone, even back home in the United States people were a little obsessed too. US households spent $104bn on pet products in 2020, according to the American Pet Products Association, which projects the market will grow to almost $110bn this year.
This has caused a global phenomenon in regards to the pet industry. Pets at Home, which is a UK company that sells pet animals and services (also where Casper is registered to his vet), had its shares increase by 75% in the past year. Chewey, the American version, had its shares increase by 77%.
Pet companies made such great leaps in the public market space that Nasdaq’s Factset Pet Care index had better returns than the composite index, and the Office for National Statistics even added dog treats to its inflation basket last month.
However, there are different view points about this pet boom going forward. Some analysts say that this was just a lockdown trend, and that when the economy opens up, the younger population will spend less of their income on their animals and more on other leisure activities.
The other side says this trend is here for a while. The average life span for a dog is 10-13 years, while cats can live up to 16 years. So the 3 million UK households that acquired animals during the lockdown (including me) will be spending on pet care for a very long time.
My personal opinion is that this popularity in pets is here to stay. Maybe the returns will not be as dramatic as the lockdown period, but people will be taking care of their for a while.
Over a third (38%) of new owners claimed that having a new pet was like having a new baby. I can agree from my experiences with Casper. And because the emotional attachment for most pet owners is comparable to babies, a majority of them will keep their pets throughout their lifetime (although sadly 11% have returned their new pets).
While we do not know if the younger generation has an attention span long enough for their pets after the lockdown restrictions are lifted, investors should definitely keep an eye on this market.
At Polestar, we have and are advising a number of businesses within this unique sector. With the rapid demand in this space, this could be a good time to explore your options for raising funding or securing a valuable exit. Like always, if you have any interest, please reach out!
“One of the trends that I think will stay in place for long after the pandemic is pet mania,” said Tancredi Cordero, chief executive of investment advisory boutique Kuros Associates. “After all, the dogs purchased now will live at least a decade.”