The coronavirus pandemic has affected people’s social lives, confining them to their homes. While this led to many difficulties, including loneliness, some people were able to remain hopeful, due to pet adoption. Be it four-legged, feathered friends or exotic companions; Pets have brought a sense of relief to many amid lockdowns and extended stay-at-home mandates due to the pandemic. This has led to an increase in the humaneness of pets, which is one of the emerging growth drivers in the pet industry.
According to the ASPCA, one in five households has adopted a cat or dog since the onset of the epidemic. This brought the current American dog and cat population to 160 million, double what was reported half a century ago. Aside from dogs, cats, and fish, the adoption of small mammals, reptiles and amphibians is gaining traction. According to a report by Morgan Stanley, pet ownership is expected to grow 14% by 2030.
Of these, millennials, including college students, homesharers, and one-person families, make up the largest section of pet parents. To impress millennials, brands have been quick to respond to the post-coronavirus pet adoption trend by offering attractive solutions, such as new pet food delivery, raw meat subscriptions, new apps and labs, trainers, behavior specialists, breeders and nutritionists.
Not surprisingly, most purchases are now made online, as owners of young pets are becoming more accustomed to online shopping. As a result, online shopping for pet related products has grown by 20% compared to pre-pandemic times.
Spending on pets is at an all-time high, as pet owners want the best for their pets and are willing to spend lavishly. The pet food industry has seen a surge in demand and a shift to natural products with higher quality ingredients and better packaging. With an increased focus on pet health and nutrition, startups are now introducing new types of food, one of which is freeze-dried dog food, which has a longer shelf life. Other growing pet food outlets are raw dog food and keto pet food. The pet food industry is currently valued at $110 billion in global sales year on year. It is expected to reach $140 billion by 2026.
There was a marked demand for veterinary care, which led to a shortage of national vets. It became impossible to get an appointment at a veterinary clinic. Even after extending hours, hiring more staff, and turning down new patients, vets complain of exhaustion and fatigue. Digital medical services for pets are also accelerating, although not many pet parents have started using these services, including telemedicine.
Despite a gradual return to pre-pandemic life, people are not considering bringing pets back as they continue to cherish the role of pets in their lives. Notably, the majority of pet owners incorporate pets into their lifestyles.
Given all of these factors, we think the pet pandemic boom is likely to persist long after life returns to normal.
The main winners
Here we explore four companies, which have been pouring in their investments to take a share of the lucrative pet industry.
Image source: Zacks Investment Research
Tractor Supply Company (TSCO – Free Report) Make efforts to become a one-stop shop for pet owners. By doing so, it now offers online pet prescriptions along with veterinary advice for dogs and cats on its application. The company expanded its self-service pet laundry service from 150 to 200 stores, and also opened 50 to 75 pet health centers. It currently boasts one veterinary service in 1,600 stores as well as a mobile app that offers on-demand veterinary advice via call, chat or email.
The company has also expanded its pet line by adding the brand VICTOR Super Premium Pet Food (“VICTOR”) to its high-quality range of dog food. This follows the introduction of VICTOR’s best performing product, Hi-Pro Plus, last year. VICTOR Super Premium Pet Food is one of the best dry food for dogs, providing a complete and balanced diet.
Zacks ranked No. 2 (buy) surprisingly late quarter earnings of 22.8% on average. A Zacks consensus estimate of Tractor Supply Inc.’s 2021 sales and earnings report growth of 19% and 23.9%, respectively, from figures reported in the same period last year. The consensus mark for 2021 earnings has advanced 1.6% in the past 60 days. TSCO stock is up 61% in the past year. you can see The full list of Zacks #1 stocks (strong buy) today is here.
Archer Daniels Midland Company (AD – Free Report) entered the pet business by recently acquiring a majority stake in manufacturers of pet treats and nutritional supplements – PetDine, Pedigree Ovens, The Pound Bakery and NutraDine (“P4”). The move is part of Archer Daniels’ strategy to transform through investments in high-growth categories such as pet nutrition. With the addition of P4 Companies, Archer Daniels will be able to provide customers with a full range of highly customized products for pet treats and supplements, including baked treats, semi-wet treats, long-lasting treats, blends, unique proteins, soft chews, liquids and powders in 15 countries. .
Archer Daniels also announced the acquisition of the remaining 40% stake in China-based pet nutrition company Invivo Sanpo, which started as a joint venture between ADM and Tianjin Jinkangbao. The acquisition will help introduce more premium pet nutrition brands into China. Other notable efforts to meet the growing demand include building production facilities, acquiring pet treat and food provider Crosswind and global pet nutrition provider Neovia, and opening an animal feeding technology center in Decatur.
Archer Daniels posted a surprise fourth-quarter profit of 23.4% on average. Zacks Consensus’ estimate of ADM’s sales and earnings for 2021 indicates growth of 28.6% and 36.5%, respectively, over the figures reported in the same period last year. The consensus mark for 2021 earnings has increased 1.2% in the past 60 days. Zacks’ No. 3 (pending) stock is up 34.9% in the past year.
general mills (GIS – Free report) is progressing well with his plans to take over the pet food arena. recently got Tyson Foods(TSN – Free Report) deals with pets, which includes popular foods like Nudges, Top Chews, and True Chews, to expand its standing in the space. Its Blue Buffalo brand has also emerged as one of the fastest growing pet food brands. Being a natural pet food manufacturer and marketer, the Blue Buffalo brand continues to grow solid retail sales and market share gains.
Zacks’ No. 3 stock had a quarterly earnings surprise of 3.3% on average. The Zacks consensus estimate for General Mills’ fiscal 2021 sales is 3.6% growth compared to the numbers reported in the same period last year. The consensus mark for fiscal year 2021 earnings has increased by a penny in the past 60 days. GIS gained 15% in the last year.
Spectrum Brands (SPBB – Free Report) of growth in the aquatic animal and companion animal categories, driven by newly acquired Omega Sea, which is now part of the Global Pet Care group of aquatic brands. The company solidified its leadership in the dog chews category with the acquisition of Armitage Pet Care. This will expand the chewing business, as Armitage is a popular UK grocery brand and offers products such as dog chews, cat chews, candy and toys. Cumulatively, the company’s pet segment remains poised for growth in 2021, buoyed by its robust innovation pipeline and growth strategy.
Spectrum Brands posted a surprise fourth-quarter profit of 83.1% on average. Zacks Consensus’ estimate of SPB’s sales and profit for fiscal year 2021 indicates a growth of 15.3% and 54.2%, respectively, compared to the figures reported in the same period last year. The consensus mark for fiscal year 2021 earnings has increased 54.3% in the past 60 days. Zacks stock has gained #3 by 29.8% in the past year.