Pet Industry Trends Signal Strong Opportunities for Private Equity Firms

5 Min Read

Today’s pet owners care deeply about the well-being of their four-legged family members. In turn, companies in the pet industry continue expanding products and services to meet increased demand.  A variety of pet industry trends continue to fuel ongoing growth, creating significant private equity investment opportunities, including new and emerging products, healthy food options and innovative tech tools. These trends provide a solid foundation for developing a comprehensive investment thesis that aligns with the growing market potential. 

Pet industry growth is expected to reach $200 billion in the U.S. and $500 billion globally by 2030.  In the past year alone, Apex Leaders assisted clients on 13 projects in this space. Apex Leaders offers highly-relevant, experienced advisors to help private equity clients diversify their portfolios by investing in the pet industry.

Consumer Focus on Pet Nutrition Keeps Growing

Paying for higher quality, more nutritious food enhances the lifespan of pets. Data shows that consumers are allocating their budgets accordingly. The global pet food market is expected to reach $149.9 billion in 2024 and to compound 5.56% annually between 2024 through 2028.

Healthy pet food options have become more scientifically based, including organic varieties, digestive probiotics and antioxidants. New consumer demand for these varieties is expanding and diversifying the pet food market. This focus on pet nutrition is leading to longer pet lives around the world. As pets age, it also increases consumer spending on their care. Given projected pet food industry growth, Apex Leaders expects to continue engaging with clients to evaluate these investments. 

Young Adults Fuel Pet Adoption Rates

Pet ownership rates remain strong, especially among younger demographics. Americans under 35 account for 33% of people who brought a pet home during the pandemic. By focusing on careers, waiting to have children and having increasingly smaller families, this age group tends to treat their pets like human children. These pet owners spend an average of $731 annually on high-quality food, veterinary care, grooming, boarding and supplies. Since young adults aren’t having children as soon as prior generations, some of their funds are contributing to the pet industry growth rather than supporting human children. 

While there’s an increase in pet adoption, trends related to having human children are steadily declining among young women. Babies born to millennial women ages 27 to 42 are predicted to steadily decline, falling below 75% in 2023, below 50% in 2028, and resting below 10% of all births by 2035. 

Pet ownership isn’t unique to young Americans, either. In the U.S. 86.9 million homes have a pet. One-third of American households have more than one pet.  

Consumers Continue Investing in Pet Care, from Vets to Groomers

While the longevity of cat and dog breeds varies, there is a steady year-over-year trend of pets living longer. This is due to multiple factors, including better medicine,  grooming services and expanding options in the pet food market. Morgan Stanley predicts overall spending on pet care to increase, with the longevity of pets, to $1,320 per pet each year by 2025 and $1,897 by 2030. These factors should be considered when developing a private equity investment thesis that focuses on long-term growth in the pet care sector.

Pet health care continues to expand with ongoing innovations in veterinary science. Vaccines, pharmaceuticals, diagnostics, imaging and treatment interventions are second only to the medical treatment of humans. In addition, more pet parents are investing in insurance plans to help cover pet care costs. Over 4.8 million pets were insured in 2022, a 124.9% increase from 2018. 

Hygiene is another important aspect related to pet care. Whether taking  pets to  professional groomers or purchasing nail trimmers and pet shampoo for home use, the U.S. pet grooming industry is expected to generate $13.3 billion per year by the end of 2028, up from $9.42 billion in 2021. Extending the lifespans of domestic animals further supports the projected stability of the pet industry for private equity investors.

Pet Parents are Spending More on Clothes, Toys and Treats

In 2022, the global pet toys market reached $8 billion in sales. It is expected to grow at a compounded annual growth rate of 6.7% from 2023 to reaching nearly $15 billion by 2032. The U.S. pet clothing market is expected to reach $9.15 billion by 2030.  There are toys for every size, shape and species of pet. Whether its hamster wheels, catnip stuffed mice, chew toys or squeaky stuffed animals, today’s pet toys are designed to stimulate, engage and exercise

The global pet clothing market experienced unexpected positive demand during the COVID-19 pandemic with the market hitting $5.01 billion in 2020 and projected growth to $7 billion by 2028. During holiday time, sales increase with festive Halloween, Christmas and Valentine’s Day outfits. For outdoorsy pets, shirts, jackets, sweaters, raincoats, life jackets and even backpacks are available for pets to carry their own treats and water bottles. 

The pet treat market aligns with the growth of the pet food market. Designed to train and reward, the global pet treat market $8.12 billion in 2022 and is expected to grow at a compound annual growth rate of 5.2% through 2030. With more pet adoptions during the pandemic, this growth is likely related to the surge.

Tech Innovations Show Promise in the Pet Industry

Pets are adapting to emerging technology at the pace of their human companions. Modern pet owners are accustomed to the digital conveniences of today and want the same for their pets. This $5 billion trend measured in 2022 is projected to continue to grow into the next decade.

There are many innovations that have become pet industry trends, such as:

• Vet telemedicine apps and software with online appointments and communications 
• Pet sitting, rescue, adoption and dog walking resource apps 
• Safety and invisible fence systems, pet wearable cameras and video recording  
• LED rechargeable night light collars, GPS tags with real-time location tracking 
• Smart toys with light and sound  
• Electronic kibble, treat and water dispensers. 

With ongoing innovations, high-speed wireless connectivity, artificial intelligence and web-based applications, experts predict up to a 15% compound annual growth rate through 2032. The tech sector presents an especially promising opportunity for venture capital pet industry firms. In particular, private equity firms who already have investments in the pet industry have existing knowledge that could prove useful in the pet tech sector. The many sectors in the pet industry can help firms diversity their portfolios. 

It’s Time to Leverage Pet Industry Trends for Your Private Equity Firm

Apex Leaders is ready to connect you with high-quality private equity advisors to explore how pet industry trends could inform a profitable investment. Contact us to get started.