The pet industry can provide recession protection for investors

For investors, pet owners or not, the pet industry could be an industry to watch in these troubled times. The pet care market is growing steadily at a rate of more than 6% per year. Overall, it went from $216 billion in 2020 to $232 billion in 2021.

Market Commentary by eToro Romania Analyst Bogdan Maioreanu

If this estimated compound annual growth rate remains stable, it will take that figure to $350 billion by 2027. Globally, the industry has grown nearly 70% over the past decade, outpacing the global economy which grew by almost 40%. The pet care industry soared even during the 2007 financial crisis and has since grown with a growth rate twice the US GDP, making it a possible candidate for an investment portfolio at recession proof.

Pet ownership is on an upward trend. Among EU countries, Romania has the The highest percentage of households with pet cats (48%) and dogs (45%). In 2021, 46% of all households in the European Union (90 million households) owned at least one pet, compared to 38% (88 million households) in 2020. There are approximately 113.6 million cats pets throughout Europe, making it the number one household. pet on the continent, followed by almost 93 million dogs. But the recent increase in the cost of living is starting to cause some pet owners to give up on them.

In the United States, approximately 70% of households now own a pet. Thirty years ago, this figure was only 56%. The demographics of pet owners are changing over time, leading to changes in buying behaviors. A investigation found that in the United States, 32% of pet owners are millennials, 24% are Gen X, and 27% are baby boomers. As humans, we also tend to humanize our pets, make them family members, and increase spending on them. So it’s no surprise that in a statistic about online sales of consumer packaged goods, pet supplies and pet food are number two and number three after vitamins. By comparison, coffee is less popular being in fifth place. The US pet care market is divide between food 36%, veterinary care 27%, supplies 23%, grooming 10% and pet purchases 4%.

A large number of publicly traded companies are taking advantage of these trends, such as pet food companies, online retailers, pet health specialists and, lately, pet insurance companies. of company. Some of these leading companies are Merck (MRK), a pharmaceutical company offering a wide variety of vaccines and veterinary drugs, Metlife (MET), a large insurance company also offering pet insurance, Chewy (CHWY), an online store that offers a wide variety of products for pets and their owners, General Mills (GIS) a pet food producer, Archer Daniel Midland Co (ADM) a leading company in the field of global nutrition, Covetrus (CVET) a global animal health technology and services company and Petco (WOOF) a health and wellness company dedicated to companion animals and their owners. To help investors gain exposure to the pet industry, eToro has developed a Pet Smart Thematic Portfolio for long-term investors, which provides balanced exposure to a wide range of leading companies, including these above are businesses catering to the needs of pets and pets. owners.

A recent scientist study found that the type of pet you own or are exposed to can influence your investment behavior. The study showed that dog owners are inclined to take more investment risk than cat owners. In the study, 145 owners of a cat or dog were given an imaginary $2,000 and asked to invest part of it in a risk-equity fund or a more conservative mutual fund. Dog owners, who made up 53% of participants, were much more likely to invest in stocks and put more money at risk than cat owners. In another study by the same researchers, they found that exposure to photos of dogs led participants to be more likely to invest more money in stocks.