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UK’S LOVE OF PETS COMES AT A PRICE

Feb 10, 2017

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Pets are big business. In our latest consumer trends report, we take a look at what’s driving growth in the multi-billion pound pet care sector. 

The UK is a nation of pet lovers. Whether it’s dogs, cats, birds, hamsters or fish, we just can’t get enough of our furry, feathered and scaly friends. According to the Pet Food Manufacturers’ Association, around 40 per cent of UK households own a pet, which equates to approximately 12 million homes. 

Indoor and outdoor fish top the pet population table at around 40 million, with dogs (8.5 million) and cats (8 million) second and third respectively. Rabbits, hamsters and guinea pigs, reptiles, birds and domestic fowl make up a further 3.7 million pets in the UK. 

As a result, the pet care market has grown into a multi-billion pound industry. The UK dog and cat food market alone is worth an estimated £2.4 billion, while the pet accessories market is predicted to grow at an annual average rate of 6.2 per cent up until 2025. 

There are a number of key trends driving growth in the pet care market, including the ‘humanisation’ of pets, premium pet products and technology. 

In the pet food market there is a shift among a growing number of pet owners towards more ‘natural’, organic food containing fewer ingredients but still providing the required nutrients. The school of thought is if you wouldn’t eat it yourself, why would you feed it your pet? 

Increasingly, the meat used in dog and cat food is the same quality as that found on most supermarket shelves or meat counters, rather than the meat by-products, bulked up with grains, that are commonly used. Even the style of pet food has become more human, with Whiskas casseroles for cats and full English breakfasts for dogs. There is even doggy popcorn for the most pampered of pooches. 

However, treating your pet to such luxuries does come with a price tag. A tin of premium, organic wet dog food, for example, will set you back £2.37, compared to just 44p for a tin of value wet dog food. Interestingly, millennials are willing to spend more ensuring the health of their pet is a priority by opting for premium, health focused brands. 

It’s not just food that health-conscious pet owners are prepared to splash their cash on. From memory foam dog beds to luxury shampoos, brands are tapping into the fact that owners are prepared to pay top dollar for premium pet products. 

Another key trend in the pet care sector is technology. The ability to buy products via a variety of channels is crucial for retailers, and the pet food industry is no exception. 

As well as buying pet food in-store, purchasing online and online subscription services are growing in popularity. Between 2011 and 2016, global online sales of pet food and supplies grew at an annual rate of 8.9 per cent. 

One US-company embracing the use of technology is Obe, which has designed a smart pet food bowl that connects to your mobile phone and Wi-Fi and allows you to track your pets eating habits via an app. Sensors let the owner know when the correct amount of food is in the bowl and re-orders the food from Amazon when stocks are running low.  

It may sound barking mad, but this innovation could signal the future for pet food purchasing, and strengthen the link between the pet and technology sectors. 

Such is the growth in the pet care sector that over the past 12 months it has been a hotbed of M&A activity, both nationally and internationally. 

In May, K&H Manufacturing, a US-based producer of premium pet supplies and the largest marketer of heated pet products in the US, was acquired by Central Garden & Pet Company for an undisclosed sum. 

A month earlier, Vital Pet Products Ltd, a UK-based distributor of pet food and associated products, was bought by Subura Group Ltd for £12.8 million. 

More recently, and closer to home, Nottingham-based Kennelpak, a wholesale supplier of pet food and products, was acquired by Enact, the SME investor managed by private equity firm Endless, for an undisclosed fee. 

As pet owners become an increasingly influential consumer group and the pet care sector continues to mature, it will become more and more attractive to investors looking to take a slice of the market. 

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