Companies targeting dog vitamins and funerals as pet industry proves it’s ‘COVID-19 proof’
From high-end doggy daycare to post-death cremations and freeze drying, the humble family pet has morphed into a big business opportunity for Australian companies.
The pet industry is now so lucrative in Australia that major ASX-listed companies are throwing their money behind it, with hopes this will protect their businesses from COVID-19 induced downturn.
Proud dog owner and president of the Pet Industry Association of Australia, Barry Codling, has been in the business for 32 years.
When he started out in the industry, most pet owners were content feeding their cats and dogs cheap tinned food from the supermarket and burying them in the backyard when their time was up.
In recent times, pet owners have become much more involved," Mr Codling said. "We call it anthropomorphism. People are treating their pets more like they're human. They are treating their pets like they are their children."
For instance, humans who have become more pre-occupied with healthy eating trends are translating that onto their sentient friends, with a growth in sales of organic pet food and even vitamin supplements for animals.
Mr Codling said the pet industry's potential had been especially evident in the last five years but had dramatically increased during the pandemic, as Australians bought puppies to amuse themselves in lockdown and stayed home with their animals more often.
"We had online sales of cat toys spike during the pandemic and even sales of dog outfits as people wanted to create Instagram accounts for their animals," Mr Codling said.
"We used to say that the pet industry was global recession proof and now we say it's COVID-19 proof."
Even before the pandemic, a national study by Animal Medicines Australia found that nationally households spent about $12.2 billion on their pets in 2019, up 42 per cent from 2013.
Luxury doggy daycare, treats and even vitamins
Pet industry business owner Rae Ciuzelis saw a boom during COVID.
Her high-end doggy daycare Ranc Pet Services in Brisbane offers themed dress up days, grooming, birthday parties with cakes, canine ice-cream, and water play.
"When kids were pulled out of school due to the pandemic, we prepared for the impacts to be bad on our business with people wanting to keep their pets home too, but we just boomed during COVID," Ms Ciuzelis said. "2020 was out busiest year to date."
Business has been busy going into 2021 as the puppies people bought during COVID grow up and owners want to keep them entertained during the day while they go back to working in offices. "We are so grateful for the support," Ms Ciuzelis said.
It is not just family owned enterprise doing well out of the pet industry boom.
Data from industry analysts IBISWorld shows pet food production is worth $2.6 billion a year in Australia and is projected to grow to $2.8 billion by 2026 as pet owners increasingly look to gourmet food options for their animals.
The IBISWorld data also shows that online retail has been particularly fruitful for the industry, with sales of pet food and toys growing 17.9 per cent year on year since 2015.
Some of the biggest players in pet food are global corporations Mars Wrigley and Nestle. Another major company targeting the space is Blackmores.
The ASX-listed company is one of Australia's biggest players in vitamin supplements for humans but in recent times it has started targeting pet owners who are worried about their animals' gut health, coats and lifespan.
Blackmores chief executive Alastair Symington told investors at its AGM in November that it planned to increasingly push into the pet supplement space in 2021, and projected the sector would grow 9 per cent per annum in the next four years.
The Pet Industry Association of Australia's Barry Codling said this move was not surprising to him and that he was aware of at least one other major company pushing into pet vitamins in 2021. "We anticipate this will be a heavily contested space," Mr Codling said.
Nutritional supplements for animals only require registration with the regulatory body Australian Pesticides and Veterinary Medicines Authority (APVMA) if they make specific claims about curing a disease.
That means if a pet product avoids making any specific claims, it can be put on the market with relatively less scrutiny than products intended for humans.
Mr Codling said he was comfortable with the pet supplements currently being sold by major brands, including Blackmores, which has APVMA registration, but he has ongoing concerns about products being flogged into Australia by smaller players.
"The barrier to entry in the Australian market is quite low," Mr Codling said. One Australian start-up has even raised money via an IPO on the Australian share market to develop so-called cannabanoid treatments for animals. Mr Codling believes the "jury is out" when it comes to medical marijuana for dogs.
Business of pets continues after death
Pet insurance has also grown into a big sector in recent years and is now sold by major retailers including Coles, Medibank and Woolworths.
As well as providing pet owners with some coverage when unexpected veterinary bills come in, some insurance polices also include extras, including for pets' funerals and cremation.
Mr Codling believed this was one of the reasons that pet funerals are growing into a big business in Australia, too.
In November, Australia's largest funeral company InvoCare cemented this trend by announcing it is buying two pet cremation businesses for $50 million.
The move will turn the ASX-listed company into the country's biggest supplier of pet cremations.
"Expanding the pet cremation business is a natural evolution for InvoCare, providing opportunities to leverage its decades of operating in the end-of-life market," chief executive Martin Earp told the share market.
Interestingly, this comes as InvoCare has been battling a loss of revenue in other areas during COVID-19, as social gathering restrictions eat into the money it can make selling big human funerals to mourners.
And then there is the business of pet preservation.
Sunshine Coast taxidermist Markus Michalowitz started out 20 years ago stuffing people's hunting trophies, such as boars and bulls.
He started getting more enquiries from pet owners about 10 years ago but tried to avoid doing taxidermy on their beloved animals, as he believes the technique does not work on them properly.
"It's hard to get the right expression of a pet with taxidermy," Mr Michalowitz said.
But Mr Michalowitz saw a market for pet preservation and taught himself how to do freeze drying of carcases, which preserves an animal's entire body rather than just its skin, giving a potentially more lifelike result. "Demand for that started to increase dramatically after an American TV show aired showing freeze dried pets," he said.
Freeze drying of pets is now worth about 30 per cent of his business and is still growing. "We do everything from 60kg dogs down to little mice," he said. "We've done labradors, bull mastiffs, chihuahuas, just everything."
This year, in a sign of the times, Mr Michalowitz also let a friend set up a small pet crematorium on his property.
"Pets are big business," he said.