This pandemic consumer trend is still going strong. How to get behind it
If you bought a bike to stay fit during the pandemic, you probably don’t need another. The same probably goes for the new sofa, the fire pit, and all those scented candles. But if you’ve brought home a puppy or adopted a kitten, that bundle of fur still needs to be fed and cared for, and that helps support what AllianceBernstein analysts called “one of the most exciting consumer categories” on Friday: pet care . Conclusion: Don’t expect a pandemic outbreak here. As CNBC Pro previously reported, pet ownership in the US is . is booming and will help maintain a higher level of sales for years to come. Research by Morgan Stanley found that there are about 5 million more pets in the US than in 2019. However, that 4% increase in pet ownership has resulted in an 11% increase in pet spending, it said. AllianceBernstein also anticipates that more doting U.S. pet “parents” will support sales growth in the years to come. But it cited two other factors that will support the industry that investors may not fully appreciate, citing Symrise, a German flavors and fragrances supplier, as a low-key way to capitalize on the trend. Key to AllianceBernstein’s argument is the fact that consumers – especially Millennials and Gen Z – love to spoil their pooches and pamper their cats. All this love and affection is leading to a shift towards higher quality foods that match what people are feeding themselves. Additionally, pet ownership and related consumption is becoming an increasingly global phenomenon, and rising rates of pet ownership and spending in Latin America and Asia Pacific will drive revenue growth in the years to come. “Although it is now [circa] 30 months before the onset of the pandemic, pet ownership is still going strong,” wrote AllianceBernstein analysts. “Pet food spending in the US was +14.2%.” This pace is faster than that predicted by Euromonitor and the Bernstein analysis global growth rate of 8% from 2021 to 2022, according to the Globalization Trends report, the analysts said. It owns Diana Pet Foods and is the leading pet food ingredients company. It also understands the human nutrition market and has a segment that caters to pet health care. Symrise is in the process of expanding its North American headquarters in Hodges, South Carolina to attract more business in the region. In March, it also announced the acquisition of Shanghai-based Wing Pet Food. The company doesn’t disclose the size of its pet supplies business, but analysts said the firm was recently said the unit is growing in its mid-teens. “…As the only global pet food ingredient supplier, it has a first-mover advantage and a presence in high-growth emerging markets,” the analysts wrote. They also found that many pet food companies are start-ups and can draw on the experience that a seasoned player like Symrise can share. These products include foods that require refrigeration or freezing. Some products are also indulgent – think Pawsecco, a “wine” for dogs – so pet owners don’t have to snack or slurp alone. Others advertise health benefits. That includes a wide range of supplements, including KittyRade, a chicken-flavored prebiotic drink for cats that promotes hydration that AllianceBernstein cited, as well as a large number of CBD products. Larger multinational food companies are also active in the pet food sector. Analysts noted that Nestle’s pet care business has outpaced the industry’s global growth rate. The company operates a number of brands under the Purina umbrella. Other companies with pet food businesses include JM Smucker, owner of brands like 9Lives and Meow Mix for cats, and Kibbles ‘n Bits and Milo’s Kitchen for dogs. General Mills owns Blue Buffalo. Shares of General Mills are up 15% year-to-date, while shares of Smucker are up 3.8% year-to-date.