For many years we have been increasingly treating our pets not just as loved members of the family, but having the same status as our children or partners. ‘Pet Humanisation’ is a Global Megatrend that has actually accelerated due to the effects of Covid-19, and is unlikely to reverse in coming years.
This interesting Megatrend is easily evidenced in how much money we are prepared to spend on their health, what we feed them, and what priority they hold in our overall household decision making. It is also obvious from the choice of services available to pet owners, and the outrageous prices for ‘designer’ breeds.
As an investor, this all gives rise to a couple of interesting questions - Why is this occurring, and what businesses are taking advantage of this phenomenon?
Megatrends by definition are long lasting, and Insync’s CIO, Monik Kotecha, sees Pet Humanisation delivering excess growth and profits in the long term to firms that are well positioned as suppliers to it
“Pet Humanisation is not new, and as such it is not a fad. This Megatrend will continue on the back of changing demographics and consumer spending patterns” says Monik.
“Recent surveys* have thrown up some interesting data. Not only have pet owners found comfort in their pets through Covid isolation, but their pet’s health is as important as their own, and they intend increasing expenditure on it.”
"The really interesting thing is that these results are most stark in younger age cohorts, Millennials and
Gen Z, and we know these cohorts will be the largest contributor to global retail expenditure over the coming decades”
So Covid-19 has driven the Pet Humanisation Megatrend due to isolation and also reallocation of other discretionary expenditure, but what else is providing the long runway of growth to this global phenomenon?
World population growth and rising middle classes in developing countries is naturally increasing the allocation of expenditure to pets, so too is the associated demographic change to smaller families and single person households, which results in people exercising their need for emotional connection with their pets.
As far as managed funds that are taking advantage of this phenomenon, Insync is a specialist Investment Manager that follows Global Megatrends, and has selected a number of businesses associated with animal health that are highly profitable, innovative and well managed.
Mr. Kotecha noted “Zoetis (Tickr ZTS) is a $5bn plus revenue firm that is highly profitable and a global supplier of animal pharmaceuticals. We have owned this stock for many years, and it has typically outperformed the benchmark by around 13% over that time.”
Insync manages a concentrated Global Quality Equity portfolio across 16 Megatrends like Pet Humanisation, and has an enviable 10-year track record of posting top quartile sustainable growth and relatively low volatility. Insync is doing all the heavy lifting for investors interested in taking advantage of these long runways of growth through some of the world’s best businesses.
* Survey: Based in responses of 8-10 on 10-point scale of agreement, IDEXX U.S. Pet Owner Research Study fielded July 2020, n= 600 pet owners