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They can be big or small, pedigrees or mutts, playful or aggressive … and they will stay this way, for while the crisis has had a negative impact on most markets in countries in the Americas, this has not been the case for the pet market.

In Latin America and The Caribbean, pet-related accessories and food are growing markets that have not yet reached their peak. Pet owners, meanwhile, here and in the more mature North American market, have become more and more like parents to their pets; they have a relationship of love, a feeling that does not know of crisis and recessions.

Key trends

  • More food for the same pets, even in a recession;
  • The trend towards “humanisation” spreads in Latin America;
  • Eccentric pets of the virtual and the real world immune to the crisis.

Commercial opportunities

  • Pet Parents appearing with new needs. In the United States and Canada this is a trend that has been growing for many years now, but in Latin America, this is a novelty which implies many new needs and more consumption of products and services such as of gifts and toys, training schools, apparel and hairdressing;
  • Not everything has been invented in the pet world. The crisis has greatly reduced the possibility of spending for millions in the Americas, but some still allow themselves to get enticed by eccentric articles, weird pets and innovations;
  • The recession has made markets mature. The rise of unemployment and other consequences derived from the crisis have caused a sudden change in the way people spend their money. People now try to save and avoid unnecessary purchases. However, this does not mean that, suddenly, all markets have either matured or plummeted. In a great part of the continent, the dog food market is an ascending curve and sales keep on surprising;
  • What type of buyers are Pet Parents? They can either be retiring baby boomers, families with small children or members of Generation X that leave their family homes late, but they all have something in common: for them, animals have almost the same rights as men, and deserve love, respect and attention, most of all.

Background

Dogs and cats have been human companions for thousands of years. However, it was not until the 1860s that commercial pet food products appeared in stores. Almost a century and a half later, products have become diverse and the relationship between men and animals has changed: nowadays, pets are part of the family.

Food and accessories have become popular in North America, although from Mexico and downwards, dogs were fed with leftovers and rarely visited a vet, according to the Pet Food Institute. The situation, however, started to change in the 1990s, and pet care became trendy after the Millennium.

Euromonitor International data shows that North America has had the largest population of dogs, cats and other pets across the continent in recent years. In 2009, nearly 402 million pets lived in the United States, or more than one animal per capita. This figure has been largely constant over the last decade, which it explained by the saturation of pets in homes (3.4 per household in 2009). Canada ranks second in the continent with 0.8 pets per capita.

In Latin America and the Caribbean, the trend is reversed: in Argentina, Brazil, Chile, Colombia, Mexico and Venezuela today there is a population of 155 million pets, a considerable growth on the 116 million in 1999. In both regions, however, markets have grown considerably in food for dogs and cats, medicines, accessories and services.

The credit crunch, while having an economic impact on the families who own pets, appeared in the middle of a developing trend seeing the greater humanization of pets and the expanded role of their caretakers. Pet Parents are a part of this trend, and will take care of their pets even in moments of crisis.

Pet food and pet care product markets in Argentina, Chile and Canada: 2004-2009US$ billion

Source: Euromonitor International from trade sources/national statisticsNote: Market sizes based on retail value RSP.

More food for the same pets, even in a recession

Can the crisis crumble expectations in a dynamic and growing market? In the case of pet food, it cannot. The recession has hit hard in many markets, except in this one: while the dog and cat population in the Americas remains almost stagnant, the amount of dog food sold on a daily basis has risen to an unprecedented level, especially in Latin America.

Maybe the owners are stressed out and are paying less attention to their pets, buying them more to compensate, or they feel prices of pet products have dipped while food prices have risen, but the fact is that consumers buy more and better food for their pets.

Chile’s case is paradigmatic. According to Euromonitor International forecasts for 2011, Chilean households will spend US$90.4 on dog and cat food in real terms (at 2010 constant prices) surpassing Argentina (US$59.90) and Brazil (US$89.7).

In the pet food market, the main distribution channels are grocery retailers (with 54% of the market in 2009 in the USA and 67.8% in Canada), although the sales in specialised stores are also growing (sales through pet shops and superstores rose from US$8.8 billion to US$10.9 billion between 2005 and 2009 in the Americas, according to Euromonitor International data on retailing.) What is surprising is that even in a recession, the market has been growing and will continue to do so at rates of 6.7% and 6.0% in Latin America and North America respectively in 2011.

In Latin American countries like Chile, the percentage of pet food prepared at home is still high -between 60% and 70%, although the percentage falls year after year, while sales of processed pet food sold through retailers grows.

“Latin America is far from the consumption that goes on in developed countries, for it is two or three generations behind in the understanding of pet care, starting with the proper nourishment, regular visits to the vet, exercising and safety … but we have come a long way,” according to Eduardo Baldrich, spokesperson of the Pet Food Institute (PFI), a US-based institution that represents pet food manufacturers. He added that there is also a “growing trend towards the purchase of accessories and toys for pets, from collars for cats and dogs, to beds, balls, and hair accessories.”

The same happens in other countries. The Peruvian food company Alicorp expected to have ended 2009 with a 15% growth in their global sales, and 5% in Peru. Its General Manager, Leslie Pierce, recently told Reuters “2009 will have been a record year for the company, despite the effects of the international crisis”.

In Panama, the economic magazine Estrategia & Negocios quotes research that analysed the performance of 300 product categories during the crisis, and assures that among the few ones that have grown, there is the segment of “food and care for pets”, with a 15% expansion in 2009´s first quarter.

In mature markets like Canada and the USA, some trends are driving the consumption of products for pets that have nothing to do with the products themselves, but with the distribution channels. An investigation by CNN Money showed that there are “Recession-proof stores” and mentions “pet stores that will probably continue to generate sales volume but their profits will contract”.

The article says that “even in a recession, dogs will be fed and kids will get their toys. This bodes well for pet supply stores and toy sellers”. One of the analysts considers that “Americans love their pets. Pets have to eat”, which is why specialised channels increase their earnings by tempting their clients with accessories.

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