Global Pet Healthcare: The Importance of Emerging Markets is Growing

Having recovered strongly from a recession-induced dip in 2009, pet healthcare sales are set to grow strongly over the coming years with a growing number of emerging market consumers venture into the market for the first time.

Global value sales continue to recover from impact of recession

According to Euromonitor International data, global value sales in the pet healthcare market will reach US$3.8 billion in 2011. This will represent an increase of 3.6% on the previous year. Although this represents a slowdown from 2010, when value sales expanded by 5.6%, this latter figure includes a significant base-year effect as the value of global sales fell slightly (by 1.4%) during 2009 due to the impact of the global economic downturn on consumer confidence. Unlike pet food, where value sales continued to grow throughout the recession, pet healthcare products continue to be regarded as discretionary by many consumers.

US market shrugs off safety concerns relating to flea/tick treatments

The US remains by far the largest national market for pet healthcare, and is forecast to account for 60% of global sales (US$2.3 billion) in value terms in 2011. Pet healthcare sales in the US consist mainly of flea/tick treatments, which do not require a prescription in the way that worming treatments do.

Like pet food, these products have come under increased regulatory scrutiny in recent years. In April 2009, the US Environmental Protection Agency (EPA) issued a notice about the rising incidence of side-effects due to topical/spot-on flea/tick treatments, such Merial Ltd’s Frontline brand and Bayer Corp’s Advantage. Side-effects included skin irritation and seizures, and a number of deaths of dogs and cats were reported. However, this adverse publicity does not appear to have significantly affected consumer demand. This could also provide opportunities for manufacturers to highlight the safety of their products or the use of “natural” ingredients, or other means of product differentiation.

Importance of emerging markets set to deepen

Euromonitor International predicts that annual value sales in the pet healthcare market will continue to exhibit healthy growth over the coming years, reaching US$4 billion in 2013 and nearly US$4.4 billion by 2015. While the US market will continue to be the main engine of growth, emerging markets are set to gradually make a larger contribution. For example, affluent Brazilians are increasingly spending large amounts of money on healthcare for their pets, proving that pet anthropomorphism is not confined to developed economies. According to Dr Valter Yoshio Hato, the co-owner of a veterinary clinic in São Paulo, “People who have chosen not to have children, often they have a pet to fill the void where there’s no child, and because it’s just like a child, people don’t spare any expense, they spend”. According to Euromonitor International data, pet healthcare value sales in Brazil will jump from US$109 million to US$132 million between 2011 and 2016, while sales in India and China are predicted to expand by around 50%, to US$12 million and US$3 million, respectively, over the same period.