No pause in the pet-care gold rush
CHRIS Stefanos has been a pharmacist for more than 30 years, dispensing medications for all types of illness, but shortly before the pandemic a customer handed him a prescription that left him stumped.
The prescription was not for the customer. It was for their dog – an early sign of what would become one of the biggest trends of the 2020s: the humanisation of pets. Australian pet ownership has soared from 61 per cent to 69 per cent of households in the past two years, with more than 1m dogs welcomed into homes.
This has fuelled a new gold rush, with companies from Woolworths and Blackmores to global food giants Mars and Nestle moving to cash in on a market, estimated to be worth $10bn and growing.
And that’s just on specialty products. If veterinary services are included, Australians are spending more than $30bn a year on their dogs and cats. For this reason, chief executives are hoping man’s best friend will deliver them a bonanza as profits taper on existing revenue streams.
Mr Stefanos – who owns four pharmacies in Melbourne – said most of the animal prescriptions he dispenses are for antidepressants, exactly the same type of medication designed to treat a range of mental health disorders in humans.
“It kind of mimics humans. Antidepressant use has just exploded in the last five to eight years, so it stands to reason that’s what we are dispensing for pets as well,” Mr Stefanos said, adding he dispenses about 50 prescriptions for animals a month, and had to refresh himself on pharmacy regulations when he received his first pet script.
“We’ve got scripts that people keep on file for us where they’re just regularly getting things for their pets. It’s far more common than I imagined.”
Other medications customers are seeking for their pets include eyedrops and anti-inflammatory and antiallergy treatments. The lines between what is for pet versus human consumption are becoming blurred as more people pamper their animals.
It is this shift that prompted Woolworths to acquire a controlling stake of Petspiration – owner of PETstock – for $586m. Chief executive Brad Banducci defended the price tag, saying the supermarket chain was not paying “top of the cycle” prices after a pandemic-induced boom in pet ownership, and said the business had plenty of runway for future growth.
Woolworths sees its 55 per cent stake in Petspiration – which has 276 stores, 65 vet clinics and 162 grooming salons – as an opportunity to branch into the $10bn specialty pets sector while also fleshing out a new, larger and more profitable retail ecosystem. “Pets are living longer and leading more rich, enjoyable lives and we don’t see this as a peak (cycle), this trend started many years ago and we expect it to continue for many more years,” Mr Banducci said at the time.
Other companies have spent the past decade building their exposure to the pet category. Vitamins maker Blackmores acquired Pure Animal Wellbeing (PAW) in
July 2010 for $2m. The division is now one of Blackmores’ three core brands and includes natural dietary supplements and topical products for dogs and cats that are sold in veterinary clinics and specialty stores in Australia, New Zealand and Asia.
Chief executive Alastair Symington said the strength of the PAW brand helped fuel a 27.8 per cent leap in Blackmores’ net profit to $30.6m last financial year. It also launched an advertising blitz for the PAW brand titled “more than human”, which the company said reached 5.5m pet owners within three months.
Meanwhile,
ASX-listed pharmacy and healthcare group Ebos acquired pet food brand BlackHawk Premium Pet Care for $NZ57.8m ($53.5m) in 2014 and last year opened an $82m pet food factory in Parkes. Its animal care division delivered a 15.3 per cent jump in earnings before interest and tax to $72.6m in the 12 months to June 30, while revenue rose 8.8 per cent to $541.3m.
“The pet care market is supported by well-established trends including the humanisation of pets and premiumisation of products. These trends have been supported by changed household behaviours as a result of Covid-19,” Ebos said.