The UK pet industry has been experiencing continued growth in recent years. With annual spending exceeding £7.5 billion in 2020, the Pet Food Manufacturing Association reports that there are now 34 million pets in the UK.
Despite some reports to the contrary, overall pet ownership has remained high yet steady throughout the recent pandemic period. However, changing consumer behaviour has had an impact; a survey by the PDSA found that 9% of all pet owners acquired their pets between March 2020 and May 2021, and a report by Pets4Homes found that at the peak of lockdown in May 2020 demand for puppies for sale rose by 104% compared to the previous year. Combined with a changing landscape in production, retail and trade, we could see lasting effects on the financial health of the pet industry throughout the months and years to come.
The latest Plimsoll analysis on UK Pet Food companies found that the overall financial health of the industry is solid, with over 40% of companies currently rated as “Strong”, and 13% growing by more than 10% in their latest year.
But 2022 could still be a challenging year for pet food exports in particular, with a huge proportion of these going to the EU. The European market is extremely important for many producers of pet food – figures from the FEDIAF estimate an annual sales figure of €21.8 billion with an annual growth rate of 2.8%. Access to this market post-Brexit is already proving trickier for UK-based firms, as customs controls on animal and plant-based products mean extra costs and delays for companies trading overseas.
Domestically, growth in pet sales in 2022 could be affected by a return to pre-pandemic lifestyles. While many new pet owners who worked from home during most of 2020 and 2021 will retain some element of remote working, and other offices take a more pet-friendly approach, even a partial return to city-centre offices could have an impact on the number of households taking on pets this year. Coupled with a return to overseas travel as well as socialising in bars and restaurants locally, post-pandemic consumer behaviour could prove incompatible with new pet ownership.
However, there are numerous bright spots that suggest a robust future for the UK pet industry. The popularity of younger pets as well as smaller breeds (which often have longer lifespans) among owners residing in urban areas or smaller accommodations, is likely to translate into long-lasting benefits for the sector.
Moreover, according to the PFMA, current growth is being driven by Millennial and Gen Z consumers, with nearly two-thirds of new pet owners aged between 16 and 34. This is another positive sign for future growth, and one which is already having a significant impact on the sector, both in terms of the range of products on offer and the way in which they are sold.
The pet food and pet accessories markets, in particular, have seen a recent boom in online sales, with bespoke products, fast delivery and subscription models all proving popular with a young, digital-savvy and discerning consumer base. A greater focus than ever before on high-quality, nutritious and eco-friendly pet food and treats has provided opportunities for many new players to enter the market in recent years, with many firms specialising in sustainable options designed for specific pet breeds, ages or dietary requirements.
The longer-term implications of this on the wider sector could be significant; Plimsoll’s analysis of acquisition targets in the pet industry found that a high proportion of “highly attractive” targets are among the sector’s smallest companies, with 94% and 93% sitting in the £0-£5 million bracket in the pet food and pet accessories markets respectively. The next few years may therefore bring some consolidation as industry leaders buy up smaller companies struggling to retain market share in an increasingly crowded sector.
Whatever the future brings, the UK pet industry is clearly experiencing a highly dynamic period, and it will be fascinating to monitor the change within it over the months to come. Plimsoll has conducted a wide range of analysis within the sector, focusing on key areas across pet food, pet accessories and retailers of pet products. For more information or to explore related industries, visit plimsoll.co.uk.