Dogs, Cats & Co.: Animal Friends as a Profitable Asset Class

• 

  Serge Nussbaumer
  Chefredaktor

It all began between 20,000 and 40,000 years ago. It was during this period that humans and wolves took their first steps towards each other. The beginning of a wonderful friendship that is no longer limited to the descendants of the wolf. Today, it is estimated that there are around one billion pets worldwide. Most of them are cats and dogs. There are also large populations of pet birds, ornamental fish, hamsters, rabbits and other non-human companions.

Nowhere is it clearer how attached we are to our animal friends than on social media. A survey by digital pet insurance company ManyPets found that two out of five people prefer to fill their social networks with pets rather than people. Online platforms such as YouTube and TikTok are now home to millions and millions of videos starring cats, dogs, birds and small rodents. In 2022 alone, more than 90,000 cat videos were uploaded to YouTube every day. Dogs are just as popular on the platform. The YouTube video “Ultimate Dog Tease” now enjoys cult status. The movie with the pining dog has been viewed more than 211 million times to date.

Pets: A multi-billion dollar market

With their millions of followers and billions of views, our beloved pets have become a powerful economic factor. Pet influencer marketing, for example, is right on trend. Product placements in pet videos have contributed to the strong growth of the pet industry in recent years. Another driver was the Covid pandemic. “Pet ownership experienced a boom during the pandemic when a large number of people added a family member with fur, feathers or fins,” explains Simeon Gutman, Morgan Stanley’s Retail Analyst, in a report on the pet industry.

The market research company Precedence Research estimates the global market volume for pet products at an impressive USD 324 billion this year. With a share of around 48%, the USA is the region with the highest sales, followed by Asia with 31% and Europe with 12%.

Dynamic rise in expenditure

A powerful industry has developed around pets, which is likely to continue to grow strongly in the coming years. In the USA in particular, no expense is spared when it comes to the well-being of animal companions. The spectrum of products on offer is huge and ranges from pet food and nutritional supplements to grooming products, equipment and accessories through to veterinary care, pet insurance and other services. According to the aforementioned Morgan Stanley report, annual spending per pet in the US averaged USD 1,155 in 2024. By 2026, this figure could rise to USD 1,445 and to USD 1,733 by 2030. This corresponds to an average annual growth rate of 7%. “This means that the pet care industry has one of the highest growth rates of all US retail sectors,” says Morgan Stanley expert Gutman.

Animal health megatrend

According to Morgan Stanley Research, demand for veterinary services in particular is likely to grow strongly over the next ten years. Based on a survey, the analysts have determined that 80% of US pet owners have visited a vet at least once in the last six months. And the trend is rising.

A study by Bloomberg Intelligence also sees great potential in the healthcare of pets. The study states that expenditure on veterinary care, diagnostics and pharmaceuticals is continuously increasing. This leads to a longer lifespan for pets, which in turn requires more intensive and cost-intensive care in old age.

Take cats, for example: a generation ago, it was rather rare for a domestic cat to live significantly longer than ten years, but nowadays a lifespan of 15 years or more is not unusual.

Enjoy your meal!

The pet food sector is also showing positive trends. According to Bloomberg Intelligence, the global market volume for pet food could reach USD 135 billion by the end of the decade, an increase of 52% compared to 2023. “We are seeing strong growth in consumer spending on pet food and expect this trend to continue until 2030,” says Diana Rosero-Pena, analyst at Bloomberg Intelligence and co-author of the study. In her opinion, the high-quality food segment in particular, which currently only accounts for 1% of the market, is likely to become much more important.

China: Pets as a substitute for children

The high growth rates predicted for the pet industry are partly due to the rapidly increasing number of pets in the Asian growth countries. The market is booming in China in particular. One reason for this is that many young Chinese people increasingly see dogs and cats as a substitute for children. Increasing urbanization and falling marriage rates are reinforcing this trend.

In this context, a study by Goldman Sachs caused quite a stir. According to the analysts, the number of domestic cats and dogs in China’s cities will exceed the number of small children under the age of four for the first time in 2024, at around 58 million. According to the investment bank’s forecast, the number of “woofers” and “house pets” in China’s cities will rise to over 70 million by 2030, more than double the number of small children.

According to Bank of America (BoA), the Chinese pet industry has now become an important macroeconomic factor that could revitalize the weakening Chinese domestic economy. BoA analysts point out that the size of the Chinese pet industry grew by 40% between 2019 and 2023 and could increase by a further 29% by 2026.

Pets as an investment opportunity

Summarizing the expert forecasts, the global pet industry is facing a bright future. Bloomberg Intelligence, for example, expects the global market volume of the pet care industry to increase by 40% to around USD 500 billion by 2030. Analysts at Precedence Research even expect it to double to USD 644 billion by 2034. The market for pets therefore offers investors highly interesting prospects.

But how should investments be made? One option is individual investments in pet stocks. These include industry giants such as pet food providers Chewy and Mars as well as pet health specialists Petco Health and Wellness and Elanco Animal Health. The e-commerce company Chewy, for example, which was founded in 2011, has a selection of around 130,000 products and services and has recently grown significantly. Sales have increased by an average of 8.3% over the past two years, and Chewy achieved exactly the same figure in the first quarter of 2025.

Elanco Animal Health, which specializes in the animal health sector, researches, develops and distributes vaccines, veterinary medicines and care products. Although turnover has stagnated recently, the company has made great progress on the profit side. After years of losses, the Group achieved a net profit of USD 388 million in 2024. Elanco was also in the black at the start of 2025.

Sector investments are an alternative. However, these are few and far between. Allianz Global Investors, for example, offers the actively managed “Allianz Pet and Animal Wellbeing” fund. The management invests in companies that are significantly active in the area of animal welfare and pet supplies. The catch: the fund is relatively expensive with an initial charge of 5.00% and an annual total expense ratio (TER) of 2.10%.

Pet tracker from Vontobel

A more cost-effective and also exchange-traded package solution is the recently issued open-end tracker certificate from Vontobel. The underlying Solactive Pet Industry Index focuses on companies that are active in the various segments of the pet market, for example in the areas of food, care and health. It contains up to 20 listed companies, which are identified using a special screening process and selected via a ranking. The ranking also determines the weighting in the index.

The index is reviewed and its components rebalanced every six months. The Open End Tracker Certificate, which is offered in two currency variants (CHF and USD), participates one-to-one in the performance of the Solactive Pet Industry Index. As the underlying index is a net return index, net dividends of the index members are taken into account. The product is suitable for investors who consider the booming pet market to be a promising satellite investment.

It should be noted that, as is usual with index trackers, there is no capital protection. This means that index losses lead to corresponding losses for the certificate.