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Chris Waters, Senior Investment Analyst
06 March, 2017
Pets are now wholeheartedly considered part of the family leading us to spend more on our furry family members to ensure they live better and longer.
In Japan, the average life expectancy for pets is up nearly 100% in the past 25 years; while Americans spent $61 billion on their pets in 2015, an increase of 25% from five years earlier. Back then our pets probably ate cheap canned food and slept outside — now they dine on filet mignon and sleep in bespoke beds. We are certainly spending more on our pets' health, as owners want healthcare for their pets that is almost as good as their own. It is now not uncommon for pet owners to spend thousands of dollars on their sick pet, even up to $10,000 for a hip implant.
Global pet ownership is increasing as both urban and middle class populations grow and age. Again in Japan, the number of cats and dogs now exceeds the population aged under 15. This growth in spend, as well as ownership, creates a great opportunity for companies catering to animal health. One such company in our international portfolio is Zoetis.
Zoetis is the world's largest producer of medicine and vaccines for pets — ranging from flea treatments to products for chronic pain and skin conditions. As it continues to invest in research and development, this pipeline of medicines should continue to grow.
Zoetis is also well placed to take advantage of another growth trend; a rising middle class and changing diets, especially in emerging markets, has increased demand for animal protein. Limited usable land and water means it is getting harder to meet this growing demand. Zoetis helps to improve the health of farmed animals and thereby increase the productivity of these farms that are the source of this dietary staple.
So while we may not all be buying $2,000 gem studded catflaps, we are spending more money on our animals so that companies like Zoetis will remain an investor's best friend.
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