The secret life of pet investing

From dog yoga to pet insurance, the pet care sector is growing at a lions pace.

It is also one where you could park your cash for a solid return.

Healthier, raw food for animals is all the rage alongside pet insurance, grooming, pricey veterinary treatments (think $7500 for a dog hip replacement), pet clothes, dog (doga) and cat yoga. And lets not forget Virgin’s Velocity frequent flyer points for pets as the humanisation of pets becomes the norm (miaow!).

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Australians have one of the highest pet ownership rates globally with 63% of households claiming ownership of an animal - mainly dogs and cats but also ornamental fish, pet birds and horses, rabbits and guinea pigs

The pet industry is worth $7-8bn according to the Animal Health Alliance, and Australians spend a whopping $4.1 billion on vet bills alone and around $3.3 billion on food for their furry friends, annually. Drive through any suburb in Australia and you’re likely to see a pet grooming shop.

“The pet market has grown each year since 2000 and has the attractive characteristics of being higher growth and less volatile than other retail segments,” says Alicia Gregory Head of Private Equity, MLC.

The other attractive thing is economic cycles don’t have a great impact on the pet care industry which is forecast to grow at 6% annually until 2020.

There are a number of private equity-backed pet care companies doing well including The Real Petfood Company and Best Friends Pets founded by The Growth Fund and Good Guys’ Andrew Muir, Gregory points out.

ASX-listed vet and pet shop chain Greencross, which has over 130 stores under the Petbarn brand, has been a takeover target by private equity players TPG and Carlyle, of late. National Veterinary Care, a relatively new entrant to the ASX and PETstock, a family owned franchise, are other firms to look out for.

The strenght of the growing sector is also reinforced this week by confectionary giant Mars acquisition of VCA – owner of 800 pet hospitals, 900 pet clinics, and dog day care franchises – coughing up a massive US$7.7bn plus over $1bn debt.

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The chocolate bar maker also makes well-known pet food brands Whiskers and Pedigree Chum. 

Other trends to look out for in the pet sector is amove to “big box” retail stores that encompass a veterinary clinic and grooming salon, says Gregory.

The online pet market is also growing rapidly,worth an estimated A$150m and set to grow to A$255m by 2020, according to figures from Greencross.