Pet Care: Quarterly Statement Q3 2020

August 2020

Euromonitor International’s pet care forecasts have been updated to reflect the implications of the Coronavirus pandemic. This report explores the four major drivers that are shaping these projections, which are developed using a combination of quantitative drivers (using income elasticities) and hard-to-quantify “soft drivers” such as pet humanisation trends. Despite a challenging macro-environment, the global industry is poised for continued growth in 2020 despite significant regional variatio

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Key Findings

Pet care is expected to prove resistant to the recession created by COVID-19

Despite a bleak outlook for the global economy in 2020, the pet care industry is expected to prove its resilience. Decades of pet humanisation trends have helped create an industry that is largely inelastic to changes in income. As people look to save money, many will make sacrifices in order to keep spending on their pets. While growth is expected to slow relative to the past few years, global pet care is projected to post growth of more than 2% in 2020 with a relatively quick rebound in 2021.

Positive “soft drivers” unique to COVID-19 will offset negative income effects

Four drivers will shape pet care’s performance under COVID-19: the recession, pet ownership trends, channel and supply chain shifts. While the recession will drag on growth, this crisis is unique in creating social isolation. This is generating a surge in demand for new pets and adoptions as people seek companionship. It is also forging new pet owner bonds as people stay at home. This unique “soft driver” will more than offset any recessionary effects, driving industry growth in 2020 and beyond.

Regional forecasts show a stark contrast in expected growth

Relative to their pre-pandemic outlook, all regions have downgraded forecasts for 2020. The magnitude of this change, however, varies significantly. Steep economic downgrades in Europe and the Americas leave Asia as the clear leader in terms of 2020 growth. Meanwhile, Latin America’s role as a key growth engine for global pet care has been derailed by the severity of the pandemic and economic shutdowns in the region. There has never been a better time to pivot to Asia.

Further downgrades to global economic forecasts will delay the pace of recovery

The pandemic’s unpredictability may lead to future economic downgrades. Second-wave infections or delays in a vaccine can quickly change the outlook. Euromonitor’s new forecast dashboard uses income elasticities to model potential changes at category and country levels. One of the most important findings from this model is that more severe downturn scenarios will significantly extend the expected duration of recovery. In the worst cases, growth will not return to pre-pandemic levels until 2023.

 

Introduction

Scope
Euromonitor International and Coronavirus (COVID-19): Forecasts and analysis
Pet care: COVID-19 data and reporting timeline
Key findings

Drivers

Four drivers for pet care under COVID-19
Hard vs soft drivers: quantifying the impacts of COVID-19 on pet care
Elasticities show pet care as essential: especially in developed markets
Pet humanisation trends create recession-resistance
Unprepared food still plays a pivotal role in emerging markets

Macroeconomic Update

Global economy will contract sharply in 2020
In our baseline view, the pandemic peaks in summer 2020
Three scenarios examine the impact of a more severe outbreak
Our view in short
Forecast real GDP growth in 2020 under different scenarios

Q3 Pet Care Update

Global pet care growth to decelerate: but only slightly - in 2020
Positive drivers to outweigh negative ones as industry growth continues
A new outlook: from “Pre-C19” to “New Baseline”
Total pet care growth: revised outlook by region
Scenario-based forecasts: exploring the future via income projections
Pessimistic scenarios reshape the recovery curve
Value trends assume new importance…especially in emerging markets

Conclusion

Conclusion
About Euromonitor International’s Industry Forecast Model
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