The Impact of Coronavirus on Pet Care

April 2020

For a pet care industry that has grown for decades, Coronavirus (COVID-19) poses an unprecedented challenge. The pandemic threatens supply chains, impacting the workforce and availability of key inputs. The recessionary fallout will test pet humanisation trends, particularly in severe downturn scenarios. At retail, COVID-19 is accelerating an online shift as social distancing changes habits. Long-term shifts in pet ownership and corporate strategy are also likely consequences of the pandemic.

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Key findings

Supply chain obstacles are the first major challenge of COVID-19

  The pandemic poses major threats to pet care supply chains. Manufacturing and transportation require a healthy workforce, while the availability of critical inputs may be limited as well. Imports and exports also face obstacles as countries revert to protectionist trade policies or face their own labour issues.

Ongoing channel shifts will be intensified by the virus

COVID-19 is accelerating a shift to e-commerce that was already reshaping pet care. Social distancing has generated a surge in online orders and led to growth for new models like Click & Collect and Third-Party Delivery. The long-term “stickiness” of this shift will depend on the ability of thinly-stretched online infrastructures to meet demand without long shipping delays or out-of-stocks.

Depending on the severity of the recession, pet care could see a slowdown or major contraction in growth

Despite initial sales spikes due to stockpiling, the long-term implications of the pandemic will stem from the recessionary fallout. Pet humanisation helped the industry weather the 2009 recession with impressive results. In more severe downturn scenarios, however, the industry will be much less able to cope. Pet food will see trading down, while non-essential products will struggle most.

Pet ownership will benefit in some regions and struggle in others

Changes in pet ownership is another long-term consequence of COVID-19. In some markets, home seclusion and isolation are driving growth in short-term pet fostering programmes that may translate into long-term pet population growth. In other markets, economic obstacles and misinformation on the relationship between animals and COVID-19 are driving pet abandonments.

Corporate strategies must adapt to new conditions

Brands face new realities in the context of COVID-19. Innovation is on hold as people look for the familiar, and traditional marketing channels remain limited. Smaller companies that lack resources may become key acquisition targets.

Introduction

Scope
Key findings
Pet care and COVID-19
COVID-19 in context

Economic Outlook

Global GDP is likely to contract in 2020 under the baseline scenario
The COVID-19 pandemic impacts both supply and demand
In our baseline view, the pandemic peaks in June 2020
Three scenarios examine the impact of a more severe outbreak
Our view in short
Forecasts for Real GDP growth in 2020 under different scenarios
Financial markets on risk-off mode as COVID-19 entered Italy
China: An early glimpse into the economic cost of the virus
COVID-19 highlights need for supply chain diversification
Fiscal stimulus a challenge with restrictions on expenditure
What could alleviate the economic effects of the pandemic?
What could exacerbate the economic impact of the pandemic?

Industry Impact

The five-step consumer progression of COVID-19
A progression of challenges for the industry over 2020-2021
COVID-19 impact at a glance
Routes to disruption
Pet humanisation trends create recession resistance, to a point
Updated outlook: Pet care in deteriorating economic scenarios by region
Non-essential products struggle most in a recession
Supply chains at risk from labour stoppages and raw material shortages
Global trade is also at risk from supply chain disruption
Initial stockpiling, destocking and normalisation…in the West
Online sale surge, straining fulfillment operations for retailers…
…while intensifying ongoing channel shifts in the industry
The “stickiness” of the online shift depends on fulfillment and experience
Western Europe: Online out-of-stocks surge in pet food
Asia Pacific: A more robust online infrastructure limits out-of-stocks

Pet Ownership

Pet ownership as a lasting implication of COVID-19
Home seclusion: Social isolation and pet companionship
Misinformation drives pet abandonments in some markets

Corporate Response

Main challenges for pet care players
Innovative upstarts face steep challenges in operations and exposure
Acquisition activity and immunity key to mid-to-long term strategy shifts

Conclusion

Key insights: COVID-19 scenarios

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About Euromonitor International’s Macro Model
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