Pet foods are going out of business as trend towards Millennial “fur babies” continues
In yet more proof that the way Millennials are treating their pets is vastly different to previous generations, popular pet food brands like Mars’s Pedigree and Nestle’s Purina are running into trouble. The cause of that trouble? Many younger adults just don’t feel that these ‘traditional’ pet foods are good enough for their special little fur babies. This shift is real, and massive – and companies like IDEXX Laboratories are capitalising on it to give consumers what they want: better pet care, with an appropriate price tag.
Although not immune to wider market sentiment, IDEXX Laboratories is still up by 22% so far this year
Source: Yahoo Finance
The Wall Street Journal, which covered this story over the weekend, cites Nielsen data showing that spending on pet food increasing by 30% per household in the four years between 2006 and 2010. The Journal continues: “many of these consumers were young people who bought pets and fed them grain-free kibble and wild-caught tuna before having children or buying houses, analysts said.” It also quotes Beverly Petrunich, owner of DoGone Fun (a Chicago dog day-care centre): “they treat them like it was their firstborn child.”
Putting human-grade ingredients into pet food pushes up prices, but it’s just the tip of the iceberg. Today’s pet owner doesn’t just shell out on more expensive kibble, but overspends (by their parents’ standards) on Christmas and Birthday presents. And, importantly, they expect their pet to get top quality healthcare: you don’t spend all that money on a new member of the family just to put them down instead of (for example) paying a few grand for a simple surgical procedure.
This is where IDEXX has foreseen consumer preference. The company supplies unique diagnostic tools to veterinary practises and operates 24 / 7 emergency practises that essentially function as pet hospitals. As Millennials continue to have fewer children than previous generations, and show increased attachment to their pets, this trend is set to continue – and no one is better positioned in the space than IDEXX Laboratories.
Dominion holds IDEXX Laboratories in its Global Trends Luxury Fund.
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