In an inflationary environment, predicting consumer trends is difficult. However, when it comes to pet stocks, the future course is obvious, as per Robeco. The asset manager believes that pet care is being aided by robust demographic and structural tailwinds in the developed world due to strong ties between pets and their families.

“The pet care industry has been enjoying long-term growth as the popularity of keeping pets has increased…More impactful still is how the industry is evolving with demographic and lifestyle changes encouraging more spending on products and services to help care for a pet, especially dogs and cats,” writes Jack Neele, Portfolio Manager at Robeco. 

Neele cites survey data to inform that millennial pet owners spend more on pet care products and services than older pet owners. Then he elaborates on how, despite an approximate 1% increase in pet ownership between 2010 and 2020, the rise in spending on pets has been much higher. 

Furthermore, Neele points to data from the American Pet Products Association to suggest that pet care spending is recession-proof. “The reason for this is embedded in survey data with pet carers repeatedly reporting they were happy to forgo consumption on themselves to benefit their pet,” says Neele. 

Also, the asset manager says that pet care demand has become less discretionary and that premium pet care niches have emerged as a result of the humanization of pets. According to Richard Speetjens, Portfolio Manager at Robeco, the two biggest pet care segments are pet food and veterinary care, with pet food spawning new brands and startups. 

Along with that, pet healthcare and pet insurance are two more key areas for investors interested in pet stocks, as per Teun Evers, Investment Trainee at Robeco.

“The pet care sector is a deep and diverse investable universe and we are gradually increasing exposure to pet care…part of that exposure is via FMCG names…the whole sector will play a growing role in our consumer strategy,” the asset manager concludes. 

View the complete insight here.