The not-so-secret pet economy

As people increasingly open their homes and hearts to their furry and feathered friends, this has shifted the way they perceive, care for and invest in their animal companions. 

According to a Bloomberg Intelligence report, the global pet industry is expected to grow to US$500 billion ($670.43 billion) by 2030, from US$320 billion as of March 2023. The growth is attributed to a growing global pet population and the premiumisation of food and services from the humanisation of pets. The US will likely remain the largest pet market in the world, with sales approaching US$200 billion by the end of the decade.

Another report by Morgan Stanley, dated March 3, 2021, notes that the pet sector could become a long-term trend, with the industry expected to reach US$275 billion by 2030 from US$100 billion in 2021.

In Singapore, the pet products market is expected to reach a compound annual growth rate (CAGR) of 9.21% from 2023 to 2030, according to Grand View Research.

See also: Petico’s strategic move to acquire Perromart

James Tan, managing partner at Quest Ventures, notes that the demand for pet-related products and services will rise as more people in Southeast Asia see their pets as family members. One of the companies backed by the Asian venture capital firm is ZumVet Singapore, which provides a one-stop service for pets — from veterinary (vet) teleconsultations to test kits and over-the-counter (OTC) medication and accessories.

“The pet industry as a whole has grown. It grew during the Covid-19 pandemic, and by all estimates, did not shrink back to pre-pandemic levels after we emerged from it,” says Tan on the industry’s growth potential.

In his view, all aspects of the pet sector are “interesting”.

See also: It’s a vet’s life

“Compelling sub-sectors emerge from time to time, and, depending on factors such as the readiness of technology, prerequisites and adoptions, [there will be] a rapid or slow emergence of these sub-sectors,” he adds.

Shiyan Koh, co-founder and general partner of venture capital fund Hustle Fund, notes that there was a huge surge in pet ownership during the pandemic. While that has slowed down after the reopening of domestic and international borders, pet owners (or pet parents as most of them call themselves) are now in a long-term relationship with the new members of their household. 

“I think that’s where you’re going to continue to see the lifetime value of some of these relationships pay off, not necessarily expecting the same level of new pet acquisition as we saw over 2020 to 2022,” notes Koh.

Hustle Fund, which focuses on early start-ups at the pre-seed stage, counts several pet-focused companies among its number. This includes Malaysian pet-focused insurance company Oyen, US-based cat-sitting app Meowtel, as well as US-based pet insurance company Nibbles.

On the growth potential of the industry, Koh adds that the fund does not have a solid estimate but it expects to see the industry grow in tandem with GDP growth.

DBS believes that products and services catering to the pet industry are a niche but growing economy as more and more people welcome furry, feathered or scaly friends into their homes. “Growth areas include pet food distribution, grooming services, as well as daycare facilities or pet hotels which are becoming more popular,” says a DBS spokesperson. “Similarly, DBS has observed a year-on-year increase in financing for capital expenditure requirements from businesses looking to expand their operations to meet growing demand.”

Paws and profits

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With pet owners seeking a higher standard of living for their pets, the industry has seen a rise in several services including gourmet meals, spas, luxurious grooming sessions and state-of-the-art medical care services.

Gone are the days when dedicated pet stores held a near-monopoly on pet food and supplies. 

Besides new businesses like Companion with its AI-powered device that trains and feeds dogs as well as monitors their health, businesses such as popular online clothing store Shein are also jostling for a piece of the pet economy. 

On its Singapore site, Shein sells a variety of accessories and clothes for dogs, cats, horses and small animals (such as hamsters) at prices from 37 cents for an adjustable collar for dogs or cats.

“As a global online fashion and lifestyle retailer, we strive to deliver the best customer experience, and part of that experience is providing a one-stop shop for our customers’ diverse needs… by offering a variety of high-quality pet products,” says a Shein spokesperson.

Catalist-listed pharmaceutical and medical supply company Pasture Holdings is another company seeking to tap further into the pet healthcare ecosystem through the launch of its mobile application, furlife. 

The app, which is Pasture’s first business-to-customer (B2C) venture, was launched in January 2023 and is complemented by the company’s existing business of supplying pet pharmaceutical and nutraceutical products. It is founded by Claire Soong, digital marketing manager at Pasture. Soong, who is also Pasture’s alternate director, is the daughter of Jonathan Lloyd Soong, the company’s executive director and chairman. 

Claire shares that the app was born out of a personal interest when her family got a dog a few years ago. 

“When we got our dog, we realised we’re spending so much money on [it]. We can’t be the only people [doing so]. So obviously there’s a market for [pets]. Beyond that, we grew to see our dog as a member of the family… We really want to help pets live longer and healthier lives,” she says.

Although furlife is a new vertical under Pasture, Claire sees the app as a community service provider, with no costs involved for the end-user for now. In the long run, she also hopes to build an ecosystem for pet healthcare and aims to democratise it by making it accessible to everyone.

One example is ensuring pet owners have their pets’ medical records at their fingertips and easily organised instead of having to sift through papers of tests and other medical records.

“The idea of streamlining the medical patient-to-clinic process appealed to me. I’ve used other apps to track and organise other aspects of my life, which is why I thought this was a good idea,” Claire says.

She hopes to add several features to the app in future. This includes tapping on Pasture’s existing business and selling pet products wholesale via the app, which helps pet parents save on costs. She also aims to connect pet healthcare and wellness providers such as cruelty-free groomers to pet owners.

In Pasture’s minutes for its annual general meeting (AGM) dated Oct 31, 2023, and published on Nov 30, 2023, Lloyd noted that the pet market is an “interesting” one for the pharmaceutical company to explore as animals such as dogs and cats fall ill too.

Furthermore, he adds that some of Pasture’s clients are in the pet market and by starting a pet vertical within the group, it will be able to foster partnerships within this segment.

Income Insurance (formerly NTUC Income Insurance Co-operative) is also looking for a share of the pie within the pet market. The insurer collaborated with global professional services firm Aon to take over Happy Tails in April 2021. A pet insurance provider, Happy Tails was arranged by Aon and underwritten by MSIG Singapore between 2015 and 2021. Happy Tails falls under Income’s general insurance business line and covers surgical expenses for pets, third-party legal liability benefits for accidents caused by pets and more.

“With many families in Singapore increasingly keeping cats and dogs as pets for companionship, we wanted to ensure we can bridge the protection gap in all aspects of our customers’ lives, including their pets, so that they can protect those who matter most to them,” says Annie Chua, head of personal lines at Income. 

The growth of pet ownership in Southeast Asia over the years, in tandem with the improved standard of living in the region, is translating to a higher demand for related goods and services such as pet food, grooming and pet insurance, notes Chua.

“There is a rising ‘furkid’ culture as pets are increasingly being looked upon as family and hence the increasing demand of pet insurance for their beloved pets to cover the costs of clinical and surgical expenses,” observes Chua. 

She attributes this trend to increasing awareness amongst pet owners of insurance available in the market and growing receptiveness to getting pet insurance. From 2021 to 2022, Income saw more than a 150% growth in the uptake of Happy Tails pet insurance.

Pet companies on the SGX

While many businesses are seeing potential in the pet market, two SGX-listed companies do not seem to be enjoying the same benefits.

In 1HFY2023, the company made a loss of $252,000, on slightly lower revenue, attributed to growing competition among vets. In December 2021, Asia Vets announced a planned acquisition of AlDigi Holdings, which holds a group of entities in digital finance and capital markets advisory, from RHT Group via a reverse takeover deal worth $45 million. A third supplemental agreement was announced on Nov 29, 2023.

Earlier this month, Mainboard-listed Qian Hu Corp, famous for its arowana fish business, reported a net loss of $9.3 million for the FY2023 ended Dec 31, 2023, down from its earnings of $1.4 million in the FY2022. The loss was mainly attributable to a $7.4 million loss on disposal of a substantial portion of its Asian Arowana broodstock as the company wanted to free up its resources and redeploy land for new business activities that can generate better value. The loss was also due to a $1.5 million allowance for Qian Hu’s “obsolete and slow-moving inventory” which arose from an inventory profiling and assessment exercise.

Regional trend

The pet economy is growing not just in Singapore — it is a regional trend as well, drawing interest from some smart money. Global consumer-focused investment firm L Catterton announced that it made a strategic investment in Japanese vet services group Withmal on Sept 11, 2023.

According to the release put out by L Catterton, the vet services market in Japan has been growing steadily despite being “very fragmented”. As at September 2023, Japan has nearly 13,000 pet clinics that are mostly small businesses. Many of these clinics are also owned by vets in their 50s or older with no succession plans.

“For such vets, joining Withmal is a potential solution as the group can continue running their practices after they retire. They can also leave ancillary operational and administrative tasks to Withmal and focus on treating pets, leveraging the group’s best-in-class equipment and facilities,” reads the release.

“Pets are treasured members of many families in Japan, and it is our mission to build a highly trusted veterinary services group that pet parents across the country can rely on for their pets’ healthcare needs,” says Withmal founder and CEO Tomoki Yamasaki.

“Withmal is a scalable enterprise in a robust category in Japan that also addresses a very real challenge faced by business owners in the country — the lack of successors,” adds Taka Shimizu, a partner in the Asia fund of L Catterton. 

“Like many other small- and medium-sized businesses in Japan, a large number of pet clinics in the country have founders who are planning to retire over the next decade with no one succeeding them. By joining Withmal, however, they can extend the longevity of their practices and continue to serve their customers and do so with greater devotion and resources,” he continues.

In the Philippines, the country’s largest corporate venture builder, 917Ventures, also entered the pet space with its telehealth platform, PetPal. The platform was launched as a vet teleconsultation service and has since expanded to offer home grooming services, home vet visits, lab tests and vaccinations. An online pharmacy and marketplace for other pet-related goods, supplies and services are in the works.

Like Pasture’s furlife app, the idea of PetPal came from personal experience. Carlo Flordeliza, a senior venture builder at 917Ventures, realised that there was a gaping need for a comprehensive petcare platform when he faced challenges in finding an available vet for his dog, Pippin, who urgently needed care at the time.

“PetPal addresses a gap in the petcare market for convenient, accessible, and cost-effective healthcare services for pets. According to the American Society for the Prevention of Cruelty to Animals, a significant number of pets rarely see a veterinarian due to their owners facing substantial challenges such as cost issues and unavailability of veterinarians,” says Flordeliza. 

“These barriers can lead pet owners to delay or skip veterinary treatments, or even abandon their pets. Affordable telehealth services like PetPal can address this while also helping pet owners avoid additional expenses related to transportation, travel time, or missed work,” he adds.

Glenn Estrella, head of ideation and acceleration at 917Ventures, says the move to head into the petcare business came about during the pandemic.

“A lot of us here are pet owners, which says a lot about the Philippines. We’re a dog country; 74% of the pet owners in the country are dog owners,” says Estrella. “We all share the same problems and stories; we would spend at least US$1,000 a year on one pet. That’s at least if they don’t get sick.”

“And we don’t question what we spend for our pets, so we thought, why don’t we try it? If you look at our portfolio [PetPal] is probably one of the things that are off. If you’re outside looking in, petcare doesn’t seem to fit the 917 group’s focus area. But we do believe it’s a problem that we need to solve. And that’s why we’re here right now,” he adds.

According to 917Ventures, the petcare market grew to a sizeable US$1.6 billion as at 2022. The market is expected to grow to US$3.08 billion by 2032.

PetPal itself collects fees from its customers that range from PHP99 ($2.36) for a chat with a vet, to PHP500 and above for teleconsultations and from PHP1,000 for home vet visits. 917Ventures takes a small cut off the fees.

In addition to catering to a growing sector, PetPal aims to make visiting vets a much more convenient affair. At present, vets in the Philippines are scattered, with just under 400 clinics and 12,000 vets spread across the archipelago. 

“A lot of these vets normally operate from their homes and not from a fully functioning clinic,” explains Estrella. “If I need a vet to come over and it’s not an emergency, I can engage PetPal’s teleconsultation service… it’s a lot easier. You can send pictures over the chat, you can send a video [even at night when the clinics are closed].”

When we last spoke in September 2023, Estrella revealed that the app is growing quickly with vet acquisitions. “If there’s about 12,000 vets, we’d be at close to 2,000 in the system by 1Q2024.”

Currently, the company is looking to focus on stickiness and scale. “Right now, we are accelerating, so we’re not at scale yet because we’re still trying to solve the fragmentation problem… We need to find a way to help our providers scale their businesses,” Estrella says. “We have internal revenue goals, but it’s more about the path to profitability… You can always game it if you want to, but we don’t want to do that. I want to see customer acquisitions, the acceptable acquisition cost. I want to be able to see repeat customers at scale and continued vet growth on the platform.” 

Whisker-approved services

From a vet that focuses on geriatric care to solutions for cleaner air for pets, these are some of the businesses worth checking out. 

• The Gentle Vet

Established in 2022, the 24-hour hospital-cum-clinic was founded with a vision to help pets live better for longer. One of the few clinics that focuses on geriatric petcare and for chronically ill pets, The Gentle Vet also stands out for its fear-free and positive treatment approach. 

In addition, the clinic is one of the few to have special services and facilities for elderly pets who are undergoing hospice and palliative care. 

“We opened The Gentle Vet as a facility… to focus on the human-animal bond. Pet owners will know how precious and profound this bond is. Our pets change our lives when they come. When they eventually leave us, the loss of their presence is staggering,” says Dr Kelly Yeo, head vet and co-founder of The Gentle Vet, which has three other co-founders — Alina Tay and two other non-executive co-founders.

“Many of our operational protocols centre around the human-animal bond. For example, we encourage and permit owners to stay with their pets if hospitalisation is required. No child likes to be left alone in a hospital; the same goes for our pets,” she adds.

• Plasma Science

Clean air is paramount — whether for the two-legged or four-legged. This is where Plasma Science’s product, Trident Air, comes in. While Plasma Science began as a passion project between co-founder Samuel Teh and some scientists in A*STAR to study ways to mitigate the risk of virus transmissions, this quickly evolved into a product for pet owners seeking to eliminate odours and pet danders. 

“Our technology was developed to improve lives, beyond just humans. We are excited about the pet industry, as pet owners (aka “pawrents”) are very passionate and very willing to provide conducive environments for their beloved pets. Our mission to provide everyone with the freedom to breathe clean, safe air extends to pets too,” says Teh.

• Paws of Kow

Paws of Kow is a brand that sells luxury pet accessories such as collars, leashes and bandanas. The business came about when founder Nicole Kow, “pawrent” to poodles Tobi and Coco, could not find pet accessories that reflected their styles.

According to Kow, her target market comprises mainly fellow “pawrents” — individuals who genuinely cherish their pets and consider them integral to their family.  

The products of Kow’s online-only business have already reached the shores of Malaysia, Indonesia, Taiwan, Germany, the UAE and the UK. The brand has also been approached by British Vogue to have its products featured on its pages.

“With the rise in pet ownership, the pet economy market is definitely an area with wide potential. The beauty of pet ownership these days is that there is a shift in perspective and there is a genuine love and bond between human and pet much like that of a parent/guardian and child,” says Kow. 

“As a result, there’s a growing desire to spoil your furkid, or as I refer to them, ‘pawby’ or ‘pawbies’ for plural, and that means you want to get them quality products and experiences,” she adds. 

Pets and their pawrents’ wallets

The Edge Singapore spoke to a few pet owners to find out how much they spend on their furkids.

Lara Ho, the owner of a 14-year-old dachshund spends about $1,500 to $1,800 a year, which comes up to about $125 to $150 a month. Her expenses include her dog’s shampoo, food, treats, vet fees and vitamins. 

Toby Chang, who has a three-year-old Yorkie terrier, spends slightly over $10,000 a year. This includes his food and treats ($150 a month), supplements ($150 a month), monthly full grooming sessions ($120 a month), as well as mostly unexpected medical expenses (this is about $5,000 to $6,000 a year). “He swallows things he shouldn’t and has had open surgery twice! Each time, it cost about $5,000 to $6,000.”

Becky Lee considers her two whippets relatively low maintenance. She spends about $2,400 a year — or $100 per dog monthly — for their snacks. Lee grooms the dogs herself and their  toys and outfits are also homemade “as much as we can”.

Gia Wong, who has two rescues — a beagle and a Singapore special — spends $200 a month on food (fresh meat), treats, supplements, poop bags, pee pads and shampoo. When her Singapore special first arrived, Gia had to take him to the vet for regular check-ups, which cost her $1,600 for four sessions.

Lani Chan, who has an eight-year-old toy poodle, spends $200 on her food and treats. Grooming sessions cost $150 and take place once every two months. Her poodle’s annual teeth cleaning sessions cost $250 a year. Her poodle also goes to canine classes, each costing about $300 to $400. On occasion, Lani will buy her new toys and clothes for Chinese New Year, which cost around $20 to $30. Her pampered pooch also celebrates her birthday yearly with her family and fellow poodle friends.

Chelsea Lim spends about $300 a month on her cat. The amount comprises $150 for food, $100 for grooming, $50 for cat litter and toys. She also pays $450 for the annual health screening.

Celine Chan spent about $300 to $400 when it came to setting up her cage and accessories for her Syrian hamster. This includes add-ons such as a ladder and various beddings for him to frolic in. His monthly maintenance costs about $10 to $20, which goes to sand and food. According to her, the cost of keeping a hamster varies depending on how easygoing it is, with some of her fellow hamster owners buying premium nuts for their pets from Scoop. Meanwhile, vet fees can cost close to $1,000, depending on the situation. In Chan’s case, her hamster had to be taken in after fracturing his leg.

Celine, who also just adopted a four-year-old ragdoll cat, says she spends about $3,950 a year — or $329 monthly — on her. Of the sum, $165 goes towards a raw food subscription, while $35 goes to treats. Toys and cat litter cost about $50 each a month. Annual expenses include $300 for dental and $50 for de-worming. 

Grace, who has a lop rabbit, spends about $75 monthly on hay, litter, food, pellets, fruits and treats. She also spends about $50 a month on grooming sessions. One-off expenses include mats, which cost her $150 for five; $100 for the rabbit’s playpen; the occasional toy, which costs between $10 and $20; and vet expenses. A hip dislocation and a two-night stay at the vet cost her $4,500. X-rays and medications cost her $400 for one visit, and regular annual check-ups cost her $250.