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The Ethical Investor: Falling birth rates propel pets sector, and why ESG investors should tap into it


  • Birth rates decline as people choose careers and pets

  • Global pet industry is benefitting from this, to grow significantly by 2030

  • Ethical investing could thrive in sustainable pet product demand



Pets industry booming as a result


Cena’s decision reflects a global trend where many people are choosing pets over children.

In China, for example, data shows that there could soon be more pets than children.

Young Chinese couples say they often find it easier and more fulfilling to adopt pets, referring to them as “fur babies”.


And in Europe, more households are choosing pets over children, with around 50% of households now having a pet instead of kids.


Against this backdrop, the global pet industry is set to explode, jumping from US$320 billion today to nearly US$500 billion by 2030, according to a recent report from Bloomberg Intelligence.


The US will continue to be the largest market, with sales expected to hit close to US$200 billion.


Pet food is expected to be the biggest expense for pet owners, potentially reaching US$135 billion globally, with a strong focus on healthier options.


Even during the pandemic, spending on pet food had remained steady.


“Consumers are willing to pay more for items for their pets, with the pet food market having the potential to grow more than 50% from current levels by the end of the decade,” said Diana Rosero-Pena at Bloomberg Intelligence.


Meanwhile, the trend of treating pets like family, coupled with improved nutrition leading to longer lifespans, is driving increased spending on their healthcare.


As a result, vet services are set to see a big boost in demand over the next decade. A recent survey of 2,300 pet owners found that 80% had visited the vet at least once in the past six months.


In this health space, the rise of new animal health companies, offering things like monoclonal antibodies, vaccines, and other treatments, has been driving innovation.

Improved diagnostic tools and AI are also expected to enhance care options, making it a pretty exciting time in the animal health sector.




So what does this have to do with ethical investing?


The pet industry could present a compelling opportunity for ethical investors due to its growing emphasis on sustainability.


The sector has been addressing critical environmental concerns such as deforestation, pollution, and waste generation.


As consumers become more aware of these issues, there’s a rising demand for pet products that prioritise them.


For example, using organic or locally sourced ingredients for pet foods not only supports local economies, but also minimises the carbon footprint associated with transportation.


Also, opting for recyclable or compostable packaging, which is growing in popularity, aligns with the increasing consumer preference.


Recent research from IRI (Information Resources, Inc) shows that 55% of Australians actively seek out environmentally friendly pet products.


“Shoppers have spoken in the strongest possible terms about their views on sustainability,” said Daniel Bone, Insights Director at IRI.


“They want to save the planet and feel that they can help do this on a daily basis by making informed and proactive purchasing decisions with their food and grocery shopping.”


Experts also believe the pet industry is a strong option for ethical investors as it allows them to invest in ways that align with their core values.


Having a pet nearby, for instance, can help lessen feelings of loneliness, as people often perceive their behaviour as a source of emotional comfort.


Also, pets can act as social facilitators, making it easier to connect with others in various situations.


Ultimately, ethical investing is when individuals align their money with their principles.

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