The global pet industry is howling. That’s great news for Chewy Inc. (NYSE:CHWY), Amazon.com Inc. (NADAQ:AMZN), Petco Health and Wellness Co. (NASDAQ:WOOF), Petmed Express Inc. (NASDAQ:PETS), and Better Choice Company (OTC:BTTR).
At the moment, “Seven out of 10 U.S. households today have pets, which is more than have children. And like parents with kids, pet owners will likely spare little expense to ensure their pets have lives as healthy and fulfilling as their own,” said Michael L. Sapir, co-founder and CEO of ProShare Advisors LLC, the advisor to ProShares, as quoted in a company press release. “Pet owners are spending billions on premium-quality foods, state-of-the-art health care, insurance policies, luxury services and more. It’s causing a new pet care economy to emerge that could reach $203 billion by 2025.”
By 2028, according to Fortune Business Insights, the global pet industry could be worth up to $325.74 billion with a CAGR of 5.6%. In addition, “The increasing concerns regarding the spread of CV-19 in dogs have accelerated demand for dog healthcare products among dog owners. For instance, from 1 December 2019 to 1 February 2020, Fox News reported a tenfold increase in the sales of the total number of dog face masks in China.”
Investor Tails Wagging Over Growth
Look at Chewy Inc., for example. In its latest quarter, net sales grew 45% year over year to $1.78 billion. Gross margins improve by 180 basis points. “Chewy’s relentless focus on execution and inventiveness resulted in record net sales and another quarter of positive adjusted EBITDA,” said Sumit Singh, Chief Executive Officer of Chewy.
Amazon.com Inc. is benefiting with the global pet care e-commerce market expected to reach $45.82 billion by 2028. According to Fior Markets, “There is a certain convenience in buying online as one can order from the comfort of their home, and everything is delivered right to the doorstep. A broad variety of products with detailed descriptions are available in online stores. Furthermore, big sales and discounts are often given by e-commerce sites.”
It’s Also a Catalyst for Better Choice Company (OTC:BTTR)
Better Choice Company Inc. an animal health and wellness company, announced that it has agreed to aggregate minimum purchases with its key Asian distribution partners totaling $25.6 Million in sales from Jan 1, 2021 – December 31, 2022.
Better Choice has built several strong distribution partnerships over the last few years in China, Korea and Japan that focus on selling its extremely popular Halo Brand. Halo’s commitment to delivering real whole meat, certified proteins and no antibiotics has resonated strongly with Asian pet parents that desire an easier to digest food for their pets with quality ingredients from a brand they trust. By delivering on this value proposition, Halo was able to achieve 95% growth in Asian sales in 2020, with sales in China representing more than 50% of total Asian sales.
The acceleration of sales in China has been driven in part by Halo’s ability to secure Product Import Registrations for 15 Holistic Dog and Cat Food Diets from the Ministry of Agriculture and Rural Affairs of China in June 2020. These product registrations have enabled the Company to expand its partnership with its Chinese distribution partner, Penefit International, Co. and sell Halo branded product on e-commerce platforms and brick-and-mortar locations throughout mainland China.
Scott Lerner, CEO of Better Choice stated “We are incredibly excited to be able to build and expand upon our already strong relationships with our distribution partners in Asia. We believe that recently agreed-to minimum purchases will provide the basis for our continued rapid growth in China, Korea and Japan, and will also give us a footprint to help further growth in other international markets. Better Choice’s success to-date in Asia has been driven by leveraging our solid marketing foundation and commitment to delivering high quality pet food to discerning pet owners with country-specific distribution strategies and category expertise. In China specifically, our partnership with Penefit has been instrumental in taking Halo from a new entrant to the Chinese market in 2018 to a leading brand in the super premium category today.” Mr. Lerner continued, “With our recent corporate improvements and a focus on our international supply chain we are prepared for growth of this magnitude, and more.”
Allen Chen of Penefit International Co. stated, “Our relationship with the Better Choice Company and the Halo brand is a key strategic partnership for us as we continue to build our presence in China’s rapidly growing animal health and wellness sector. We are proud of Halo’s debut Double 11 performance on Tmall in 2020, which saw Halo achieve 1st place in sales for first-time imported foreign premium pet food brands on the world’s largest physical retail and online shopping day, and are pleased to be able to represent such an incredibly innovative, growing product line up for many years to come.”
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