If you purchased a bicycle to stay fit during the pandemic, you likely don’t need another one. The same likely goes for that new sofa, the fire pit and all those scented candles. But if you brought home a puppy or adopted a kitten, that bundle of fur still needs to be fed and entertained, and that’s helping to support what AllianceBernstein analysts on Friday called “one of the most exciting consumer categories” out there: pet care. The bottom line: Don’t expect a pandemic bust here. As CNBC Pro has previously reported, pet ownership in the U.S . is booming, and will help sustain a higher level of sales in the coming years. Morgan Stanley research has found that there are about 5 million more pets in the U.S. than there were in 2019. However, that 4% increase in pet ownership has resulted in an 11% gain in pet spending, it said. AllianceBernstein also expects more doting U.S. pet “parents” to support sales growth in the coming years. But it called out two other factors that will prop up the industry that may not be fully appreciated by investors, and cited Symrise , a German supplier of flavors and fragrances, as an under-the-radar way to play the trend. Key to AllianceBernstein’s argument is the fact that consumers — particularly millennials and Gen Z — love pampering their pooches and coddling their cats. All this love and affection is translating into a shift to more premium food that’s on par with what humans feed themselves. Also, pet ownership and all the consumption it drives is becoming a more global phenomenon, and rising rates of pet ownership and spending from Latin America and Asia Pacific will drive sales growth in the coming years. “Despite now being [circa] 30 months away from the start of the pandemic, pet care is still going strong,” AllianceBernstein analysts wrote. “In the 52 weeks leading up to the 24th September 2022, Nielsen data tells us that the 12-month year-on-year increase in pet food spending was +14.2% in the US.” That pace is faster than 8% global growth rate from 2021 to 2022 predicted by Euromonitor and Bernstein analysis, the report said. Symrise is well-positioned to benefit from both the premiumization and globalization trends, the analysts said. It owns Diana Pet Foods, and is the leading pet food ingredients company. It also understands the human food market and has a segment directed to pet health care. Symrise is in the process of expanding its North Amercian headquarters in Hodges, South Carolina, as it looks to grab more business in the region. In March, it also announced the acquisition of Shanghai-based Wing Pet Food. The company doesn’t disclose the size of its pet business, but the analysts said the company recently said the unit is growing at a mid-teens pace. “… As the only global pet food ingredient player, it has first mover advantage and presence in high-growth emerging markets,” the analysts wrote. They also noted that many pet food companies are start-ups and can tap the experience that a seasoned player like Symrise can share. Among those products are foods that need to be refrigerated or frozen. Some products are also indulgent — think, Pawsecco, a “wine” for dogs — so pet parents don’t have to snack or sip alone. Others tout health benefits. This includes a wide array of supplements including KittyRade, a chicken-flavored prebiotic drink for cats that promotes hydration that AllianceBernstein cited, as well as a large number of CBD products. Larger multinational food companies are also in the pet foods space. The analysts noted that Nestle’s pet care business has been outperforming the industry’s global growth rate. The company operates a number of brands under the Purina umbrella. Other companies with pet foods business include J.M. Smucker , the owner of brands such as 9Lives and Meow Mix for cats and Kibbles ‘n Bits and Milo’s Kitchen for dogs. General Mills owns Blue Buffalo. General Mills shares are up 15% year to date, while Smucker shares have gained 3.8% year to date.
