Dog Daze

A €9 billion paradise for pets

  • Why it matters

    Why it matters

    Spending on goods and services targeted at house pets is thought to amount to about €9 billion per annum. Retailers, insurers, pharmaceutical companies and service providers anticipate ongoing growth.

  • Facts

    Facts

    • Germany is home to approximately 30 million house pets, with preference given to dogs and cats. Only the Russians have more.
    • Spending on wet food for dogs recently increased by 6.4 percent to €415 million. Spending on dog snacks increased by 5.7 percent to €479 million.
    • According to the German tax authorities, veterinarians here charged a total of €2.8 billion for services in 2014.
  • Audio

    Audio

  • Pdf
Funny Dog Taking Bubble Bath
Pampered pets are big business in Germany. Source: Handelsblatt

The latest, fashionable retail address in the German city of Cologne is Heinz Behrens’ shop, the Barf Butcher. With fresh oxen tails and beef stomachs on offer, in addition to high-end canned food, it’s a magnet for his customers – the city’s dogs – who can’t help but stop, tail wagging, to gaze in the windows longingly. It’s no wonder that although it is only a few weeks old, Mr. Behrens’ business is a hit with the city’s canines, and more importantly, their deep-pocketed masters.

“Freshly prepared and organic food for a healthy diet, for all meat-eaters,” is how Mr. Behrens’ advertises his business. “Cats and dogs have become family members, and people want the best for them,” he explains why breed-specific, organic and sustainable food has come to replace sugar-filled canned offerings from discounters. High-level care for house pets usually begins with food and goes from there. Germans are also increasingly opening their wallets for just general health and well-being of their pets.

Germany is home to approximately 30 million house pets, with a pronounced proclivity for dogs and cats. Only the Russians have more.

German chain Fressnapf has introduced its own in-house brand, Foodprint, where customers can learn about the origins of ingredients.

“People project a lot of what is important to them personally onto their pets,” observes Jens Lönneker, manager of the Cologne-based market research company, Rheingold Salon. A growing number of single people living in big cities and the loss of traditional ways of family life in smaller communities also have an impact. “For many people, pets offer stability and serve as a replacement for significant others,” Mr. Lönneker explains.

The German market for pet care is worth around €9 billion annually, according Renate Ohr, an economics professor from the University of Göttingen, with more than half of this figure spent at retailers, both large and small.

Times have definitely changed. Once, in post-war years, a family might keep a rabbit as a pet, until eventually it would supplement the family’s nutritional intake. But now extravagant spending on pets is no longer socially stigmatized.

Consider this: German pet retailing chain, Fressnapf, the market-leader, has introduced its own in-house brand, Foodprint, where customers can learn about the origins of ingredients and where they were processed, by means of a barcode on the packaging.

Individualization is yet another trend: At the website, wunschfutter.de, for example, customers can order custom blends for their pets in much the same way that people can go to Mymuesli, an online purveyor of custom cereal blends, to stock up on their favorite breakfast food.

Fressnapf is market leader for a reason and has been at the forefront of trends. In May, the retailer will introduce Dog’s Creek, the first outdoor brand for dogs, a kind of North Face for the four-legged. In the second half of 2017, the company will roll out the brand, Take Care, a line of pet hygiene products. The company also has plans to expand its in-house dog grooming and veterinary services.

“We help customers to recognize the needs and wants that they didn’t know they had,” Fressnapf boss Alfred Glander says candidly.

For pet owners and animal lovers, it seems no price is too high. In spite of stiff competition, spending on wet food for dogs has increased by 6.4 percent to €415 million ($439 million). Dog-owners have spent even more on snacks: Spending on dog treats rose by 5.7 percent to €479 million ($506 million).

 

Pet Market in Germany – Turnover and Number of Sites

However dedicated pet stores are not first in line to cash in on this tsunami of spending: Two-thirds of canned or bagged food for animals is sold at grocery stores and drugstores.

Still, chains such as Fressnapf, Futterhaus or Zoo & Co. are booming. This is particularly true for the market-leader, Fressnapf: Since Torsten Toeller founded the pet store 27 years ago, the company has expanded from a single store in the west German town of Erkelenz, to become the European market-leader with 1,400 stores in eleven countries and a turnover of €1.9 billion.

An end to the boom is not in sight, according to the company’s Mr. Glander. With the potential to open up to 800 new stores in the next three to five years, Fressnapf is putting its money where the pets’ mouths are.

The pet business looks very good beyond edibles as well. Medical care for pets is a booming market, with worldwide veterinary medical sales worth an estimated $30 billion and annual growth between 4 and 6 percent. About half of this business comes from medicine for pets like dogs, cats and horses, with the other half spent on agricultural animals.

Market research firm Euromonitor says this market is growing particularly well in Germany. Most recently German pharmaceutical company Boehringer took over French firm Sanofi’s animal medicine branch for €11.4 billion. They are certainly betting on growth in the industry: Roughly half of the company’s combined sales of €3.4 billion are thanks to health products for house pets.

Veterinary services also make up a gigantic market, with medical procedures such as artificial hips, catheters and even braces becoming more routine for house pets. While there are no official statistics on how much money Germans spend on veterinary care for their pets, veterinarians charged a total of €2.8 billion for their services in 2014, according to tax figures. Most of this was spent on dogs and their main complaint was not, as some might think, diabetes or cancer, but allergic reactions.

All of that care costs money and in Germany, it is possible to insure man’s best friends against the high price of possible medical treatment. Four insurance companies in Germany offer veterinary insurance for dogs, cats and sometimes even horses. Agila, an insurance company specializing in policies for cats and dogs, says that it has more than 200,000 policies and growing.

In 1984, Uelzner started providing insurance policies for house pets. Today, the company has more than 350,000 insurance covers for dogs, cats and horses. Just like Agila, Uelzner sees only more growth in the future. Economics professor Ms. Ohr, estimates that about €90 million was spent in 2014 in Germany on health insurance for dogs and cats.

In Germany, pets can also be insured with personal liability insurance which covers situations such as, for instance, if a dog runs out onto the road and causes a car accident. The insurance covers the cost of damages. The association of German insurers concludes that 70 percent of all dogs in Germany are insured for this. Ms. Ohr’s work suggests it’s around 65 percent and that these policies account for around €360 million in turnover annually.

And then of course there are the more traditional pet services: groomers, pet sitters, animal boarding houses and trainers. There are 7,000 dog groomers registered with the German Pet Trade and Industry Association and the numbers are rising. Ms. Ohr believes that Germans spend between €65 million to €70 million per year on pet hotels and pet daycare. And the number of locals qualified to service the furry member of the family is also rising: Since 2007, the Chamber of Industry and Commerce in Potsdam has been offering courses for would-be dog trainers and behavioral consultants. The course costs €3,000 and has been completed by 861 trainers.

Given the ever-increasing number of German pet owners willing to spend lavishly on their charges, it’s almost certain those graduates won’t be lacking work.

 

Maike Freund is an editor at Handelsblatt’s politics desk. Bert-Friedrich Fröndhoff leads a team of reporters in Dusseldorf covering the chemicals, healthcare and services industries. Florian Kolf leads a team of correspondents, who cover the trading and consumer sector. To contact the authors: freund@handelsblatt.com, froendhoff@handelsblatt.com, kolf@handelsblatt.com

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!