How Pet Health is Driving Industry Growth
Pet marketers and retailers have long made hay with veterinarians’ ability to influence pet owners’ pet product purchasing decisions. Some of the biggest brand success stories—Greenies and Hill’s spring to mind—have been woven around veterinarian endorsement, and PetSmart’s first in-store Banfield Pet Hospital dates to 1994 and has spawned nearly a thousand more, co-owned with Mars.
With pet health as the foremost pet market driver, veterinarians today are more potent than ever, with 76 percent of dog and cat owners agreeing that “vet recommendation is important to me in the pet foods I buy,” and 71 percent agreeing that “the most important consideration when buying pet medications is medical advice from a veterinarian.” Nor is the influence of veterinarians limited to pet food and medications, with myriad brands of grooming products, supplements and even cat litter directly benefiting from veterinarians’ R&D input and direct or tacit blessing. Given these trends and statistics, it comes as little surprise that some of the pet industry’s biggest players are doubling down on all things veterinary, in some cases more or less betting the house.
The world’s largest pet food maker, Mars, has been on a veterinary acquisitions tear. In fall 2017, the company completed its $9.1 billion purchase of VCA, bringing its total number of animal hospitals to approximately 2,000. The VCA deal continues a string of veterinary acquisitions intended to diversify Mars’ pet care interests, including Pet Partners in 2016 and BluePearl in 2015. On Sept. 12, 2017, the day the VCA purchase closed, Pamela Mars-Wright, great-granddaughter of the American business magnate Franklin C. Mars, said Mars now counts 45,000 employees in pet care.
“We’re a pretty big company, and one-third of our people work on the veterinary side,” she told an industry gathering in Portland, Ore., reported by VIN News Service, Sept. 26, 2017. Mars is also building out its veterinary business internationally, having acquired U.K. veterinary specialist Linnaeus Group Limited and the AniCura European animal hospital network in June 2018.
Pulling out stops on the retail side is the second largest U.S. pet retailer, Petco. In April 2017, Petco acquired online veterinary consultation platform PetCoach, and in July 2018, Petco parlayed PetCoach into a new store concept offering “the highest quality suite of personalized pet services, products and experiences—all designed through a veterinary lens—to address total pet health and wellness.”
“Digital care” offered as part of the experience includes the ability to book appointments online, create custom pet profiles, consult with licensed veterinarians, order from a veterinarian-vetted selection of pet food and supplies, and access a library of pet-health-related content.
“The concept allows us to continue creating new, differentiated and personalized pet care experiences, all backed by our extensive veterinary expertise and support,” explained Brock Weatherup, Petco’s executive vice president of strategic innovation and digital experience, in a press release in July.
Working with Thrive Affordable Vet Care, Petco is also building new stores and retooling existing ones to include on-site animal hospitals offering a full suite of veterinary services, with the first dozen locations in Texas, California and Colorado. Through its Vetco unit, Petco has long offered on-site vaccination and wellness clinics, but via Thrive and PetCoach, the retailer is playing catch-up to PetSmart/Banfield.
Mars isn’t the only big pet product marketer moving into veterinary services, nor is Petco the only big pet product retailer doing so. Angling into the market from both directions are PetIQ, a leading manufacturer and distributor of OTC flea/tick medications and prescription pet medications, and Walmart, the world’s largest retailer. During the past few years, both companies have been expanding their involvement in pet medications, and on-site veterinary clinics appear to be a logical strategic next step. As of April 2018, PetIQ had opened its first three Walmart-based clinics in Oklahoma, with plans for 20 more in 2018, working toward a total build-out of more than 1,000 veterinary clinics in Walmart and other retail stores through 2023.
Looking ahead, the potentially billion-dollar question is whether Walmart, which has downplayed its relationship with VetIQ as “landlord-tenant,” will decide to compete in veterinary services more directly, which would also bolster the retailer’s position in branded and private-label pet medications.
When it comes to creating and selling pet products and services, nothing is more compelling than the promise of enhanced pet health, and pet-health-wise, veterinarians rule. Making it clear that they get this, a growing number of pet marketers and retailers—those mentioned here are but a few examples—are indelibly interweaving veterinary care into the core of their operations, and rightly so.
In more ways than one, health is wealth. And for pet market participants playing the long game, anything less might not do.
David Lummis is the lead pet-market analyst for Packaged Facts, a division of MarketResearch.com, and author of Packaged Facts’ U.S. Pet Market Outlook, 2018-2019—August 2018 Update (packagedfacts.com). (Data cited are from Packaged Facts’ Q1 2018 Survey of Pet Owners.)