《Deconstructing the Pet Economy 》Series 01： From US300bntoUS500bn: The Growth Logic of the Pet Economy Has Changed

It is no longer about more people owning pets — it is about spending more, and spending better, on each one.

《Deconstructing the Pet Economy》 is a research series authored by David Thomas, Director at FirstCapital Advisers, with research partner Wing Ho, Chief Administrative Officer at FirstCapital Advisers, applying a macro lens and data-driven analysis to systematically examine the structural transformation of the global pet industry.

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The global pet industry surpassed US500 billion by 2030 — cumulative growth of more than 45% over the five-year period (Bloomberg Intelligence, Pet Economy Report 2025).

A natural question follows: where is this growth coming from?

The answer is unexpected: it is no longer about "more people owning pets."

Take the United States, the world's largest pet consumer market. According to the American Pet Products Association's (APPA) 2026 State of the Industry Report, pet ownership has stabilised at 66% of households, with approximately 95 million homes owning a pet. That figure has plateaued.

Yet total industry expenditure continues to climb: US165 billion in 2026 (APPA).

Penetration has peaked, but spending continues to rise. This divergence reveals a critical shift in the growth engine of the pet economy — from volume expansion (more pet owners) to value deepening (more spent per pet).

Every Pet Is Increasingly Treated as Family

Behind this shift lies a fundamental redefinition of the role pets play within households — from functional animals to family members.

According to the 2026 China Pet Industry White Paper (Consumption Report) compiled by PetData, 58% of Chinese pet owners refer to their pets as "family members", and 29% view them as "close friends". Humanisation has become the norm: 65% of owners prepare tailored nutritional plans for their pets, nearly 40% plan trips with their pets, and 26% have arranged professional photo shoots or purchased holiday attire for them.

Bloomberg Intelligence analysts have identified "pet humanisation" as the primary driving force behind the industry's growth, noting that owners are increasingly prioritising health, wellness, professional care, medical services and insurance.

The commercial implication is significant: when consumers treat pets as family, their spending shifts from "buying feed" to "curating a life for a loved one." This means greater willingness to accept premium pricing, higher quality expectations, and stronger brand loyalty.

The Structural Migration of Growth: From Food to Supplies to Experiences

 Another dimension of the consumption upgrade is the shift in category weighting.

Of the US68.3 billion. But the fastest-growing categories are those moving from "eating well" to "living well". Veterinary care and product sales reached US34.4 billion, and other services — including boarding, grooming, insurance and training — amounted to US$14.3 billion (APPA).

Bloomberg Intelligence highlights the healthcare segment as one with the strongest long-term growth trajectory in the pet industry. Over the past five years, pet nutritional supplements have been among the category's brightest performers.

In China, a similar shift from functional to quality-driven consumption is underway. Smart pet devices, pet fashion, and pet-friendly commercial spaces are emerging at pace, with online sales of pet supplies recording significant year-on-year increases.

The pet economy's value chain is being reshaped. Brands capable of delivering integrated products that combine functionality, design appeal and emotional value stand to command greater pricing power and customer loyalty.

Resilience in the Face of Cycles

No investment assessment can ignore macro risk. One reason the pet economy has drawn sustained attention from capital markets is its demonstrated counter-cyclical characteristics.

A September 2025 research report from Huachuang Securities notes that the pet economy is, at its core, a deep fusion of the emotional economy and the real economy — and it is this emotional dimension that lends the sector its counter-cyclical properties.

Empirically, even under inflationary pressure, pet owners reduce core spending far less than they do on other discretionary categories. Bloomberg Intelligence reports that approximately 50% of US pet owners maintained their spending levels in 2025, with only 22% choosing to cut back. In the public markets, leading pet companies have performed accordingly — Guaibao Pet recorded compound annual growth rates of 27% in revenue and 54% in net profit between 2020 and 2024 (Huachuang Securities).

For investors focused on the consumer sector, this attribute may offer distinct portfolio value in an environment of heightened macro uncertainty.

In Summary

The fundamentals of the pet economy are undergoing a qualitative shift. The underlying growth logic has transitioned from "more people owning pets" to "more spent, and more thoughtfully spent, on each one." The forces driving this — pet humanisation, generational change, consumption upgrading — are long-cycle trends, not short-lived fads.

In the articles that follow, we will examine which sub-sectors stand to benefit most from these trends, and what types of brands are best positioned to emerge as long-term winners.

Next up: Cats Are "Winning" Against Dogs: A Consumer Shift Hiding in Plain Sight

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Data Sources (in order of appearance):

• Bloomberg Intelligence, Pet Economy Report 2025

• American Pet Products Association (APPA), 2026 State of the Industry Report

• PetData (派读宠物行业大数据平台), 2026 China Pet Industry White Paper (Consumption Report)

• Huachuang Securities, Pet Economy In-Depth Research Report, September 2025

Data as at: May 2026

Disclaimer

This article has been prepared by FirstCapital Advisers based on publicly available information for industry research and discussion purposes only. It does not constitute investment advice, an offer, or a solicitation. References to third-party data and views do not constitute an endorsement of their accuracy, completeness or timeliness. Investors should conduct their own independent due diligence and thoroughly assess all relevant risks before making any investment decision. FirstCapital Advisers and its affiliates accept no liability for any loss arising from reliance on this content.