Dog spas. DNA tests for cats. Guinea pig Halloween costumes. Pet dinners that you might be tempted to take a bite of yourself.
We’re living in the golden age of pet care, and the industry shows no signs of heeling — globally, the market is projected to balloon to $500B by 2030, according to Bloomberg Intelligence.
For dealmakers looking to fetch high returns, the pet care industry holds a wealth of opportunities across segments including supplies, veterinary services, training, grooming, insurance, and daycare and boarding.
In this PE Playbook, the Grata team has put together the need-to-know trends for investors considering making moves in the pet care market, including:
- How the industry is fragmented
- Where the most M&A activity is happening
- Which companies are attracting VC attention
The market map above is not intended to be an exhaustive representation of companies in the space.
Companies that provide services that fall into multiple segments are categorized in this report by their primary offering.
Industry Overview
Market Distribution
Geography
Source: Grata
Pet care is booming in the US in general, but California, Texas, and Florida are the top three states for pet care companies.
Ownership
Source: Grata
The pet care industry is led by some heavy hitters, with Petsmart, Petco, and Chewy taking the top three spots.
But even with these big names in the mix, pet care is crawling with middle market opportunities. Privately owned companies account for just under 75% of industry share, and 54% of them are bootstrapped.
The high percentage of independently owned companies in these segments also represent opportunities for investors looking to establish a foothold in the pet care industry. See more details in the following section.
Segment Distribution
Source: Grata
This report focuses on the following segments of the pet care industry. Grata users can see a curated list of some of the companies used to create each segment by clicking the links below.
- Pet Supplies: These companies include pet supply stores as well as retailers and manufacturers of products like pet food and pet accessories.
- Veterinary Care: Companies in this segment provide routine and emergency care for pets.
- Training: The companies in this segment offer dog training services and classes.
- Grooming: Companies in this market primarily focus on grooming services for pets. Some also offer training and boarding services.
- Pet Insurance: These companies allow pet owners to purchase insurance policies to cover partial costs for their pets’ routine vet visits, illness care, and emergency care.
- Daycare & Boarding: The companies in this sector offer dog daycare, dog walking, petsitting, and pet boarding services.
Public Comparables
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Source: Grata
There has never been a better time to get into pet care. Sixty-six percent of US households now own a pet — an all-time high. And pet owners, particularly millennials, are more willing to spend money on their dog or cat’s wellbeing than ever before. This is driving business to companies across the industry.
It’s important to note here public companies account for 5% or less of the training, grooming, and daycare and boarding segments, which is significantly smaller than the other markets. For example, public companies account for 44% of the pet supplies segment and 23% of veterinary services. This means that their multiples are heavily skewed by a few large corporations — mainly Rover Group, Wag! Group, and Mad Paws.
Meanwhile, veterinary services and daycare and boarding tie for the highest EV/Revenue multiples. A rise in pet ownership since the pandemic has driven strong demand for these services over the last few years. The vet industry in particular has proven to be mostly recession-proof — the number of vet clinics in the US actually grew by over 8% in 2020.
With 28.9% of US households belonging to single adults with no children, and with many jobs requiring at least a partial return to office, demand for doggy daycare services are at an all-time high. And with people generally willing to pay more to fund their furry friend’s best life, even those who work fully remote are sending their dogs to daycare centers on some days to socialize. As a result, the space has seen an average annual revenue growth rate of 26.3%.
Demand for pet insurance is also on the rise. Pets will always need vet care, and those bills add up quickly. A single visit to an emergency vet can cost over $1,000. As a result, more pet owners are turning to pet insurance to help ease the financial burden. The US pet insurance market is currently estimated at around $3B, and it’s expected to grow at a 17% CAGR through 2030, according to Grand View Research.
Private Comparables
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Source: Grata
In the private sector, pet supplies companies see the most average revenue by far. Notably, this market includes PetSmart, whose annual revenue is estimated to be $18.6B. But even without the outlier, private pet supplies companies top the list. The sector’s median revenue is $29.6M, the highest of the segments analyzed here.
Pet insurance has the second-highest revenue. Policy costs vary depending on location, an owner’s number and type of pets, the specific pet breed, and age. Some companies also charge higher premiums for pets with pre-existing conditions.
Ultimately, customers pay average monthly fees ranging from $22 to $97. Typically, pet owners take their pets to the vet once a year for routine checkups and vaccinations, costing them around $186 on average. This means that pet insurance companies receive a steady monthly income and likely only have to cover a couple of claims per customer each year.
At the opposite end of the spectrum, daycare and boarding facilities see the least amount of revenue. These companies tend to be small operations, with around 15 employees on average. Revenue can vary widely based on the size and location of the facility as well as the range of services offered. For example, pet boarding companies located in urban areas tend to have a bigger customer pool with more disposable income, which means they can charge more. Companies in this space often also offer grooming or training services to attract more customers and bring in additional revenue.
The private sector data further supports the investment opportunities in the training, grooming, and daycare and boarding markets. These areas are seeing healthy revenue, steady growth, and little to no capital raised.
VC & Growth Comparables
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Source: Grata
Startups across the pet care industry are increasingly integrating tech into their offerings, which is gaining traction with VC and growth investors.
The largest investment to a pet care company in the last year was a whopping $354M growth round to Butternut Box, a UK-based startup that sells fresh and frozen meals for dogs. Customers build their boxes online and sign up for monthly subscriptions. Butternut Box is reportedly the largest fresh dog food brand in Europe, with customers in the UK, Ireland, the Netherlands, Belgium, and Poland.
Bond Vet also raised a sizable growth round last year led by Warburg Pincus. Bond Vet has reportedly provided 400,000 visits across its 40+ US-based clinics since it launched in 2019. The company offers pre-scheduled appointments, walk-ins, and telehealth services. Its clinics are notoriously modern in design, aiming to create a calm, comfortable atmosphere for pet owners and their four-legged friends.
Pet Care Acquisitions
Top Roll-Ups
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Source: Grata
Our data suggests that pet care companies are like baked treats: you can’t have just one.
The pet care industry has seen a notable amount of roll-up activity from PE-backed companies in the last several years, primarily focused on the veterinary services segment.
Large veterinary groups are increasingly buying up smaller practices to expand their presence and attract a larger pool of customers, which in turn enable them to lower their service prices. This is a big part of the reason why vet services companies are seeing higher valuations.
Most Active Strategic Buyers in the Last Year
The companies shown in the chart below have emerged as the most active buyers in the pet care space in the 12 months:
Source: Grata
Southern Veterinary Partners, CVS Group, and Independent Vetcare have focused their acquisition efforts on small pet practices while Altano Gruppe has purchased four companies that specialize in equine care.
PetO made four acquisitions in May: three pet supplies stores and one veterinary clinic.
Meanwhile, Pet Resort Hospitality Group has concentrated exclusively on companies whose main offering is pet grooming.
Notable Deals
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Source: Grata
Pet Supplies: Post Holdings Acquires Perfection Pet Food
In December, Post Holdings completed its acquisition of Perfection Pet Food, which manufactures and packages private label and co-manufactured pet food and treats, for $235M.
Post Holdings reports that the company will be gaining two manufacturing facilities based in Visalia, California, boosting Post’s manufacturing capabilities and giving it an entry into the private label space.
If you’re an investor interested in companies like Perfection Pet Food, try these:
Veterinary Services: Southern Veterinary Partners Acquires Pewee Valley Veterinary Center
Southern Veterinary Partners went on a buying spree in 2023, snapping up 12 animal hospitals and clinics in total. The organization now has a presence in 28 states.
PeWee Valley Veterinary Center provides routine and emergency services in Kentucky.
If you’re an investor interested in companies like PeWee Valley Veterinary Center, try these:
Training & Grooming: Pet Resort Hospitality Group Acquires Playtime Pet Resort
Pet Resort Hospitality Group has also been on an acquisition tear. The company bought five pet resort brands in January, including Texas-based Playtime Pet Resort and Meadowlake Pet Resort & Training Center.
Both Playtime Pet Resort and Meadowlake offer training, grooming, and boarding services.
If you’re an investor interested in companies like Playtime Pet Resort and Meadowlake Pet Resort & Training Center, try these:
Insurance: JAB Holding Company Acquires Embrace Pet Insurance
In November, JAB Holding Company announced its purchase of Embrace Pet Insurance, whose pet policies are underwritten by Munich Re company American Modern.
JAB has accumulated 14 pet care industry brands since 2019, establishing its presence in the space in North America and Europe.
If you’re an investor interested in companies like Embrace Pet Insurance, try these:
Daycare & Boarding: Propelled Brands Acquires Camp Bow Wow
Propelled Brands bought dog daycare and boarding franchise Camp Bow Wow in February for an undisclosed amount.
Propelled cited Camp Bow Wow’s 200+ locations across 40 US states and Canada as the primary reason for the acquisition. The deal brings Propelled Brands’ combined portfolio to more than 1,300 locations.
If you’re an investor interested in companies like Camp Bow Wow, try these:
Get the Most Out of the Playbook
If you’re an investor interested in making moves in the cannabis space, Grata can help you put the insights in this article into action.
From in-depth market research to sourcing to pipeline management and relationship nurturing, Grata’s end-to-end dealmaking platform streamlines your workflows so that you can close more deals.
Schedule a demo today to get started.
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