Like looking into a furry crystal ball

The global pet sector is set to boom by 2030 – and if we peer carefully beneath its furry surface, we are being given a few clues about what the family photos of the future will look like.

Not too long ago, someone told me a joke about the so-called “hierarchy of Millennial dependents”. It goes like this: for Millenials, plants are like pets, pets are like babies, and babies are like those rare exotic animals that some people keep that require them to spend vast amounts of money and basically reconfigure their entire lifestyle. I laughed at the joke, which struck me as a wry assessment of my generation’s spending preferences. But then I went home and thought about my peer group, and how many of them actually have children versus how many have animals… and the joke became slightly less funny.

Case study: my friend Jane

I have a friend named Jane* who is a single parent to a busy two year old. Jane is 32 years old and has a tertiary qualification from a respected South African university. She works as an IT technician for a company with an international footprint and earns well for a woman of her age. Her car is paid off and she is currently living in a rental property.

Jane spends a lot of her expendable income on her two year old, who requires a special diet and regular specialist checkups due to digestive issues. Jane pays out of pocket for these specialist checkups, as they are not covered by the medical aid plan that she chose. Although Jane works remotely, she still pays for her child to attend a daycare five days a week. On weekends, she can usually be found at a birthday party for one of her child’s daycare friends. These parties always feature custom-made cakes and party packs, as well as themed snacks and decor.

You may never have guessed it from the description that I just gave you, but the two year old in Jane’s life is actually a Dalmatian named Charlie. Not the grandchild that Jane’s mother envisioned, no doubt, but since Jane has made the decision to not have any (human) children, this is her reality.

For someone like Jane’s mom, who was married and had three children by the time she was in her mid-twenties, I’m sure this is a confusing divergence from what she believes to be the norm. Yet I’m seeing this same story unfold in the lives of about two-thirds of my friends and colleagues. As someone with a toddler, I am more often than not the exception among my peers.

The dog days are coming

This is and will always be an opinion column, informed by my views and personal experiences. However, I do think a closer look at projections from the global pet industry supports what I’ve been seeing on the ground.

According to the Pet Economy report from Bloomberg Intelligence, the pet industry is on a great growth trajectory, projected to increase from $320 billion today to nearly $500 billion by 2030. What’s driving this growth? A combination of more pets worldwide and the trend of treating pets like family, leading to higher-quality food and services.

The US will remain the biggest pet market, with sales expected to reach around $200 billion by the end of the decade. A big factor here is the increase in spending on pet healthcare – things like medical aid for pets (pedical aid?), vet visits, diagnostics, and medications. There’s also a growing need for senior pet care, which can get pricey. With pets living longer, more money is being spent on advanced treatments like monoclonal antibodies, which are used to treat arthritis in animals. Driven by more and more advanced medications, the pet pharmaceutical market could hit $25 billion by 2030. Plus, as preventive care becomes more common, diagnostics could become a $30 billion global market.

Europe has the biggest growth potential in this space, with a market valued at $12 billion but only an 8% penetration rate – talk about a growth runway! Pet ownership in Europe has already increased by over 50% since 2020 in European countries such as the United Kingdom, Germany and France.

So, is this a great time to invest in pet-related stocks? I’ll suggest it to the Ghost for a Magic Markets research piece at some point. But between the lines of the pet industry growth story, there’s a second story unfolding – and one we should probably be paying attention to.

So people love their pets. So what?

The issue is not that people love their pets. It’s that people love their pets so much that they aren’t creating more people.

Replacement fertility is the number of children women need to have, on average, to keep the population steady, assuming mortality rates don’t change. If this level is maintained long enough, each generation will essentially replace itself. As of 2023, that magic number is 2.1 children per woman.

The problem becomes clear in the data: industrialised countries are all falling below replacement-level fertility. In the US, Census data shows that the percentage of women aged 30 to 44 (aka Millennials) who have never had children is at an all-time high since 1960, contributing to a fertility rate of just 1.8 children per woman. Remember, we’re talking about averages here – which means that the US fertility rate is that low despite the fact that some midwestern families (you know you’ve seen them on TikTok) have eight children or more.

Canada is even lower, with only 1.3 children per woman in 2022, according to Statistics Canada. Europe is also seeing record lows – 2022 had the fewest babies born since 1960. The UK’s fertility rate is 1.6, Germany’s is 1.4, and Italy’s is just 1.2. Asia isn’t faring much better. Even after lifting its one-child policy, China reports just 1.2 children per woman. Japan stands at 1.3, and Korea has hit a striking low of 0.8 children per woman.

In South Africa, our national fertility rate is currently 2.29 children per woman. While this may seem like a healthy number when compared to that magic 2.1 that we discussed before, a zoomed-out view of the stats shows that this figure is down from a high of 2.48 in 2019. So we are also declining – just very slowly.

Why the baby blues?

It’s simple, really – having children has become extraordinarily expensive. The more developed a country is, the more expensive it becomes to live there, which explains why developed countries are the ones feeling the majority of the baby blues. The trend is echoed beautifully in the numbers – Niger, one of the poorest countries in the world, has the world’s highest fertility rate, currently sitting at almost 7 children per woman.

Millennials, who are currently in their baby-making prime, are feeling the brunt of the economic pressure. On the one hand, there’s the crisis of “delayed adulthood”, brought on by the fact that this generation has been too broke to meet traditional milestones like graduating from tertiary education, getting married or buying a house. Those who have managed it have done so nearly a decade older than their parents’ generation.

On the other hand, many of these Millennials are faced with the prospect of looking after their Baby Boomer parents, a retiring generation that is not only living longer than anyone expected but doing so on precious little savings. In 2019, the World Economic Forum estimated that retirees from six countries with advanced economies, such as the US and Europe, will outlive their retirement savings by a full decade. I recommend that you don’t do yourself the disservice of trying to imagine how that same story will play out in South Africa, which has historically had a terrible savings culture.

In the face of these bleak statistics, it makes sense that people like my friend Jane are opting for pet rearing rather than child rearing. And while Jane does this to a high standard and therefore pays a premium for everything her dog needs, from food to daycare to dog-safe birthday cakes, she is probably still only spending a quarter on her dog of what she would spend on a child.

On the flipside, I hope Jane is taking those rands that she’s saving through pet ownership and investing them smartly. Say what you will about dogs being good companions – I’ve yet to hear of one that supported its parent in retirement.

For more on this topic and how it affects consumer trends, I wrote on what tiny pineapples can tell us about our future back in May 2024. It was a popular article that you’ll find here.

*not her real name

About the author: Dominique Olivier

Dominique Olivier is the founder of human.writer, where she uses her love of storytelling and ideation to help brands solve problems.

She is a weekly columnist in Ghost Mail and collaborates with The Finance Ghost on Ghost Mail Weekender, a Sunday publication designed to help you be more interesting.

Dominique can be reached on LinkedIn here.