Humans may not be acquiring pets at a pandemic-induced pace anymore, but they still are spending plenty on food, supplies, and services to take care of the furry members of their families.
Investors in public and private markets have their eyes on all that pet-care spending. Increasingly, consumers have gone beyond buying kibble to snapping up premium products and services that ensure their pets are living healthy, environmentally friendly lives. It’s a trend familiar to anyone who has followed the growth in eco-friendly wellness products and services for humans.
The shorthand for this phenomenon? The “humanisation of pets,” according to Milwaukee-based Baird.
“What that meant 10 years ago was you started to see the premiumisation of the quality of the diets and the emergence of grain-free brands and premium, cleaner-labeled food brands,” says Spencer DePree, a director in Baird’s global consumer and retail group. “That certainly is true today, but you’re starting to see that expand into other parts of the lifestyle of the pet.”
The entire pet economy is valued at about US$130 billion to US$140 billion, divided into four main categories: nutrition, products and supplies, healthcare, and services, according to Baird. Nutrition products snag most consumer dollars, but the so-called humanisation trend touches all of them.
Australia, Canada, and parts of Europe are leading the pet-market conversion to “non-traditional, more premium food and nutrition,” says Scott Ehlen, a director in Baird’s global consumer investment banking group. For the U.S., it’s a question of “how quickly, not if,” the trend will take hold, Ehlen says.
Penta spoke with DePree and Ehlen about what’s driving the growth in pet-related purchases and some of the companies on their radar screen.
Proactive vs. Reactive
One reason for the uptick in purchases of healthier pet products is consumers have realised they can proactively keep their pets happy and free from illness. The simplest step is to provide them with a diet that won’t lead to health problems in future years, and, as with humans, mix in nutritional supplements and treats with health benefits, such as dental care.
“That’s something you’ve seen in human wellness over the last five to seven years,” DePree says.
In pet food, that’s led companies to go beyond making grain-free kibble to producing fresh foods and to offering “toppers,” such as fish oils or freeze-dried raw meat. Companies are even developing foods that don’t rely on traditional beef and poultry proteins, such as Berkeley, Calif.-based Jiminy’s insect-based pet foods—a company backed by venture capital, according to private-markets data company PitchBook.
“Their value proposition is pretty impressive when you just look at the energy consumption that goes into producing a pound of beef,” DePree says.
As people spent more time at home with their pets during the pandemic, they also realized their furry companions have a lot of downtime. Humans that have returned to the office want to make sure their pets stay happy and active, so many are putting their dogs in daycare facilities with cameras that allow them to check in to see how their pup is doing.
“It’s not a kennel, it’s doggy daycare, where it’s analogous to taking your child to daycare,” Ehlen says.
There are a handful of franchisors backed by private equity in this sector including Dogtopia, which Ehlen says is one of the larger companies with at least 200 franchisees and more in the pipeline. An investment vehicle formed by the New York-based private-equity firm Red Barn Equity Partners with funding from institutions and family offices made a major investment in 2020 in the company, which offers daycare, boarding, and spa facilities, according to a news release.
Pet grooming is another area that’s prime for investment. Ehlen says he takes his own dog to a groomer who keeps track of appointments on a paper calendar. “It’s impossible to get a hold of her, impossible to schedule,” he says.
“A vast majority of the market continues to exist in that state in 2023,” Ehlen says. “You’re finally starting to see folks realise that this is a huge market, it’s a non-discretionary market, it’s going to be around forever. It’s just in desperate need of investment, of capital, of innovation.”
The ‘Pet’ Play in Food
The importance of pets to the economy is evident within the four major consumer products companies—Mars, Nestlé, Post Holdings, and General Mills. All include pet foods among their brands; Post, in fact, made a push into the business in February by purchasing Nature’s Way and Rachael Ray Nutrish, among other more standard pet food brands, from J.M. Smucker Co. for $1.2 billion.
For an investor interested in the growth of premium natural pet food, the only pure public-market play is Freshpet, based in Secaucus, N.J., DePree says.
While bigger companies have grabbed more market share, independent, private companies are “still the birthplace of new brands, new innovation, and that could be coming from either new companies or new product lines,” he says. “When the category validates itself or the scale hits, then you may see one of the bigger players jump in through an acquisition.”
Independent companies in the natural pet food space include the Farmer’s Dog, based in New York, which is backed by venture capital, according to Pitchbook. Denver-based Alphia, a pet food co-manufacturer that supplies other companies, was bought late last month by PAI Partners, a private-equity firm, from another PE firm, J.H. Whitney, according to a news release.
In March, the specialty pet food brand Natural Balance, announced it would merge with Canidae, which makes premium sustainable pet food, a news release said.
Before the stock market became more volatile last year, there was a “big queue of folks circling the wagons,” DePree says. Considering that the large consumer products companies are still trying to figure out how to grow this market, “over the next 18, 24 months, you’ll see some more stories become public.” For now, he says, “the demand for ways to play ‘pet’ outstrips the supply.”
The Internet-of-Things for Dogs
Pets aren’t exempt from humans’ obsession with tech, either. The latest pet-tech trends range from fitness trackers to food-monitoring devices that not only monitor how much and when your pet is eating, but also automatically order more food when you’re running low, DePree says.
Old-tech—such as electronic fences that keep dogs confined to a designated space—are being replaced by devices considered more humane and able to collect data on a pet’s behaviour, Ehlen says.
An example is Halo Collar, which uses wireless GPS and allows owners to set up zones to contain their pets wherever they are. The company, based in Woodcliff, N.J., and co-founded by dog psychologist Cesar Millan and tech innovator Ken Ehrman, was backed in May by Utah-based Decathlon Capital Partners, which provides revenue-based financing.
Most innovations in the pet economy so far have focused on dogs, but Ehlen and DePree say companies also have their sights on improving the lives of cats.
“If anyone is doing any innovation in cat, it’s alongside dog, but now you’re starting to see a more purpose-driven and specific sort of focus on the category,” DePress says. But he chides, “cats might be insulted at the humanisation concept—they probably hold themselves in a higher place.”
Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Couples find that lab-grown diamonds make it cheaper to get engaged or upgrade to a bigger ring. But there are rocky moments.
Wedding planner Sterling Boulet has some advice for brides-to-be regarding lab-grown diamonds, which cost a fraction of the natural ones.
“If you’re trying to get your man to propose, they’ll propose faster if you offer this as an option,” says Boulet, of Raleigh, N.C. Recently, she adds, a friend’s fiancé “thanked me the next three times I saw him” for telling him about the cheaper lab-made option.
Man-made diamonds are catching on, despite some lingering stigma. This year was the first time that sales of lab-made and natural mined loose diamonds, primarily used as center stones in engagement rings, were split evenly, according to data from Tenoris, a jewellery and diamond trend-analytics company.
The rise of lab-made stones, however, is bringing up quirks alongside the perks. Now that blingier engagement rings—above two or three carats—are more affordable, more people are dealing with the peculiarities of wearing rather large rocks.

Esther Hare, a 5-foot-11-inch former triathlete, sought out a 4.5-carat lab-made oval-shaped diamond to fit her larger hands as a part of her vow renewal in Hawaii last year. It was a far cry from the half-carat ring her husband proposed with more than 25 years ago and the 1.5-carat upgrade they purchased 10 years ago. Hare, 50, who lives in San Jose, Calif., and works in high tech, chose a $40,000 lab-made diamond because “it’s nuts” to have to spend $100,000 on a natural stone. “It had to be big—that was my vision,” she says.
But the size of the ring has made it less practical at times. She doesn’t wear it for athletic training and swaps in her wedding band instead. And she is careful to leave it at home when traveling. “A lot of times I won’t take it on vacation because it’s just a monster,” she says.
The average retail price for a one-carat lab-made loose diamond decreased to $1,426 this year from $3,039 in 2020, according to the Tenoris data. Similar-sized loose natural diamonds cost $5,426 this year, compared with $4,943 in 2020.
Lab-made diamonds have essentially the same chemical makeup as natural ones, and look the same, unless viewed through sophisticated equipment that gauges the characteristics of emitted light.
At Ritani, an online jewellery retailer, lab-made diamond sales make up about 70% of the diamonds sold, up from roughly 30% two years ago, says Juliet Gomes, head of customer service at the company, based in White Plains, N.Y.
Ritani sometimes records videos of the lab-diamonds pinging when exposed to a “diamond tester,” a tool that judges authenticity, to show customers that the man-made rocks behave the same as natural ones. “We definitely have some deep conversations with them,” Gomes says.
Not all gem dealers are rolling with these stones.
Philadelphia jeweller Steven Singer only stocks the natural stuff in his store and is planning a February campaign to give about 1,000 one-carat lab-made diamonds away free to prove they are “worthless.” Anyone can sign up online and get one in the mail; even shipping is free. “I’m not selling Frankensteins that were built in a lab,” Singer says.
Some brides are turned off by the larger bling now allowed by the lower prices.When her now-husband proposed with a two-carat lab-grown engagement ring, Tiffany Buchert, 40, was excited about the prospect of marriage—but not about the size of the diamond, which she says struck her as “costume jewellery-ish.”
“I said yes in the moment, of course, I didn’t want it to be weird,” says the physician assistant from West Chester, Pa.
But within weeks, she says, she fessed up, telling her fiancé: “I think I hate this ring.”
The couple returned it and then bought a one-carat natural diamond for more than double the price.

When Boulet, the wedding planner in Raleigh, got engaged herself, she was over the moon when her fiancé proposed with a 2.3 carat lab-made diamond ring. “It’s very shiny, we were almost worried it was too shiny and was going to look fake,” she says.
It doesn’t, which presents another issue—looking like someone who really shelled out for jewellery. Boulet will occasionally volunteer that her diamond ring came from a lab.
“I don’t want people to think I’m putting on airs, or trying to be flashier than I am,” she says.
For Daniel Teoh, a 36-year-old software engineer outside of Detroit, buying a cheaper lab-made diamond for his fiancée meant extra room in his $30,000 ring budget.
Instead of a bigger ring, he got her something they could both enjoy. During a walk while on an annual ski trip to South Lake Tahoe, Calif., Teoh popped the question and handed his now-wife a handmade wooden box that included a 2.5-carat lab-made diamond ring—and a car key.
She put on the ring, celebrated with both of their sisters and a friend, who was the unofficial photographer of the happy event, and then they drove back to the house. There, she saw a 1965 Mustang GT coupe in Wimbledon white with red stripes and a bow on top.
Looking back, Teoh says, it was still the diamond that made the big first impression.
“It wasn’t until like 15 minutes later she was like ‘so, what’s with this key?’” he adds.
Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’