Senior consumer choices. These are the sectors that are benefiting from demographic change.
Demographic change is progressing, prompting companies to focus on retirees as a consumer group. The significant purchasing power of seniors, combined with their ample leisure time, is a positive factor for many sectors – including the pet industry. As a result, it offers attractive investment opportunities for investors.
Purchasing power of seniors is rising
Our society is aging. The number of seniors worldwide will double to over two billion by 2050. Consequently, the demands and needs of this consumer group are becoming increasingly important. This is also evident in the markets. In many countries, seniors are the fastest growing age group in terms of spending. According to Euromonitor, private spending by retirees will rise to USD 15 billion by 2020. This dynamism presents lucrative investment opportunities which Credit Suisse has brought together in the "Silver Economy" Supertrend.
Consumer companies benefit from demographic change
The leisure and tourism sectors will be the main beneficiaries of demographic change because seniors enjoy a high level of purchasing power and have plenty of leisure time. One prominent example is the cruise industry in which demand has risen sharply in recent years.
Manufacturers of personal care and beauty products as well as home automation systems are also expected to see increased sales thanks to retirees. A significant part of private spending by seniors will also flow into medical appliances and devices, not least because health insurers rarely cover the full cost of such items.
The pet industry is booming thanks to spending by retirees
Whether it's dogs, cats or budgerigars – there are now more households with pets than with children. According to a study carried out in 22 countries by market research institute GfK, almost 60% of people share their living space with a pet. Seniors contribute significantly to this trend. In the United States, for example, 32% of baby boomers have a pet. Among the population as a whole, pet owners account for just 23%. This makes the pet industry an attractive market segment. Average annual spending on a dog is about USD 1,500. For a cat, the figure is just under USD 1,000.
Growth in the market for premium dog and cat food is particularly strong. Pet owners effectively treat their pets as if they were family members – only the best is good enough. This behavior is referred to as "pet parenting" and leads to high profits for the producers of premium pet foods. The American Pet Product Association and the European Pet Food Industry Federation estimate that the premium pet food market is worth USD 50 billion.
Pet product industry continues to offer upside potential
From a historical perspective, the market for pet products is growing rapidly. Innovations – such as health insurance for pets or self-cleaning cat toilets – are continually expanding the product range. This is good news for both consumers and investors because, according to the experts at Credit Suisse, the uptrend in this market segment offers attractive investment opportunities.