Pet economy 2026: Spending is growing, but investing in it remains difficult
21 OCT, 2026
With estimates pointing to a global market worth $500 billion by 2030 (Bloomberg Intelligence, 2023), the pet economy was presented as one of the decade’s megatrends.
To be fair, spending on pets is worth $158 billion in the United States, Europe’s pet food market alone is worth €29.4 billion, and both are still growing. But in 2026, the picture for investors is more nuanced: growth is slowing, the financial results of publicly traded companies are diverging, and there are very few ways for European investors to gain exposure to the theme. It is a case that deserves the attention of fund selectors.
Demand holds up, but is slowing
In the United States, spending on pets reached $158 billion in 2025 (+3.7%), and the American Pet Products Association (APPA) estimates it will reach $165 billion in 2026. However, about two percentage points of the expected growth are due to inflation. And 22% of pet owners say they spent less in 2025.
In Europe, the latest FEDIAF Facts & Figures report (published in June 2026, based on 2024 data) puts pet food sales at €29.4 billion. Value grew by around 4%, but volume by only around 1%: as in the United States, prices and premiumisation are doing most of the work. Some 140 million European households, or 49% of the total, own at least one pet, and cats (111 million) outnumber dogs (91 million). Wet formats account for 60% of the value of the cat food market.
A comparison with the pandemic years makes the slowdown clear. During lockdowns, households spent more time at home and spending on pets accelerated: in 2021, the U.S. market grew by 13.5% to $123.6 billion, more than double the +6% that APPA itself had forecast. Today, the pace is about a quarter of that. The extraordinary momentum of those years has faded.
From spending to financial results: a divided picture
Second-quarter 2026 results show that growth is not benefiting all segments equally.
| Segment | Performance (Q2 2026) | Why |
|---|---|---|
| Veterinary medicines for companion animals | Revenue down by up to 6%, with 2026 forecasts revised downward | Fewer clinic visits and more price-conscious owners |
| Veterinary diagnostics | Growth of around 10% and forecasts raised | Higher prices and more tests per visit offset the decline in visits |
| Premium fresh food | Growth of around 15% and forecasts raised | Strong demand for high-end products |
| Specialized e-commerce | Growth of around 7% | More than 80% of sales come from recurring subscriptions |
| Food from major groups | Organic growth of around 3% (first half) | Modest volumes, driven by wet cat food |
Source: RankiaPro analysis of press releases from Zoetis, IDEXX, Freshpet, Chewy, and Nestlé Purina (August and September 2026).
Segments linked to recurring consumption, prevention, and the high-end market are holding up. High-priced medicines and spending that owners can postpone are struggling.
Tools for investing in animal welfare: a shrinking universe
For European investors, the dedicated offering is minimal:
| Instrument | Type | Assets |
|---|---|---|
| Allianz Pet and Animal Wellbeing | UCITS fund | 82.4 million euros |
| ProShares Pet Care ETF (PAWZ) | U.S. ETF | Approximately $31 million |
| Rize Pet Care UCITS ETF | UCITS ETF | Closed in December 2023 ($2.5 million at closure) |
Investment strategy
The Allianz fund is currently the only UCITS fund dedicated to the pet economy available to European investors.
The strategy, managed by Oleksandr Pidlubnyy (July 2022) and Nezhla Mehmed (April 2024), invests primarily in global equities of companies involved in animal welfare and pet products and services. Under the Sustainability Key Performance Indicator Strategy (Absolute Threshold), the fund promotes environmental and social characteristics, with at least 20% of its investments being sustainable and aligned with the United Nations Sustainable Development Goals (SDGs) and the European taxonomy. It also applies exclusion criteria and avoids issuers with negative impacts on environmental or social objectives.
Its approach is divided into three main areas:
- Animal health: companies focused on medicines, diagnostics, and vaccines.
- Consumer products and services: includes food, equipment, insurance, and specialized retail.
- Technology and sustainability: digital veterinary solutions and sustainable alternatives for animal production stand out.
Top portfolio holdings
According to Allianz GI data (as of September 30, 2025), the fund's five largest holdings include leading companies in the veterinary and specialized consumer sectors:
ProShares Pet Care ETF (PAWZ)
The closest alternative is the ProShares Pet Care ETF (PAWZ), listed in the United States since November 2018. It tracks the FactSet Pet Care Index, holds 29 securities and has an annual expense ratio of 0.50%. As of 30/09/2026, it is down 15.6% over one year and has returned an average of 2.6% per year since launch, in US dollars (ProShares data). It is not a UCITS fund and no KID appears to be available: for this reason, it cannot be offered to European retail clients.
Europe did have a passive option: the Rize Pet Care UCITS ETF, launched in 2022. It never gathered meaningful assets and was closed in December 2023, when it held just $2.5 million.
What the pet economy teaches us about thematic investing
The case goes beyond the sector: a real trend has translated neither into good returns nor into products capable of attracting assets. This raises four useful questions to ask about any thematic investment proposal.
- Growth in a theme is not the investor’s return. Those who invested in 2021 bought expectations that were already priced in: entry point and valuations matter as much as the trend.
- A narrow universe means concentration. Four of PAWZ’s top five holdings are also among the top ten holdings of the Allianz fund. A forecast cut by just one large group affects both.
- The fund’s size is a risk in its own right. Below €100 million, mergers and closures become possibilities to consider. The closure of the Rize Pet Care UCITS ETF in 2023 points in this direction.
- Stock selection matters within the theme. In 2026, some segments are growing at double-digit rates, while others are contracting. This supports the case for active management, provided its results can be verified in the figures.
