Episode 19: Creature Comforts – Germany’s red-hot house pet market

Food, accessories, services, tech gadgets - the house pet market is huge and diverse. The number of pets in Germany has been growing for years, and so has the amount Germans are willing spend on the welfare of their animal loved ones. And the outlook for the future is top dog! So what are the particulars of Germans’ relationships with their pets? We talk to a Swedish pet insurance company that has recently expanded to Germany. And we ask two members of Germany‘s biggest pet association for an overview of a doggone great market.
 

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Our Guests

Nathalie Rosen

Natalie Rosen is country manager for Germany at Swedish company Lassie, a preventative pet insurance provider that entered the German market in 2023.

 

Antje Schreiber

Dr. Rowena

Antje Schreiber and Rowena Arzt work for Germany’s oldest and biggest pet association, the Zentralverband Zoologischer Fachbetriebe, ZZF. It represents the professional, economic and socio-political interests of the German pet industry and organizes the world's leading trade fair Interzoo. Arzt is responsible for the exhibition department as well as a subsidiary that helping companies in the pet business internationalize their business. Schreiber is head of communications.
 

Transcript of this episode

[Dogs barking]

Presenter: 

Down, boy, down! Roughly 85 million people live in Germany, so how many pets do you think they have? If you guessed 34.3 million, you’re right. And that’s not counting fish or terrarium animals. Germans love dogs, but the most popular pets are actually…

[Dogs barking, cats whining]

Presenter:

…cats. 15.7 million felines live in Germany. Every fourth household has one. Hello and welcome to “Into Germany." The German business podcast brought to you by Germany Trade & Invest, GTAI, the German government’s international business promotion agency. I’m Kelly O’Brian!

Why the talk about man - and woman's - best friends? Because it’s big business. World-wide turnover in the pet sector is growing by more than 5 percent a year. And Germany has a huge market for producers of pet supplies: Food, accessories, services and gadgets, supporting owners in their daily pet care.

Rowena Arzt, Zentralverband Zoologischer Fachbetriebe, ZZF:

Germans love pets. We can really say this. In about 45% of all German households, we have at least one pet. So it's a very strong bond between pets and Germans.

Antje Schreiber, Zentralverband Zoologischer Fachbetriebe, ZZF:

In fact, we had a tense economic situation last year. I mean the increased cost of living and because of the higher inflation. But despite that, German pet owners were spending quite a bit of money for the care and health of their pets, and they spent more than €7 billion. In terms of turnover, Germany is directly behind the UK. But ahead of France, Italy, Spain and other European countries. So it's a large market.

Presenter:

That was Rowena Arzt and Antje Schreiber from Germany’s biggest and oldest pet association. The Zentralverband Zoologischer Fachbetriebe, short ZZF, was founded in 1947 to represent the professional, economic and socio-political interests of the German pet industry. It also organizes the biennial Interzoo – the world's leading trade fair for the international pet industry and an important entry point for international companies seeking to benefit from the German market. 

We’ll hear more about that later. But NOW let’s check out the story of a company that has expanded to Germany to profit from this booming sector in Europe’s biggest economy. Swedish company Lassie came to Germany in 2023. The service they offer might not be the first thing that comes to your mind when thinking about the pet industry, but it’s a rapidly growing niche. Preventative pet insurance. Nathalie Rosen is Lassie’s country manager for Germany.

So Nathalie, Germany was the first country Lassie expanded to. But before we discuss this in detail, could you tell us a bit about your business model?

Nathalie Rosen, German country manager, Lassie:

Lassie is a digital pet insurance for cats and dogs that was founded in Sweden, in Stockholm and we name ourselves the first preventative pet insurance because we want to take pet insurance with a twist. Generally, pet insurances cover the cost in an insured event. So let's say the pet is sick and they go to the vet that those costs are covered. But we think this is pretty reactive and we want to be proactive and support that the visits of the vet can be prevented from the beginning. That means we take a proactive approach and we want to support customers or as we say, pet parents from day one when they sign up with Lassie to playfully transfer knowledge and tips and tricks how to best take care of their dog and cat to prevent avoidable illnesses and injuries. And this is a concept that we haven't seen in the pet insurance world at all, but that we know from human health insurance where, for example, sports get subsidized, or let's say you walk 10,000 steps a day, that you get x euro rebate after you have fulfilled the program. And we are offering with our app something similar. You can playfully consume courses and quizzes. You can collect points that you can redeem as a rebate on your insurance premium every year. We kind of incentivize preventative behavior because we are convinced that pets need prevention similarly as we humans do. But of course, we also offer strong insurance coverage in the event of illnesses or when we talk about liability insurance. If a dog creates a damage to a third party. And in that context, in Germany, we offer a pure surgery insurance for health insurance as well as dog liability insurance. 

Presenter:

We already heard in the beginning that the Germans are a pet loving nation. 

Nathalie Rosen, German country manager, Lassie:

If we think back, many people got a pet during the Corona times. People work from home and the bond between cats and dogs and their owners have become even stronger. Pets are full family members, and you want to be sure that if something happens, you can fully take care of your pet and keep it healthy. So, cats and dogs are full family members and you want to be sure whatever it is, whether it's pet supplies or, as I said, health insurance. You want that they have the best treatment possible. And I would say we can kind of say this is also humanization of pets that is driving increased expanse on pets as well. 

Presenter:

What’s the legal situation in Germany? Do pets have to be insured?

Nathalie Rosen, German country manager, Lassie:

We can particularly talk about dogs here. In Germany, dog owners are liable with all their current and future assets for claims that result from a damage the own dog caused to a third party. And this even if I acted in a correct legal way. Let's say my dog has been on a leash and therefore it depends on the federal states, whether it's recommended or even mandatory to have a dog liability for all breeds. And also if we look at important stakeholders, whether it's vets or for example, shelters, the experience that we have or make is that they do recommend having a pet insurance as well.

Presenter:

When I hear that, I’m not surprised that Lassie chose Germany for the start of its international expansion. 

Nathalie Rosen, German country manager, Lassie:

We definitely see a huge potential in the German market. There are 26 million cats and dogs and there is a low penetration when it comes to pet insurance. So numbers vary, but let's say approximately 20% of those pets are insured. So there is a high potential of uninsured pets. And also we noticed a frustration when it comes to analog processes that are still existing in the insurance industry. And here we felt the, on the one hand digital but also preventative model of Lassie, is filling a gap.

Presenter:

How did you prepare for the market launch?

Nathalie Rosen, German country manager, Lassie:

First of all, we have a great blueprint from Lassie in Sweden, because Sweden is one of the most mature markets when it comes to pet insurance. But of course, we need to deeply understand the German market, the customers and the competition and see where we need to adapt the product for the launch and along the way. And one key thing was to build upon the experience that we have in Sweden, also with the Swedish team, but also to have a local team on the ground, particularly customer facing roles, customer service, claims handling for instance. And to learn what is interesting to the customer? How do they want to communicate with us? How do we need to tweak our website, our products, etc. And that has been key to us as a startup to act really fast taking on this feedback, iterating on the points I've mentioned and optimizing our product, web app and communication according to the German customer’s needs.

Presenter: 

Did you get any help to better understand the German customer’s needs and the particularities of the local market?

Nathalie Rosen, German country manager, Lassie:

After we decided to launch in Germany, the Lassie founders participated in the Access Germany Program that took physically place in Berlin, which is a program intended to help Swedish companies to enter the German market. It was the 2022 edition and it was arranged between Germany Trade and Invest and the Swedish Chamber of Commerce.This program was particularly helpful to get a first overview of how does the German customer thinks, what are insights on German customers and how do they differ from maybe the Swedish customer? How to do PR in Germany? What are sales do's and don'ts? How about digitalization in Germany, and what are learnings from going to market in Germany? And of course also legal basics, for example when it comes to hiring. So it was really helpful to get that overview right on the start.

Presenter:

You’re now in your second year on the German market. How would you sum up your experience so far?

Nathalie Rosen, German country manager, Lassie:

Right now we count over 85,000 customers. So, yeah, we can say that this is very successful in both markets. And I would say the success recipe was, as I mentioned, taking a successful blueprint from the Swedish market. Learning from the customers, adapting quick to the German market and then really challenging the insurance industry. Whether it's the way we communicate with customers more in the Swedish way using the „Du“ because pets are a very emotional topic and we want to take out the complexity of the whole insurance world, being super quick in communicating with our customers and next to offering of course a great product, as I mentioned before, with the preventative approach. And we also see that not only in the growth numbers, but also in the customer satisfaction and recommendation platforms such as Trustpilot.

Presenter:

For our non-German speaking listeners, “Du” is the informal German way of saying you. That means Lassie is taking a friendly, down-to-earth approach to customer relations. So, Nathalie, tell us: Why should other companies from the pet care sector follow your lead? 

Nathalie Rosen, German country manager, Lassie:

The German pet market is large, as mentioned before, and it's growing. And we see that there is a momentum for new companies coming into the market.

Presenter: 

That was Nathalie Rosen from pet insurance company Lassie. Many thanks for sharing your experiences. We’ll return to the huge German house pet market shortly. But first it’s time for our monthly round-up of some of the top business news from Germany. 

[Dogs barking] 

Presenter: 

Future Facility

German pharmaceuticals and chemicals giant, Merck is investing a hefty nine-figure in a state-of-the-art facility in its home city of Darmstadt. Merck’s “Advanced Research Center” is part of an EUR 1.5 billion investment project in Darmstadt. The newly built facility is expected to be operational in 2027. One focus of the research envisioned at the center will be mRNA technology. And while we’re on that topic…

Good Karma for German Pharma 

Another pharmaceutical industry heavyweight, Japan’s Daiichi Sankyo if launching launching a billion-euro expansion at its Pfaffenhofen location in southern Germany to create an international innovation center. The project will bring leading international researchers, engineers and sterile- and bio-technology experts to the Bavarian town. The goal is to increase Daiichi Sankyo’s production capacities for cardiovascular medications. The innovation center will also encompass new laboratories for antibody drug conjugates to fight cancer. But that’s not all…

Three’s the Charm 

US pharmaceutical company Abbvie - the world’s sixth largest biomedical firm by revenue - has kicked off a 150m German expansion of its own. The project is an ultra-modern research and office facility in the city of Ludwigshafen, which will be home to more than one third of AbbVie’s roughly one thousand researchers. The center will focus on developing new medications for conditions like Parkison’s Disease, Alzheimer’s and autoimmune ailments. Other major pharmaceuticals projects announced recent in southern and southwestern Germany include expansions by Eli Lilly, NovoNordisk, BioNTech and Roche. So much for pharma…

And the Winners Were

Mercedes-Benz headed the list of the 2024 Microsoft Intelligent Manufacturing Awards, which were handed out at the Hanover Messe Trade Fair. The IT colossus and their co-sponsors, consultants Roland Berger, named the German carmaker their overall winner for the company’s MO 360 Data Platform. Swedish battery maker Northvolt, which has just launched a billion-euro expansion in northern Germany, was honored in the category Innovate! for its Particle Trap System for monitoring technical cleanliness. And finally…

Another Pet Record

The 2024 Interzoo Housepet Trade Fair attracted 37,000 visitors from 140 countries. That’s an all-time best and an increase of 32 percent over 2022 edition of the biennial event. The fair was held in the southern German city of Nuremberg from May 7 to May 10. Around 2150 exhibitors from 68 countries presented the latest products and services aimed at meeting the needs of dogs, cats, fish, small mammals, terrarium animals and just about every sort of pet under the sun.

[Dogs barking] 

Presenter:

So to get an overview of the pet market’s structure and its potential for international companies, let’s return to the trade group that organizes Interzoo - the German Association of Zoological Specialist Companies or ZZF. I’m joined now by Antje Schreiber and Rowena Arzt. Before we talk business, can I ask: Do you have pets yourselves?

Rowena Arzt, Zentralverband Zoologischer Fachbetriebe, ZZF:

We have not only pets at home, but we also have pets in the office. So we have two feel-good-managers, we call them. That's Lottie and Elly, so two dogs who come every day to the office. And it’s a very, very friendly hello every morning when the two office dogs are welcoming us. They are really feel-good-managers. Also during a long working day, sometimes in the afternoon, Lottie is coming into my office and just checking how I am and want to be pat. And they really create a nice atmosphere. And also it's very good for the employees who have pets that they have the opportunity to take them to the office.

Presenter:

Okay, welcome Elly, Lottie and all the other office pets. Antje, could you tell us a bit more about your association and what you do?

Antje Schreiber, Zentralverband Zoologischer Fachbetriebe, ZZF:

ZZF is the German pet trade and industry association, and it stands up for good framework conditions for the pet industry in Germany. But also for responsible pet ownership and animal welfare. We are also organized in the European pet organization EPO, which is the voice of the European pet industry. Our members are pet markets and franchise systems, wholesalers, manufacturers, groomers and also breeders of small animals. And in 1966, ZZF founded its subsidiary, the WZF and you could say that this company is responsible for all economic activities of ZZF. So all publishing activities, education, training, our events. And the most important project is Interzoo, the world's leading trade fair for pet supplies.

Presenter:

The 38th edition took place at the beginning of May and we’ll talk about it in detail shortly. But first, let’s discuss the general market situation. The pet care market has seen significant growth over the past years. In 2019 the total turnover amounted to 5.5 billion euros, in 2022, it reached 7.1 billion. Was this a Covid driven phenomenon? Or is growth continuing?

Antje Schreiber, Zentralverband Zoologischer Fachbetriebe, ZZF:

We had a tense economic situation last year. I mean, the increased cost of living and because of the higher inflation. But despite that, German pet owners were spending quite a bit of money for the care and health of their pets, and they spent more than 7 billion euros. And that means that 4.5 billion euros were spent on pet food in the retail sector and 1.1 billion euros on pet accessories. And furthermore, we had 1.3 billion euros spend in e-commerce and 161 million euros on wild pet food. And the biggest market is that for cat food, it's the largest food segment and wet food is the most important driver. And second is then dog food and also wet food is the most important driver in dog food as well. Germans spend a lot on premium products. Premium food for dogs and cats is ahead in all food categories, especially there was a high demand for wet cat food. And, yeah, in terms of turnover, Germany is directly behind the UK but ahead of France, Italy, Spain and other European countries. So it's a large market. I think that we will have a slight growth in the coming years as well. Because pet owners love living with pets and pet friends love living with pets. And they will ensure that pets are well cared for and healthy. Yeah, I think this future will go on as in the last ten years.

Presenter:

Antje, you were talking about the Germans’ devotion to their pets. Is there anything particular companies need to know about German pet owners? Or are they more or less the same as, say, British or Spanish ones?

Antje Schreiber, Zentralverband Zoologischer Fachbetriebe, ZZF:

Maybe it's important that the Germans really want to do something good for the animals. They adopt their pets. They visit animal shelters and yeah doing something good is really a guiding principle. There are, for example, no cats and dogs in pet shops, which is a difference to other European countries. Maybe the Germans are less interested inkitschy products like colored fur or costumes for pets. They love outdoor activities with their dogs and they are quite practical. They love accessories that make the living with pets more comfortable. Many pet owners are well informed when they come to a pet shop, for example, they really ask the right questions, and they value animal welfare, as I already said, and they are environmentally conscious. So, they expect really manufacturers to adhere to environmental protection rules. If you have a look on some online platforms, where articles are sold like goldfish bowls or lashes for hamsters or very small, tiny cages and toys containing plasticides and things like that. It's not something that the Germans would buy. Not really something that has a future in the German market.

Presenter:

It sounds like they are quite demanding but also very passionate costumers. Rowena, looking at your recent trade fair – what are the hot trends right now?

Rowena Arzt, Zentralverband Zoologischer Fachbetriebe, ZZF:

There is for sure the trend of sustainability. There is the trend of pet tech, meaning that people are looking for smart devices supporting them in their pet care. Everything around health. So products increasing the health of the pet, they are high on the list. Also, everything which is supporting the joint activity between pet parent and pet. So, is it intelligence toys or joined activity toys. So these are also a high trend, a hot topic. And also we see the aspects of design in the accessory part. So, creating joint living spaces with your pet and adding your style also to the pet world and having nice fun is also something which we could see. But the natural trend, sustainability, also talking about what kind of packaging you use for the pet food or how you can have sustainable ingredients, alternative protein sources. These are all topics, which are trend topics at the fair. 

Presenter:

Pet tech – that sounds interesting. Is this something like an apple watch for dogs and cats?

Rowena Arzt, Zentralverband Zoologischer Fachbetriebe, ZZF:

This could be, for example, a GPS tracker, which is not only giving you the location, but also saying how active was your pet during the day? And then you have some indication how much calories your pet needs and you can adapt the food to it. So this could be something. You could also measure other things like heart beat etc. Or you could have some feeding device, which is opening up only for the right pet which is in front or you have snack automatization. So if you are not at home and you want to communicate with your pets, so there are things that you have a video camera and you can talk to your pets and you can open up the snack device and provide your pet with a snack and with your voice.

Antje Schreiber, Zentralverband Zoologischer Fachbetriebe, ZZF

There are also devices for the aquatics, for example, apps where you can influence the climate and the temperature of the aquariums or the terrariums. So you're on holiday and you can check how well are your fishes and are your reptiles.

Presenter:

Apps and GPS trackers, health beneficial food, sophisticated accessories – it sounds like the pet care market is quite diverse.

Rowena Arzt, Zentralverband Zoologischer Fachbetriebe, ZZF:

What is special about the market is that you have not only one trend and one segment. The pet market has several segments. So you have people looking specifically for those pet tech issues, pet tech products and who are very much in favor of this. So these are always the ones in the general lifestyle which are very much open to technical devices. But then, on the other hand, you have people who are very much into sustainability and nature and so they would look for different kind of products. So they would also look for different accessories. And then you have a segment where people are looking for boutique articles. So everything is about design and beauty and style. But you also have the general pet keeper who is really having the pet like we used to have the pets in the past they are taking care of the pet, but without any additional or specific device. So it's really a multifaceted market with a lot of different segments and this makes it also so interesting.

Presenter:

Okay – another important question for companies interested in expanding their business to Germany: How is the market structured?

Antje Schreiber, Zentralverband Zoologischer Fachbetriebe, ZZF:

We've got a lot of global players in this market like Hill’s and Mars, Nestlé, Vitakraft, they do pet care and so on. But also smaller specialized manufacturers. And we have a lot of startup companies in Germany. They are coming up every year. And this is also the case in the retail. So we still have wholesalers for independent pet shops, which is not the case in some other countries. And there are every year new retailers coming up, that specialize on aquatics or boutique articles and so on. But of course, the organized pet shops are on the rise. There are franchise systems that are very successful not only in Germany but also in other European countries. And the number of these stores is rising and the sales area is rising. And furthermore there are drugstores and food retailers and others, like petrol stations that also sell pet food.

Presenter:

As the world’s leading trade fair, Interzoo is a main contact point for companies wishing to expand their business. Rowena, you’re responsible for the exhibition department and you’re the managing director of a subsidiary called International Pet Business that helps other companies to internationalize their business. What advice do you have for people thinking about entering the German market?

Rowena Arzt, Zentralverband Zoologischer Fachbetriebe, ZZF

Well, the trade fair has always been a very international marketplace. So we have 86% of the exhibitors coming from abroad and 75% from the visitors coming from different countries. So it's really a marketplace where international trade takes place. What is important really to understand the German market is to have your own, well to know about your own USP. So what would you like to add to the market? And then to see: What is the market niche and what makes you special, and how can you serve the needs like we have discussed them? So what can you add in the regard to sustainability? What can you add in regard to health? What can you add in regard to activity together with your pets or in regard to design? So really, to find the specific niche. And also I would think that what is best, is really to seek for cooperation. So I think the cooperation with existing companies is something which is important. So if there is a company, for example, working on ingredients, and we have a pet food from abroad and you have in Germany a very good pet food producer. So I think it's ideal if these companies find each other and work on a joint supply chain.

Presenter:

We were talking to Nathalie Rosen from pet insurance company Lassie earlier. They also teamed up with a German company, the risk carrier HDI Global Specialty. So, cooperation really seems important, not only in the pet food segment, but overall. Let’s talk a little bit about pet services. They’re another booming market segment.

Rowena Arzt, Zentralverband Zoologischer Fachbetriebe, ZZF:

Yes, there are services. Also grooming is a strong service and an important service, so it's also adding to the health of the pet. But there are also other services like platforms where people meet, when they don't have the time for that to walk their dog, that they meet other people who will take the dog for a walk. So there are more and more services also developing around that, or teaching how to prepare the food for your animal. Services like consulting services for your pet. It's everything creating a 360 degree environment around the pet, starting from the very young puppy to the death of the animal, so that we can see that there are also products and services around. It's really accompanying the pet along the life and supporting the pet owner in this sense.

Antje Schreiber, Zentralverband Zoologischer Fachbetriebe, ZZF:

The interesting thing is that the retailers are offering these services as well. Or they cooperate with others, like animal hotels or boarding centers or physiotherapists or grooming salons and so on. So, this is again the question of why cooperation is so important in Germany.

Presenter:

You already mentioned that Interzoo is your biggest project. It’s been around since 1950 and has hosted more than 2100 exhibitors from 68 countries at this year’s edition. Rowena, you’re responsible for the exhibition department. How does the trade fair help with the market entry in Germany?

Rowena Arzt, Zentralverband Zoologischer Fachbetriebe, ZZF:

First of all, Interzoo gives you a very very condensed market overview in just four days. So you can experience the whole world of pet products. So it helps really to get a market overview, to see what are the trends, to find cooperation partners. We do have a conference program, for those ones who want to invest into Germany. There’s a session on the European market with a specific focus on the German market. And we also have a session on specific social media marketing in the German speaking countries so that you get the ten tips to boost your business there. We do have these startup pavilions with specific conditions, but there are also many country pavilions.So these pavilions also make it easier for companies to exhibit because they get a standardized booth. They get help with the export. They get help with customs.But we also provide a lot of information. We have founded in 2020 Interzoo Academy, which is an online platform where we have specific market information. And in addition with IPB, so with the smaller company we're having, we also organize matchmakings.

Regarding the startups we have more than 70 startups who are displaying their products on more than 700m² this year. So we have also two specific startup pavilions, one for young innovators from Germany, but also one international startup pavilion. And we also have created a specific stage for them, a so called „fresh ideas stage". And on this stage we have more than 30 presentation slots where innovative companies present their product ideas and also their business ideas and you can network with them. So specifically, you can see the market is not only growing because of existing players who do more business but we also have a lot of startups coming into the market. And I think, in a nutshell, that is what Interzoo does, it helps you to meet the right business partners in the pet industry to develop your own market and a supply chain. 

Presenter:

The next Interzoo will be in May 2026 – so mark that date on your calendars!  Before we end, I’d like to ask you again for your expert opinion: Are there any sectors which are currently especially interesting for foreign companies?

Rowena Arzt, Zentralverband Zoologischer Fachbetriebe, ZZF:

I would say it's more really on your individual USP. So if you are able to contribute to one of these trends and because the market is so multifaceted, so diverse, it offers so many different opportunities. It really depends on what is your own USP? Where do you see what you can add to the market? And if you can do that and live your idea, I think you have not to look for the one segment which is growing the most. 

Presenter:

Rowena, Antje, thanks a lot for joining the podcast!

[Dogs barking]

Presenter:

Yes, don’t worry, we’ll go out for a walk now. But before we say goodbye, here's a look at HOW GERMANY WORKS.   

How does Germany ensure the quality of pet food – or food in general for that matter? Quality control is the responsibility of the Federal Office of Consumer Protection and Food Safety. It comes under the German Food and Agriculture Ministry. The Agency grants authorization and coordinates monitoring programs with the 16 regional states that make up the Federal Republic of Germany. It also interfaces with the EU’s Food and Veterinary Office. This triple oversight – on the European, national and regional levels – ensures that makers of high-quality products are protected against competitors with inferior standards. And that’s how Germany Works.

So, we've come to the end of another episode of Into Germany. Many thanks to our guests Nathalie, Rowena and Antje –and especially Lottie and Elly. If we’ve stimulated your appetite for expanding your business to Europe’s largest market, don’t hesitate to contact Germany Trade and Invest. We’re eager to discuss your pet project, all at no cost because we’re a government agency. Get in touch at gtai.com. We’re also keen on your opinions, suggestions and questions. Please leave a comment in your favorite podcast app or drop us a line. You’ll find all the details in our show notes.

So, till next month, stay healthy, “Auf Wiederhören” and remember: Germany means business. 

[Dogs barking]

Presenter:

Okay, okay, I’m coming !

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