The Billion-Dollar Business of Man's Best Friend

Viewing an animal primarily as an investment reveals just how contradictory our relationship with animals really is. At one end are livestock traded as commodities. Beef and pork futures are bought and sold every day, have their own price charts and can even be analyzed using technical indicators. At the other end are racehorses, breeding stock, luxury breeds and rare or endangered species, where economic value is intertwined with status, the passion of collecting and, sometimes, criminal activity.

This is precisely what makes animals such unusual assets. They are not stocks, bonds or paintings hanging on a wall. Animals live, age, reproduce and may fall ill or die. From an investor's perspective, that makes them unusually risky assets.

At the same time, they evoke emotions that financial assets rarely do. Seasoned investors often warn that becoming emotionally attached to a stock is one of the costliest mistakes an investor can make.

With animals – especially pets – the opposite is true. Emotion lies at the heart of the relationship and underpins the entire business model. The stronger the emotional bond, the more willing owners are to spend. Wherever strong demand, limited supply and human emotion converge, black markets inevitably emerge.

Estimates of the global illegal wildlife trade generally range from $20bn (€17.5bn) to $23bn (€20.1bn) a year. Interpol places the figure at up to $20bn annually. That is an enormous market, making it unsurprising that it attracts criminals despite the risk of severe penalties and imprisonment.

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Betting on Horses

Racehorses are perhaps the clearest example of animals as alternative investments. They have pedigrees, auction prices, prestige, compelling stories and, at least in theory, significant upside potential. Nor is this a niche market.

At the 2025 Keeneland September Yearling Sale, 3,070 horses changed hands for a combined $531.5m (€465.1m). The average price was about $173,000 (€151,000), with 56 horses selling for more than $1m (€875,000) and the most expensive fetching $3.3m (€2.9m).

The auction, however, is only the final chapter. Years of breeding, selection, veterinary care and uncertainty come first. For every horse that commands a premium price, many others fail to justify expectations. Owners who choose to race their horses also face additional expenses, including training, boarding, transport, entry fees, veterinary care and the constant risk of injury.

The investment case is therefore sobering. On a risk-adjusted basis, returns are typically negative and often fail to cover ownership costs. Racehorses are better described as passion investments than financial assets. Buyers are paying not only for the possibility of financial gain, but also for prestige, excitement and the dream that their horse might become the exception.

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The Pet Economy

The idea of a passion investment also helps explain the much larger pet industry. From a purely financial perspective, a dog or cat is a remarkably poor investment. Pets generate no cash flow, are difficult to sell and usually become more expensive as they age.

Advances in veterinary medicine have reinforced this trend. Better diagnostics and more treatment options mean that illnesses which once proved fatal are now followed by scans, surgery, medication and specialist care.

Source: American Pet Products Association (APPA)

The French daily Le Monde illustrated this trend through the example of veterinary oncology. At the Oncovet clinic in Villeneuve-d'Ascq, pets routinely undergo surgery, chemotherapy, radiotherapy and immunotherapy – treatments more commonly associated with human medicine.

According to the report, demand for these services has grown by roughly 10% a year since 2000. A full course of treatment typically costs between €3,500 ($4,100) and €6,000 ($7,000).

The change is profound. Pets are no longer simply companions but full members of the family who may eventually become patients.

This lies at the heart of the investment story. A pet may be a poor investment, but people's willingness to spend on their pets is excellent business. In affluent societies, dogs and cats have moved from the backyard into the living room. Once they become members of the household, entire industries emerge around them: pet food, veterinary care, diagnostics, medicines, insurance, online retail, boarding, grooming and specialist clinics.

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Great Business, Average Stocks

How have companies serving this market performed? On paper, they should be attractive investments. Yet the stock market tells a more complicated story.

Chewy, one of the largest online pet retailers, illustrates the challenge. Although the company has continued to grow, its shares have struggled to regain the highs reached during the pandemic pet boom.

The COVID-19 years represented an extraordinary period for the industry. Pet ownership surged during lockdowns, boosting demand throughout the sector. Since then, however, growth has returned to more normal levels. Revenues and profits continue to rise, but not quickly enough to satisfy investors accustomed to explosive expansion.

After years of spectacular returns in artificial intelligence, many investors have become accustomed to rapid growth. The pet industry, by contrast, is built on steady, predictable expansion.

The sector could face another test in 2026. Renewed inflation is eroding household purchasing power, leaving consumers with less disposable income – including for their pets. Share prices across much of the sector have fallen sharply as investors reassess growth expectations.

That may ultimately prove to be the industry's greatest strength. Pets may never produce another Nvidia, but demand for pet food and veterinary care is unlikely to disappear – even in a world transformed by artificial intelligence.

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