Plants are the new Pets and Pets are the new children!

At DSGCP, we have been tracking the evolution of the pet category since we started in 2012. That is a full decade. Pets are an important component in our theme ‘the evolving family unit'. We expect this category to be huge in the future given the rapid adoption of pets among Millennials and GenZ. Our conviction in the category helped us invest in Supertails in early 2021 when the founders were still working on the idea. We love partnering with founders at an ideation stage on Day -1. It was a decision completely based on the founders’ ability to execute and build a category-defining brand in a segment that is expected to grow massively. Supertails has come a long way. The team has made great progress in building India’s best digital-first destination for all Pet Care needs.

Why are we excited about pet care? A large market at the cusp of an inflection point.

Over the last 5 years, India has been one of the fastest-growing pet care markets in the world, largely backed by pet adoption by the millennial population and further fuelled by the need for companionship during the pandemic. Dog adoption rates have grown upwards of 50% in 2020 while the cat market has grown upwards of 40%. With pets in more than 12% of urban Indian homes, the country is on the threshold of further exponential growth in this industry similar to what happened in more evolved pet markets like China ($30Bn USD) and USA ($105Bn USD) in the past.

India’s pet care market has taken its first steps and has a long runway for growth

Like China in 2010, India’s pet care market is at the cusp of an inflection point

Source: Statista, Boqii F-1 filing, Interzoo, Lemonade, Petfoodindustry.com, Globalpetindustry.com

As per Euromonitor, the pet care market in India is estimated to be INR 25.3 billion (US$ 350 Mn) as of 2019. Dog and cat food contributes 83%, pet products contribute 8%, and healthcare accounts for 6% of the total pet care industry. Although the Indian pet care industry occupies only a fraction of the global industry, it is amongst the fastest growing markets with a projected CAGR of ~17.0% (2018-2024) vis-a-vis the global projected CAGR of 5.2% (2019-2025). The key growth drivers are:

• Rising pet ownership: Pet penetration among Indian households is less than 10% in India; however, it is rising rapidly on account of favorable macros like rising urbanization, higher disposable income, and smaller family sizes. GenZ and Millenials are adopting pets at a much higher rate than previous generations as they are searching for companionship in their pets. Globally, India has seen the highest percentage growth in dog population in 2012-2017, registering a sturdy 77% CAGR (as compared to -3% in US and UK).

• Premiumization & Humanization: Pet owners in India belong primarily to upper or upper-middle-class families. With rising disposable income, humanization trends, and rising health and wellness awareness, pet parents are now more conscious of the kind of products they buy and are increasingly looking for premium and natural offerings for their pets, which has drastically narrowed the gap between pet food and human food. Pet food manufacturers are offering premium products that are gluten-free, GMO-free, and rich in high-quality vitamins and minerals, with increased health benefits like dog food with Omega 3 and 6 fatty acids for healthy skin, probiotics in a dry formula to help maintain digestive health, glucosamine for healthy joints and strong bones, and more.

• Growing Demand for Ancillary Pet Products: Pet parents are buying products and services beyond food to take care of their pets better. New pet services range from salons & spas to sophisticated services such as end-of-life services (Palliative services for terminally ill pets, pet cemeteries, and cremation, grief consulting, etc.). There has been an increase in the number of food service establishments, such as restaurants and cafés, which are becoming pet-friendly, with some even hosting special events and pool parties for dogs. Further, technological advancements have led to a rise of smart pet products such as GPS-enabled tags, leashes, and smart feeding machines as well as cameras that help the pet owner connect with their pets when they are away from home.

The pet segment has seen successful brands being built with a digital-first approach across markets

Chewy, United States

Founded in 2011 by Ryan Cohen and Michael Day, Chewy is an e-commerce platform for pet foods and other pet-related products. They differentiated themselves by focusing on fast shipping, competitive pricing, 24*7-customer service, and providing customers with a hyper-specialized experience, thus combining the convenience of shopping online with the superior customer service of pet stores. They over-indexed on customer service and built lifelong relationships with customers through small gestures like sending hand-written holiday cards, pet portraits, and flowers for deceased pets. In 2017, PetSmart acquired Chewy for US$ 3.3 Bn, which was the largest-ever acquisition of an eCommerce business at the time. Currently, it is a publicly-traded company with a market capitalization of US$ 15.5 Bn.

Petlove, Brazil

Founded in 1999, Petlove is the largest pet-focused online retailer in Brazil. The company has a portfolio of 17K pet products, including its own and exclusive brands. Over the years, the company has evolved into a comprehensive and inclusive platform offering pet sitting and boarding services, pet insurance, and services to veterinarians. They have 160K active subscribers and 75% of the company's revenue comes from subscriptions. They also act as a technology provider for the Brazilian pet market, with more than 2,000 partners, including doctors, veterinary clinics, hospitals, and pet shops. The company was started by veterinarian Marcio Waldman under the brand name ‘PetSuperMarket’ as a commerce platform for pet supplies. To date, PetLove has raised US$ 225 Mn in funding from investors like Tiger Global and L Catterton among others.

Zooplus, Germany

Founded in 1999 in Germany, Zooplus is currently the undisputed market leader in the pet eCommerce category in Europe. Cutting-edge tech-led backend processes allowed Zooplus an unparalleled optimization of the value chain and deliver unprecedented customer value and experience. High retention and best-in-class data & strong customer love enabled them to roll out into several European countries. Operating in 30+ countries and having a large assortment of 8,000+ products, Zooplus has 8 Mn+ active customers and a subscription like business model with 90%+ recurring sales. In 2008, Zooplus went public and in 2021, it was acquired by a private equity firm valuing the firm at US$ 3.5 Bn.

As demonstrated in these case studies, we believe there is an opportunity to build the go-to destination for Pet products and services in India with a digital-first, tech-led approach and laser-sharp customer focus.

The Supertails Value Proposition

The Supertails digital platform was launched in May 2021 as a one-stop solution for all pet-care needs. The company has been focused on solving the core customer pain points in India.

• Limited access to products and inefficient product discoverability
• Limited accessibility to quality vets/trainers
• Lack of clean and nutritionally sufficient food options
• Most pet parents rely on content/blogs built for international audiences
• Longer delivery timelines

There are 4 business verticals:

Multi-brand e-commerce platform

The platform offers the largest assortment of pet supplies from India and across the globe with super-fast delivery. They offer 10,000+ SKUs across 200+ brands. They deliver pan-India, offering 2-3 day delivery in metro cities and 3-4 day delivery in non-metros

24/7 online veterinary consultation

Supertails offers fully digital telehealth consultation services made available through a team of highly experienced in-house veterinarians. With 24/7 online veterinary consultation, pet parents can book an appointment online and select a timeslot at their convenience. Discussion notes, prescriptions, and treatment plans are shared with the pet parent post the consultation. Supertails also offers a free follow-up in case the issue isn’t resolved.

Online pet training

The Supertails team of experienced dog training and behavior experts provide guidance and solutions for all pets’ needs. They provide consults even prior to the adoption of a pet and help potential pet parents discover is the most suitable pet depending on their lifestyle and needs

Henlo

Henlo is Supertails in-house balanced nutrition brand for pets made from responsibly sourced super-ingredients and carefully crafted by vets and nutritionists.

It has been a fantastic journey since our first investment in May 2021

What we love about Supertails

The founding team with a track record of solid execution and team building

Varun, Vineet, and Aman were all ex-CXOs at Licious, an online meat delivery platform. Varun and Vineet have extensive experience in operations and have led teams of 1000+ members at Licious while Aman’s expertise lies in strategic planning, fund-raising, and operation in finance. They spearheaded operations through the steep Revenue growth phase of Licious. They are strong leaders and built great teams. The founders have hired a very strong senior and mid-level managerial team who have displayed excellent speed of execution and leadership skills.

Building the go-to digital-first brand for pet needs

The experience for pet parents in India is broken due to several issues like low product availability & discoverability, less accessibility & high costs of vets/trainers, and lack of clean, nutritionally sufficient food options. Supertails solves all the customer pain points with a digital-first approach and offers a best-in-class customer experience. They have seen a very good improvement in customer cohorts already. They are working on providing 24/7 access to personal vets and trainers, in-house pet buddies, customer delight executives, and personalized cohort-based infotainment to elevate customer service further.

Pet Care is a category with huge tailwinds

We expect the Pet Care category to become massive in India over the next decade. Several large and successful pet eCommerce platforms have been built over the past decade by offering unparalleled services and solutions to simplify pet care. DSG Consumer Partners is also an investor in Perromart, the largest pet eCommerce company in Singapore. Pet is also considered a recession-resilient segment as pet parents treat their pets like family members. For e.g., this resilience was demonstrated in the US in both 2001 and 2008, when the economy tumbled and pet spending grew by 7% and 5% (Source). We are actively looking at more investments in this category in India and SEA.

Opportunity to build an enduring brand with a fiercely loyal customer base

Like Mom & baby, Pets is a segment where there is an opportunity to build a fiercely loyal customer base. It is a high-involvement purchase decision for pet parents and there is an opportunity to build a brand with a rabid following.

We are privileged to partner with the Supertails team as they build the category-defining pet care brand and are happy to participate with Fireside Ventures, Saama Capital, Sauce.vc, and Whiteboard Capital in the current funding round.