LONDON (Reuters Breakingviews) - To 17th century Dutch tulip bulbs and 1929 Wall Street shares, it may soon be time to add 2020 puppies. Demand for pets has rocketed under Covid-19, doubling the average price of a British pooch to 1,875 pounds ($2,500). Breeders flooding the market just as economic hard times bite has all the ingredients of a canine crash.
Unlike financial opportunists, new dog owners presumably intend to keep their companions rather than flip them to a more credulous buyer at a quick profit. And pets have real, as opposed to purely speculative, worth. Three-quarters of Americans, for instance, credit their furry friends with helping them deal with the stress of lockdowns, according to the American Pet Products Association. That means the current boom falls a whisker short of meeting the strict definition of a financial bubble.
Even so, the gap between supply and demand demonstrates distinctly frisky qualities. At the height of the lockdown in May every Cavapoo puppy listed on UK website Pets4Homes had almost 1,900 buyers sniffing around it as families flocked to the popular breed, a cross between a poodle and a Cavalier King Charles Spaniel. Animal charities say puppy farming and smuggling is on the rise.
The dynamics of pet production and the precariousness of demand point to the potential for a loud pop. At almost 3,000 pounds, an English bulldog now costs 50% more than the average Brit’s monthly take-home pay. Amortised over its expected 12-year lifetime, that’s a more reasonable outlay of 250 pounds a year. But operating costs like food and insurance will bite harder if the virus delivers a long economic tail. And home-workers who shift back to offices may need to factor in the expense of dog-sitting.
Then there’s supply. Just as bullion barons prepared to dig new mine shafts when gold hit $2,000 an ounce in August, some breeders may be chasing a quick buck. Yet the lag between conception and collection leaves them on the hook if buyers change their minds.
So far this year, the boom has produced mainly winners, from London-based Battersea Dogs Home, which is handling fewer rescue cases, to $79 billion animal health giant Zoetis, whose shares hit a record high in November. A puppy crash, however, will breed new victims of the speculator’s curse.
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