Panel SA: Inflation restricts the purchase of collar for pets, but premium food is maintained, says Cobasi

After the rise in animal adoption in the pandemic, a trend that has already settled, inflation hit the pet market.

According to Paulo Nassar, one of the founders of Cobasi, the consumer restricted the purchase of toys and other superfluous items for the animals, but did not change the premium feed for cheaper.

The current scenario of inflation and interest rates has not been good for the pet market. How are you coping?Speaking specifically of our sector, inflation has impacted, since last year, the correction of costs of goods resold by Cobasi, basically, pet food [ração], veterinary pharmacy, accessories. Also as an importer, Cobasi had the impact of a high dollar last year.

Cobasi has been in a constant tug of war with suppliers since last year, avoiding passing this on to consumers. It has impacts from the increase in agricultural commodities, mainly pet food inputs, which cannot be insured.

It is an increase in corn, soybeans, meat bran, rice, which are inputs in the manufacture of animal feed. The industry was under a lot of pressure and, consequently, had to pass on these increases. We also had an increase in energy, which is very considerable as an input for the industry.

But the inflation of products resold by Cobasi is more or less with the IPCA. It could be higher, if it weren’t for our eternal fight with suppliers to contain these increases. We calculate that it would be from 15% to 18% and we managed to reduce this between 6% and 7%. At the end, consumers have inflationary pressure in their pockets and this reduces their purchasing power.

How is this consumer’s sensitivity to inflation?The pet market is quite resilient. We are dealing with affection, with our pets and plants. When it involves affection, people sometimes stop buying something in the family budget to keep the pet’s.

But we feel, this year and last year, a change in behavior of what is a priority. Customers focusing on food, on keeping pet food. We have not seen customers switching from premium and super premium food to more basic food. I think this is maintained and it is very good, even because Cobasi, in the vast majority of stores, works with audiences A, B and B less.

This public, despite having a budget restriction, focused on buying pet food, hygiene and beauty and veterinary pharmacy, anti-flea and other medicines, but in the part of superfluous, collars, toys, there was a sales restriction. Customers are not buying or buying less of these products and prioritizing what is essential.

And the euphoria of the quarantine period, of people who didn’t have a pet and ended up adopting. Did that settle?The pandemic brought isolation, which brought a huge need for affection. Anyone who has never had a pet thought about having one. And we include flowers and plants in that. This boom has already happened. He changed. We were all isolated at home, the animals were very close.

Today, we have NGOs that are our partners in placing abandoned animals in homes. People continue to adopt, but in smaller numbers.

Have you recently partnered with the real estate sector for a pet park? Do you have room for that in a condo?With the verticalization of large cities such as São Paulo and the creation of condominiums with several towers, the need for a leisure area for pets in these condominiums was created.

Cobasi closed a partnership with Trisul. In one of their developments in the west side, we will be together with the construction creating a pet park for this condominium.

Today, some condominiums are already built with a self-service bathing area, for people who live there to go down with their dogs and cats. It is a trend that is consolidating. Some builders have already noticed. It is becoming the market standard in the implementation of new condominiums.

How is your expansion plan going? Did the rent surge in the pandemic impact the planning of new units?Most lease agreements for new areas, new commercial points, have always been governed by the IGP-M. When it soared, we renegotiated with the owners the exchange of the index for IPCA. There was a big turnout. The average correction here was between 10% and 12%.

Our expansion plan is maintained, despite the challenging year, with high inflation and interest rates. Cobasi has always grown through its own cash, with zero debt, and it continues. Last year, we had a plan to open between 35 and 40 stores, we opened 38. In 2022, we have a plan for 40 new stores. It is being delivered, and the second semester is more positive for us. It has an interesting seasonal sale.

Is there an acquisition on the horizon?There are analyses, we have an M&A committee [fusões e aquisições]. It meets every 15 days. A lot of offers come and we analyze. But few make sense, or almost none.

Acquiring companies to try to aggregate the ecosystem is the desire of every retailer. It often doesn’t make sense. We can’t lose our core [negócio principal], which is to be a retailer and specialist. For us, it makes no sense to acquire industry, we are retailers.

X-ray

President and co-founder of Cobasi, the entrepreneur has worked at the pet products and services retailer since the mid-1980s alongside his brothers João and Ricardo Nassar. Economist graduated from FEA USP, he also studied in California