Pet Market Pricing Update – August CPI Drops!

The latest CPI data for August is out. August is usually a fairly predictable and stable month. In over 70% of previous years…Vet & Non Vet Service prices usually take a little dip…and Food & Supplies go up. The overall Pet CPI has gone up in August 94% of the time.

However, as we have seen, this is not a “normal” year. Key 2014 August Facts:

  • The Pet Supplies Segment usually goes up in August. Not only did it not go up. It dropped almost a full percentage point from July.
  • The overall Pet CPI dropped in August. This has only happened 1 time in history and that was 15 years ago. This drop was largely driven by the Pet Supplies segment.

Here are the specifics:

    • Vet Service CPI – down 0.1% over July – As expected.
      • Up 2.3% since Dec.
      • Projected – Up 3.68% for 2014. (last  month’s projection was 3.73%)
    • Pet Services – up 0.1% over July – Not normal; Usually drops in August.
      • Up 1.5% since Dec
      • Projected – up 3.36% for 2014 (last month’s projection was 3.23%)
    • Pet Supplies – down -0.9% from July – Not Normal; Usually goes up in August.
      • Down -2.1% since Dec.
      • Projected – down -1.56% for 2014 (last month’s projection was -1.47%)
    • Pet Food – up -0.3% from July – As expected, but smaller increase than normal.
      • Down -0.1% since December
      • Projected – down -0.47% for 2014 (last month projection was -0.48%)
    • Total Pet – down -0.1% from July – Not normal – Dip in August hasn’t occurred in 15 years.
      • Up 0.1% since Dec
      • Projection – up 0.55% for 2014 (last month’s projection was .58%)

Here’s what it looks like along with updated annual projections:


For the balance of the year:

  • Service prices should continue steadily upward. The only break could be a possible dip in Veterinary prices in November. The peak month for pricing is invariably December.
  • Food has hopefully started the regular pricing climb which goes from August through November. Then comes a big drop in December. With the unusually low prices for the first 8 months, it appears very likely that the 2014 CPI will be less than 2013. An annual drop in prices for Pet Food has occurred only 1 other time – in 2010.
  • Pet Supplies prices continue to “plummet”. There is no other word for it. They are down 1.74% just since June. This is going into September which usually produces another drop and the price low point for the year. October and November generally bring CPI increases followed by the December Drop to close out the year.
  • Driven by ever increasing Service prices, Total Pet has never had a drop in annual prices. The smallest increase was 0.6% in 2010. This was driven by CPI decreases in both Food and Supplies. We have the same situation now and we are “on track” to meet or beat our record low.

The Pet Supply Segment is the ongoing concern. We saw that an unexpected big drop in Supplies prices pushed the whole Pet Market into negative numbers in August for only the second time in history and the first time in 15 years.

The Pet Supply Segment reached its all time pricing peak in May 2009. Since that time it has been working its way down – deflating. The price drop so far is 7.6%. How does that compare to other pet segments and key economic indicators. Take a look:


Somehow the 1% drops here and there and even the 7.6% drop over 5 years doesn’t seem like that much. Since Pet Supplies is going in the opposite direction from the other indicators, it’s hard to compare. Let’s use Pet Supplies as the “base” performance and compare these other categories to it to see what the overall differences are.

That looks like this:


Except for Pet Food, there is over a 20% difference in the pricing performance of Pet Supplies vs other economic indicators. The difference in the services is understandable as the price of basically all services has been growing faster than the National CPI.

However, 20+% differences in pricing performance from food and beverages and the overall CPI are significant. Remember, all these categories were operating in the very same economic conditions. If you “do the math”, it shows that the gap has widened at an average rate of 4% or more, in every year since 2009.

Will the deflation continue? In recent years, September has been the “bottom” month for pricing in the Supplies segment so it is possible, even likely that we will see another CPI drop in September. The big question is when will this segment “put on the brakes” and start a true change in direction? A deflating market grows increasingly difficult for manufacturers, distributors and retailers.

Building A Pet Business…like climbing a mountain!

Building a Pet Business – Sometimes it’s like climbing a mountain.

In my consulting business, GPS For Pet Businesses, I have likened building a pet business to a road trip. You set a destination (your goal), plan a route, gather your resources…then you’re off. Delays and roadblocks occur – some expected, some not. You find the way – through or around – and continue on your journey – focused on the final goal.

As you can tell from earlier posts, I am “into” analysis. Why? Because developing a business requires decision making and decisions are only as good as the information they are based on. However, analysis and good decisions are not enough.

“Strategy is grand. Execution is crucial.” – I heard this phrase countless times from Tom Leonard when he was the President of Aspen Pet. So what does it take to execute…? It takes the will to succeed. You must be motivated. So all the analysis and strategizing will come to naught without the emotional strength to carry it through. However, never forget that the time for emotion comes AFTER the decisions have been made, not during the process.

In the Pet industry we are always noting the ongoing humanization of our companion animals so we are sensitive to drawing parallels between human and animal behavior. Recently I visited the “high country” in Colorado including the summit of Mt. Evans at 14,240 ft. Literally 3,000 ft above the tree line, the world at 3 miles high is something to behold.

I was fortunate enough to witness a “family” making their way to the very peak of the mountain. I watched in awe at their progress. During their quest I was struck by the similarities between their journey and the one we take in trying to build a business. Building a business is like a journey but sometimes it can seem like you are climbing a mountain.

Take a look.

First, a group comes together and decides to follow a leader on a journey to a higher place.


The path can be rocky from the beginning but the way is clear.


The road can get incredibly tough but they find a way and persevere


It makes sense to pause and prepare themselves for the final push!


Suddenly they’ve made it…to the summit…together!


Ah…the view from the top! That’s why “you” made the trek!


Mt. Evans, Colorado – Approximately 14,240 ft. – 3000 ft. above the tree line. Echo Lake in the picture is at 8,000 ft. – over 6,000 below. In the initial “feature” picture, you were looking up to the summit from the lake.

Watching this family of mountain goats was truly inspiring and a living reminder. Business and life can get tough sometimes. Sit down. Figure it out. Then do it.

“Failure is not an option.”- Gene Kranz, mission director of Apollo 13.

In my next post, we’ll get back to the numbers as the August CPI update will be available from the USBLS. In a normal year the prices for services – Vet and Non-vet should be down in August. Both Food and supplies should be up. However, this is not a normal year.