2018 Total Pet Spending was $78.60B – Where did it come from…?

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Total Pet Spending in the U.S. reached $78.60B in 2018, a $1.47B (1.9%) increase from 2017. These figures and others in this report are calculated from data in the annual Consumer Expenditure Survey conducted by the US BLS. 2018 was a much more sedate year for the industry after the spectacular lift in 2017. However, it was only calm on the surface. When you look at each segment there was a certain amount of turmoil. The FDA warning on grain free dog food, the new tariffs on supplies and increased inflation in Veterinary all had a negative impact on spending in the second half. The good news was a record surge in Services Spending. 2018 also saw a $6.5B drop in spending by the Baby Boomers. Fortunately, other groups, especially the younger ones, stepped up. The situation certainly deserves a closer look.

The first question is, “Who is spending most of the $78+ billion dollars?” There are of course multiple answers. We will look at Total Pet Spending in terms of 10 demographic categories. In each category we will identify the group that is responsible for most of the overall spending. Our target number was to find demographic segments in each category that account for 60% or more of the total. To get the finalists, we started with the biggest spending segment then bundled related groups until we reached at least 60%.

Knowing the specific group within each demographic category that was responsible for generating the bulk of Total Pet $ is the first step in our analysis. Next, we will drill even deeper to show the best and worst performing demographic segments and finally, the segments that generated the biggest dollar gains or losses in 2018.

In the chart that follows, the demographic categories appear in ranked order by Total Pet market share from highest to lowest. We also included their share of total CU’s (Financially Independent Consumer Units) and their performance rating. Performance is their share of market vs their share of CU’s. This is an  important number, not just for measuring the impact of a particular demographic group, but also in measuring the importance of the whole demographic category in Spending. These are all large groups with a high market share. A performance score over 120% means that this demographic measure is extremely important in generating increased Pet Spending. I have highlighted the 6 groups with 120+% performance. (I rounded up for the 35>64 age group).

The groups are the same as in 2017, but some rankings have changed. Everyone Works and Education gained in share ranking and performance. Suburban gained share but not rank. The performance of the other 7 groups fell, indicating more balanced spending. Homeowners, All Wage & Salaried, Married Couples and 35>64 yr olds fell in share ranking.

  1. Race/Ethnic – White, not Hispanic (86.3%) This is the 2nd largest group and accounts for the vast majority of Pet Spending. Their performance rating fell slightly to 125%. This category now officially ranks #5 in terms of importance in Pet Spending demographic characteristics but they are in a virtual tie for 3rd place with 2 other groups. Although this demographic, along with age, are 2 areas in which the consumers have no control. Spending disparities are enhanced by differences in other areas like Income, CU Composition and homeownership. There are also apparently cultural differences which impact Pet Spending. Asian Americans are first in income, education and spending but last in Pet Spending as a percentage of total spending – 0.33% vs a national average of 0.98%.
  2. # in CU – 2+ people (80.9%) It just takes two. Singles still have the lowest performance of any group, but they gained ground in 2018. This gain along with a drop in spending by 2 person CU’s caused the overall performance of 2+ CUs to drop to 114.7%. However, 4 person CUs also gained so only singles and 5+ person CU perform under 100%.
  3. Housing – Homeowners (79.8%) Controlling your “own space” has long been a key to larger pet families and more pet spending. However, 2018 was a good year for renters. Homeowners had the biggest drop in both share and performance. Their 125.7% performance dropped them to 3rd place in terms of importance for increased pet spending. The homeownership rate for Millennials is substantially lower than previous generations when they were the same age but it is increasing. We also saw an impact from more older Americans “downsizing”.
  4. Income – Over $50K (74.9%) Although Pet Parenting is common in all income groups, money does matter. With a performance rating of 138.9%, CU income is the single most important factor in increased Pet Spending. Their performance decreased from 141.6% in 2017. This was driven by a spending drop in the $50>99K range, along with a strong lift from those earning $30>49K.
  5. Education – Associates Degree or Higher (69.5%) Income generally increases with education level and so does Pet spending. Education can also be a key factor in recognizing the value in product improvements, like super premium foods. In 2018 this higher educated group spent $4.9B more on their pets and moved up from 7rd to 5th in share of pet spending. This move also reflects the spending lift by the younger groups as they are generally more educated than Boomers+. At the same time High School Grads with some College substantially decreased their Pet spending so the performance of the Associates Degree and More group moved up from 120.1% to 127.5% – from 6th to 2nd place. This moves Education back to the forefront in terms of importance in Pet Spending.
  6. Occupation – All Wage & Salary Earners (64.4%) – Pet ownership is widespread across all segments in this group. After a big lift In 2017, the blue-collar workers radically cut back their pet spending, especially on Food. All Wage & Salary Earners’ performance fell to 105.4%, by far the lowest of any group. It remains below 110% because there is still a big spending (and income) disparity within the group and the self-employed also had a great year!
  7. # Earners – “Everyone Works” (63.8%) This is a composite of CU’s, regardless of size, where all adults are employed. This group’s ranking in share of overall pet spending jumped from 9th to 7th. Their performance increased from 108.2% to 110.3%. Younger CUs have more earners. You see one sign of their increased 2018 Pet $ right here.
  8. Age – 35>64 (63.2%) This group’s share of spending fell from 6th to 8th because the 55>64 yr olds spent $4B less. The 35>54 group couldn’t quite make it up. The 65+ and under 35 groups also had a good year which pushed the 35>64 yr old’s performance down from 123.2% to 119.5%. However, they are still ranked 6th in overall importance.
  9. CU Composition – Married Couples (62.2%) With or without children, two people, committed to each other, is an ideal situation for Pet Parenting. In 2018, primarily due to a drop in spending by married couples only CU’s, this group fell from 8th to 9th in share of spending. A big spending lift by singles also contributed to a decrease in performance from 128.1% to 125.2%. which dropped them from 3rd to 4th in importance.
  10. Area – Suburban (61.0%) Homeownership is high and they have the “space” for pets. Their share of pet spending increased from 59.8%. Their performance also increased from 107.6 to 110.0%. The gain in share and performance was due to a great year for Suburbs over 2500 pop. All areas under 2500, both rural and suburban had a bad year. Rural areas were down $3.23B which drove Suburban performance up, despite a $2.7B increase by Center Cities.

Total Pet Spending is a sum of the spending in all four industry segments. The “big demographic spenders” listed above are determined by the total pet numbers. Although the share of spending and performance of these groups may vary between segments, every one of them generates a minimum of 58.2% of the spending in every segment. As we analyze individual segments, some of the groups will change to better reflect where most of the business is coming from.

The group performance is a very important measure. Any group that exceeds 120% indicates an increased concentration of the business which makes it easier for marketing to target the big spenders. Although Income over $50K is the clear winner, there are other strong performers. The high performance in 6 groups also indicates the presence of segments within these categories that are seriously underperforming. These can be identified and targeted for improvement.

Now, let’s drill deeper and look at 2018’s best and worst performing segments in each demographic category.

Most of the best and worst performers are just who we would expect and there are only 5 that are different from 2017. Changes from 2017 are “boxed”. We should note:

  • Income is very important, which is shown by the 221.5% performance. All income groups over $70K have 100+% performance. However, there was also radically improved performance from the $30>49K group.
  • Generation – Baby Boomers fell from the top spot for the first time since… However, the Gen Xers stepped up.
  • Age – It was a youth movement. The 45>54 yr olds took over the lead from the 55>64 yr old Boomers and the under 25 group escaped the bottom to be replaced by the oldest Americans.
  • Occupation – After a 1 year break, the high income Self-Employed Group moved back to the top.
  • CU Composition – Although the performance of Married Couple Only fell, they are the winner for a 3rd consecutive year. Married w/children improved performance, but the big news is Singles moved up and out of the loser spot.

Except for the move from Boomers to GenX, there was little change in the “players”, so most expected winners are still doing well. In the next section we’ll look at the segments who literally made the biggest difference in spending in 2018.

We’ll “Show you the money”! This chart details the biggest $ changes in spending from 2017.

Now we will truly see the difference between 2018 and 2017. There are 24 Winners and Losers. 2 Losers and 1 Winner are repeats but 13 segments (54%) actually switched from the biggest increase to the biggest decrease or vice versa.

  • Generation – The Boomer Bust had a widespread impact and the negatives were often incredibly big numbers.
    • Winner – Gen X – Pet Spending: $25.15B; Up $3.81B (+17.9%)
      • 2017: Baby Boomers
    • Loser – Baby Boomers – Pet Spending: $29.61B; Down -$6.48B (-18.0%)
      • 2017: Silent Generation
    • Comment – It took the contribution of many segments to generate overall positive numbers for 2018.
  • Housing – Homeowners w/Mtge, the biggest segment in this category, won for the first time since 2014.
    • Winner – Homeowner w/Mtge – Pet Spending: $42.92B; Up $3.29B (+8.3%)
      • 2017: Homeowner w/o Mtge
    • Loser – Homeowner w/o Mtge– Pet Spending: $19.81B; Down -$3.37B (-14.6%)
      • 2017: Homeowner w/Mtge
    • Comment – Winner and loser flipped. W/O Mtge group was driven down by older workers with paid off homes.
  • Area Type – Central City led the way in the movement to Urbanize Total Pet Spending – another flip.
    • Winner – Central City – Pet Spending: $23.59B; Up $2.66B (+12.7%)
      • 2017: Rural
    • Loser – Rural – Pet Spending: $7.05B; Down -$2.99B (-29.8%)
      • 2017: Central City
    • Comment – Areas under 2500 population – down -$3.23B. Areas over 2500 – up $4.7B.
  • Education – HS Grads with some College gave back 88% of their 2017 gain and flipped from winner to loser.
    • Winner – BA/BS Degree – Pet Spending: $25.13B; Up $2.63B (+11.7%)
      • 2017: HS Grad w/some College
    • Loser – HS Grad w/some College – Pet Spending: $12.99B; Down -$3.47B (-21.1%)
      • 2017: Assoc. Degree
    • Comment – The BA/BS group led the way but groups with at least an Associate degree were up $4.87B. Higher Education, which generally generates higher income, has moved back up in importance in Total Pet Spending.
  • Age – The 55>64 yr olds flipped again, but this time it was from winner to loser.
    • Winner – 35>44 yrs – Pet Spending: $14.46B; Up $2.31B (+19.0%)
      • 2017: 55>64 yrs
    • Loser – 55>64 yrs – Pet Spending: $17.50B; Down $3.95B (-18.4%)
      • 2017: <25 yrs
    • Comment: The 55>64 yr olds stood alone as every other age group increased their Total Pet spending.
  • Income – No repeats or flips here but the over $150K group was up $3.12B
    • Winner – $150 to $199K – Pet Spending: $9.12B; Up $1.96B (+27.4%)
      • 2017: $100 to $149K
    • Loser – Under $30K – Pet Spending: $9.47B; Down -$1.44B (-13.2%)
      • 2017: $30 to $39K
    • Comment – Although the increase was definitely skewed towards higher incomes, it was a roller coaster ride. Over $100K – Up $3.45B; $50>99K – Down -$1.54B; $30>49K – Up $1.0B; Under $30K – Down -$1.44B
  • Occupation – Another dual flip between the winner and the loser and we’re back to a more “expected” outcome.
    • Winner –– Self-Employed – Pet Spending: $7.24B; Up $1.83B (+33.8%)
      • 2017: Blue Collar Workers
    • Loser – Blue-Collar Workers – Pet Spending: $11.84B; Down -$2.77B (-18.9%)
      • 2017: Self-Employed
    • Comment – In 2017 Blue-Collar workers were the big movers. In 2018 they gave back 64% of their gain. In 2018 Self-employed workers gained 4% in CUs and 28% in Income and spent some of the extra $ on their pets.
  • CU Composition – Married Couples only, the perennially best performing segment, flipped from winner to loser.
    • Winner –– Singles – $14.99; Up $1.64B (+12.2%)
      • 2017: Married, Couple Only
    • Loser – Married, Couple Only – $24.58B; Down -$1.72B (-6.5%)
      • 2017: Married Oldest Child <6
    • Comment – In 2018 there were 2 choices for increased pet spending. You needed to be single or a married couple with children of any age. Every other CU composition segment spent less.
  • # in CU – This dual winner/loser flip is mind blowing and likely unprecedented.
    • Winner – 1 Person – Pet Spending: $14.99B; Up $1.64B (+12.2%)
      • 2017: 2 People
    • Loser – 2 People – Pet Spending: $33.36B; Down -$1.96B (-5.6%)
      • 2017: 1 Person
    • Comment: In a “normal” year 2 people is the magic number. In 2018 the rules changed. 1, 3 or 4 person CUs spent more. 2 and 5+ person CUs spent less. I guess this shows that married couples are “limited” to 2 children.
  • Region – The Midwest held on to the winners spot in 2018.
    • Winner – Midwest – Pet Spending: $17.76B; Up $1.32B (+8.0%)
      • 2017: Midwest
    • Loser – Northeast – Pet Spending: $13.85B; Down -$0.97B (-6.6%)
      • 2017: West
    • Comment – Only the Northeast spent less. The other regions had a combined increase of $2.44B.
  • # Earners – 1 Earner, 2+ CUs went from Winner to Loser. More earners usually means more income and spending.
    • Winner – 2 Earners – Pet Spending: $31.13B; Up $0.89B (+2.9%)
      • 2017: 1 Earner, 2+ CU
    • Loser – 1 Earner, 2+ CU – Pet Spending: $16.82B; Down -$1.23B (-6.8%)
      • 2017: No Earner, Single
    • Comment – CUs where everyone works were up $2.34B. Apparently the only situation that the # of earners didn’t matter in 2018 was for Singles – No Earner, Up $0.85B; 1 Earner, Up $0.79B.
  • Race/Ethnic – Same Winner & Loser. White, Not Hispanics account for 86% of Pet $, but only 48% of the increase.
    • Winner – White, Not Hispanic – Pet Spending: $67.86B; Up $0.71B (+1.1%)
      • 2017: White, Not Hispanic
    • Loser – Asian American – Pet Spending: $1.51B; Down -$0.11B (-6.9%)
      • 2017: Asian American
    • Comment – Only Asian Americans spent less. Hispanics and African Americans spent a total of $0.86B more.

We’ve now seen the best overall performers and the “winners” and “losers” in terms of increase/decrease in Total Pet Spending $ for 12 Demographic Categories. Not every good performer can be a winner but some of these “hidden” segments should be recognized for their outstanding performance. They don’t win an award, but they deserve….

HONORABLE MENTION

Let’s start with the Millennials. The Gen Xers were the best performers and had the biggest increase, but the Millennials were not far behind with a $3.4B increase. You also see the impact of this youth “movement” in other honorees. The Under 25 group is officially getting in the Pet Parenting game with a 41% spending increase. Married with Children CUs had a $2.4B spending increase but the biggest lift, +45%, came from those with the youngest children and probably younger parents. Homeowners, with and without mortgages had a net spending drop of -$0.08B. Without Renters, the industry would have had no increase in Total Pet $. Renters are also more likely to be younger but there is also a growing number of downsizing older Americans in this segment.

College Grads get all the accolades. However, in 2018 the Associates Degree group was up $1.75B (+22.4%) with 111% performance. In Occupation, it is all about Managers or Self-Employed. The regular white collar workers had a $1.64B increase with 103% performance. Without the contribution of these 2 groups, 2018 Total Pet Spending was down.

Summary

Pet spending increased $12.8B (19.9%) from 2014 to 2017. It was primarily driven by the movement to upgrade to Super Premium Food, but it did not come easy. Value shopping, especially on the internet, and trading $ between segments created turmoil in the industry. Furthermore, 77% of the increase came in 2017. That brings us to 2018.

In 2018, the spending increase was minor, $1.47B (1.9%). This bland increase included a $2.3B drop Pet Food and a $2B record increase in Services. There were also outside factors at work. The FDA warning regarding grain free dog food and added tariffs to Supplies depressed spending in the second half of the year. However, the biggest change was a $6.5B drop in spending by the Baby Boomers. Fortunately, the other groups, especially the younger ones, stepped up to keep things positive but there were some changes in the spending demographics. The demographic groups responsible for most of Total Pet Spending were the same as those in 2017. However, there were changes in their spending share rankings. More Earners and Higher Education moved up in rank and performance, while 35>64 yr olds, Married Couples and Wage/Salary earners fell in rank. In fact, the performance of 7 groups fell indicating more balanced spending.

In terms of performance, the most influential demographic big spending groups remained at 6. However, Income now stands alone at the top with the other 5 clearly on a lower tier. Knowing the demographic segments in these categories allows industry participants to more effectively target their best customers and… those most in need of improvement.

The most significant change in the best and worst performing individual demographic segments was Gen Xers replacing Boomers at the top. The biggest changes occurred in $ and there was turmoil. 13 segments (54%) switched from Winner to Loser or vice versa. Overall, the youth movement was probably the key spending trend in 2018 and is reflected in the increased spending by a number of segments – not just age groups, including Center City, renters, singles and married couples with children. As always, to get to the heart of the matter and to more actionable data you must “drill down”. This will become even more apparent as we turn our analysis to the individual industry segments.

But before we go…The “Ultimate” Total Pet Spending Consumer Unit in 2018 consists of 2 people – a married couple, alone. They are in the 45 to 54 age range. They are White, but not of Hispanic origin. At least one of the them has an Advanced College Degree. They have their own business and are doing well  – over $200K. They’re working to pay off their house located in a lovely, small suburb of a metropolitan area with a population of about 3,000,000 in the West.

 

 

2018 U.S. Pet Spending by Generation – A Baby Boomer Bust?

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In 2018 Americans spent $77.60B on our companion animals, 0.98% of $8.0 Trillion in total expenditures. Pet Spending was up only $1.47B (+1.9%), a marked change from the +$9.8B in 2017. There were a number of factors affecting pet spending in 2018. The FDA warning regarding grain free dog food helped drive spending down. Increased tariffs on Supplies flattened spending late in the year in that segment. Veterinary Services had a small increase, but it was almost entirely driven by inflation. The only truly good news came from Services, which had the biggest increase in history.

In this report we will look at how these factors and others affected the Pet Spending for today’s most “in demand” demographic measurement – by Generation. Baby Boomers have driven the industry. Are they starting to fade? Are Gen Xers and Millennials stepping up? Using data from the US BLS Consumer Expenditure Survey we will look for answers.

We’ll start by defining the generations and looking at their share of U.S. Consumer Units (CUs are basically Households)

GENERATIONS DEFINED

              • Millennials: Born 1981 to 1999. In 2018, Age 19 to 37
              • Gen X: Born 1965 to 1980. In 2018, Age 38 to 53
              • Baby Boomers: Born 1946 to 1964. In 2018, Age 54 to 72
              • Silent Generation: Born 1928 to 1945. In 2018, Age 73 to 90
              • Greatest Generation: Born before 1928. In 2018, Age 91+

  • Baby Boomers are still the largest number of CU’s at 43.8M and 33.3% of the total but they are losing ground. In fact, they have 1.3M fewer CU’s than in 2016.
  • The 2 Oldest Generations will continue to lose CUs primarily due to death or movement to permanent care facilities. On the other side, the Gen Xers increased their CU count. One factor is a rising divorce rate in the 45+ age group.
  • Millennials have the largest number of individuals, but they rank only third in the number of CU’s. However, this number is rapidly growing as once again a significant number gained financial independence in 2018.

Now let’s look at some key CU Characteristics

The only significant change was the increase in homeownership by the Gen Xers and Millennials. However, the overall homeownership numbers didn’t change due to a decrease by the oldest Americans.

  • CU Size – CUs with 2+ people account for 70.5% of all U.S. CUs (down from 71.3% in 2017) and 80.9% of pet $ (down from 82.5% due to a spending drop by 2 person CUs). Despite 2+ million more CUs, Millennials held their ground. CU size, with all the related responsibilities, still peaks with the Gen Xers and then starts dropping. The Boomers are the last group with 2+ CUs. However, their size fell from 2.2 to 2.1 probably because many adult children moved out.
  • # Children < 18 – 28.0% of U.S. CU’s have children and they generate 30.5% of Pet Spending. Driven by a $2.4B increase by Married Couples with children, CUs with children are once again earning their share. However, the story is more complex. As expected, Single parents spent the least, but the big change came in Married Couple only CUs – down -$1.72B. However, the Pet Spending drop for all 2+ CUs without children was even worse, -$2.5B. Thankfully, single CUs were up $1.64B. There were no changes in the # of children per CU in 2018 but there were definite changes in pet spending behavior. Married with Children and singles both spent significantly more on their pets. The Married with Children group tends to skew younger, but singles have higher numbers at both ends of the age range.
  • # Earners – While not as important as income, Pet spending is also tied to the number of earners in a CU. 2+ person, 2 Earner CUs annually spend 19% more on their pets than 1 Earner CUs. As the chart shows, the “earning” is being done in America by Gen Xers, Millennials and Boomers. However, the Boomers will inevitably fade.
  • Homeownership – Owning and controlling your own space has been a major factor in increased Pet Ownership and spending. Driven by the younger groups, homeownership increased to 63.48% from 62.9%. Homeowners w/mtges spent $3.3B more on their pets but couldn’t overcome a -$3.4B drop from homeowners w/no mtge. As a result, the homeowners share of Total Pet Spending fell from 81.4% to 79.8%. Ultimately, renters, with a $1.64B increase kept the industry positive for the year. The key to increased pet spending in 2018 was paying a monthly housing bill.
    • Millennials are still the most common renters in society, but their level of Homeownership increased from 35% to 37%. However, it is still only 58% of the national average and about 2/3 of the rate of Gen Xers and Boomers when they were the same age.
    • Gen Xers passed the national average in 2018 and Homeownership continues to increase up to age 90.

Next, we’ll compare the Generations to the National Avg.:

In Income, Total CU Spending, Total Pet Spending and the Pet Share of Total CU Spending

CU National Avg: Income – $78.635; Total CU Spending – $61,160; Total Pet Spending – $598.41; Pet Share – 0.98%

  • Income – The Gen Xers are the leaders and widened the gap with a 12.1% increase. The Boomers earn 25% less but are the only other group to exceed the national average. Income drops radically in the older groups as retirement becomes almost universal. Millennials’ income grew 9% but is less than the Boomers and only 63% of the Gen Xers.
  • Total Spending – The Gen Xers make the most and spend the most but it’s not out of line with their income. Boomers also spend more than the average but their after tax income still supports it. The older groups are actually deficit spending in relation to their after tax income. The Millennials’ spending increased 3.1%, second only to the +3.3% by Gen Xers. With increases in CUs, Income and Spending, the Millennials’ retail importance is still growing.
  • Pet Spending – Only 2 groups exceed the national average. However, for the first time, Boomers don’t hold the top spot. That now belongs to the Gen Xers. Millennials also made a significant move, up to 81.4% from 69.6% in 2017.
  • Pet Spending Share of Total Spending – The national number fell slightly from 0.99% to 0.98%. However, the most significant change can be seen in comparing the 2017 and 2018 numbers for all groups. The Boomers dominated in 2017, with 1.28% of all their expenditures being spent on their pets. In 2018, they are still the only group to spend more than 1% of their total on their pets. However, every other group had an increase. In fact, all CUs under 90 yrs old now spend at least 0.92% of total spending on pets. This is an amazing balance and bodes well for the future.

Now, let’s look at Total Pet Spending by Generation in terms of market share as well as the actual annual $ spent for 2014 through 2018. The 2018 numbers are boxed in red (decrease) or green (increase) to note the change from 2017.

  • Boomers are still the biggest force in Pet Spending, but their share fell precipitously to 37.7% from 46.8% in 2017.
  • There are definite age-related patterns which are readily apparent in the bar graph. Spending in the oldest groups is relatively low and falling. In contrast, the two youngest groups are showing consistent year after year growth which spiked in 2018. The Boomers are in the middle. They still have the biggest share but are also the most likely group to have a strong reaction to trends, especially in this era of super premium foods. With their tremendous buying power, this can cause major spending swings impacting the whole industry.
  • In 2018, the Boomers spending plummeted, -$6.5B, but the Gen Xers and Millennials stepped up, +$7.2B. The older groups also contributed, with double digit percentage increases.
  • Boomers – Ave CU spent $672.03 (-$132.91); 2018 Total Pet spending = $29.61B, Down -$6.48B (-18.0%)
    • 2014>2018: Up $0.14B; They have been on a spending roller coaster and are now back to their 2014 $ level.
  • Gen X – Ave CU spent $708.32 (+$91.95); 2018 Total Pet Spending = $25.15B, Up $3.81B (+17.9%)
    • 2014>2018: Up $7.39B; Their annual Pet spending growth since 2014 has been the most consistent of any group, but their 2018 increase of $3.8B surpassed their total increase from 2014 to 2017.
  • Millennials – Ave CU spent $486.85 (+$73.71); 2018 Total Pet Spending = $16.92B, Up $3.42B (+25.4%)
    • 2014>2018: Up $7.23B; The Millennials had a big lift in spending in 2014 but Spending grew only slightly in 2015. Since then, their total pet spending has grown by over $7B, with almost half of this coming in 2018.
  • Silent Gen. – Ave CU spent $420.46 (+$51.66); 2017 Total Pet Spending = $6.72B, Up $0.66B (+10.8%)
    • 2014>2018: Down $0.15B; They still spend a relatively high amount on their pets, but age is becoming a factor.
  • Greatest Gen.– Ave CU spent $179.73 (+76.82); 2017 Total Pet Spending= $0.19B, Up $0.06B (+40.8%)
    • 2014>2018: Down $0.34B; After a lifelong commitment to their pets, their Pet Parenting days are fading away.

The Boomers backed off in Pet Spending in a big way in 2018, but the younger groups immediately made up the difference…and more. Plus, the oldest groups also stepped in to help generate a more positive year for the industry.

Let’s look at the individual segments. First, Pet Food…

  • For Boomers and the younger groups, the up and down, trendy nature of Pet Food is readily apparent, but the swings in spending are more pronounced for the Boomers. In the older generations, pet ownership is fading.
  • The Millennials’ have led the way in food trends, including value shopping and their performance in any given year was matched in the following year by Gen Xers and Boomers …until 2018, when the Boomers broke the pattern.
  • Boomers – Ave CU spent $264.73 (-$84.19); 2018 Pet Food spending = $11.78B, Down $3.93B (-25.0%)
    • 2014>2018: Up $2.04B – After a big lift in 2017, spending plummeted, in part as a reaction to the FDA warning.
  • Gen X – Ave CU spent $234.05 (+9.53); 2018 Pet Food spending = $8.32B, Up $0.61B (+7.9%)
    • 2014>2018: Up $1.33B If this highest income group reacted to the FDA, it was to further upgrade their food.
  • Millennials – Ave CU spent $174.76 (+$20.36); 2018 Pet Food Spending $6.04B, Up $0.99B (+19.6%)
    • 2014>2018: Up $1.76B They are the only group with increases in 2016, 2017 and 2018. They are growing in numbers and in their commitment to their pets. Since 2014 they have been the pioneer in food upgrades.
  • Silent Generation – Ave CU spent $170.43 (+$13.80); 2018 Pet Food spending = $2.67B, Up $0.10B (+3.9%)
    • 2014>2018: Down $0.21B; They remain committed to their pets, but their numbers are starting to fade.
  • Greatest Gen. – Ave CU spent $34.76 (-$16.94); 2018 Pet Food spending = $0.03B, Down $0.03B (-53.1%)
    • 2014>2018: Down $0.15B; CUs are down 60% since 2014. At 91+ years old, their pet parenting days are ending.

Pet Food Spending is driven by trends. In 2018, the FDA warning for grain free dog food created a turmoil. Boomers dialed back to more regular food. However, it appears that the younger groups were unaffected or may have upgraded to even more expensive varieties. Now, let’s look at Supplies Spending.

  • Boomers still have the largest share, barely, but the younger groups have their biggest “presence” in Supplies. Gen Xers and Millennials together account for 57.6% of Supplies spending.
  • Baby Boomers – Ave CU spent $156.81 (-$10.71); 2018 Pet Supplies spending = $6.86B, Down $0.62B (-8.3%)
    • 2014>2018:Up $0.19B; A big lift in 2017, then a cut back in 2018. They may be the only group impacted by tariffs.
  • Gen X – Ave CU spent $192.20 (+$20.46); 2018 Pet Supplies spending = $6.82B, Up $0.85B (+14.2%)
    • 2014>2018: Up $1.34B; Gen Xers perform best in Supplies. They paid for their Food Upgrade in 2015 with Supplies $ but they have come back strong. They lead in CU spending and are virtually tied in $ with the Boomers.
  • Millennials – Ave CU spent $131.13 (+$18.79); 2018 Pet Supplies spending = $4.57B, Up $0.90B (+24.7%)
    • 2014>2018: Up $1.54B; Supplies are again Millennials’ best performing segment. In 2016 they cut spending to help fund increases in Food and Veterinary. Since then, they have come back strong, +$1.8B.
  • Silent Generation – Ave CU spent $90.69 (+3.77); 2018 Pet Supplies spending = $1.47B, Up $0.04B (+2.7%)
    • 2014>2018: Down $0.23B; Pattern is similar to Gen X, but not as pronounced and with lower results.
  • Greatest Gen. – Ave CU spent $65.77 (+$50.99); 2018 Pet Supplies spending = $0.07B, Up $0.05B (+249%)
    • 2014>2018: Down $0.05B; Supplies generally have a lower priority for these oldest Pet Parents, but not in 2018.

Most groups cut back on Supplies spending in 2015 due to a combination of rising prices and an attempt to compensate for the cost of upgrading their pet food. In 2016 Consumers value shopped for food and spent some of the saved money on Supplies. Supply prices dropped in 2017 and basically everyone under 90 years spent more! Late 2018 saw added tariffs. Boomers dialed back their purchase frequency. Everyone else was either unaffected or bought more, early.

Next, we’ll turn our attention to the Service Segments. First, Non-Veterinary Pet Services

  • Gen Xers took over from the Boomers. This segment is skewing younger as the Gen X/Millennial share is now 60.2%.
  • Baby Boomers – Ave CU spent $62.99 (-$2.53); 2018 Pet Services spending = $2.76B, Down $0.17B (-5.9%)
    • 2014>2018: Up $0.08B; Boomers still need Services. Their spending drop was the smallest of any segment.
  • Gen X – Ave CU spent $94.22 (+$39.54); 2018 Pet Services spending = $3.34B, Up $1.44B (+75.9%)
    • 2014>2018: Up $1.75B; Had a big increase in income. Spent significantly more for the convenience of Services.
  • Millennials – Ave CU spent $54.71 (+$17.96); 2018 Pet Services spending = $1.91B, Up $0.71B (+59.0%)
    • 2014>2018: Up $1.20B; They are the only group with an increase every year, but spending “took off” in 2018.
  • Silent Generation – Ave CU spent $43.66 (-$0.92); 2018 Pet Services spending = $0.71B, Down $0.02B (-3.6%)
    • 2014>2018: Up $0.05B; They definitely have a need. Their spending has been reasonably consistent.
  • Greatest Gen. – Ave CU spent $6.62 (+$2.92); 2018 Pet Services spending = $0.007B, Up $0.002B (+42.6%)
    • 2014>2018: Down $0.03B; A continued drop in the number of CU’s and in pet parents, but eked out an increase.

This segment has always found a way to grow every year – until 2017. The small drop in spending was caused by a combination of factors. An extremely competitive environment created deals so even with increased frequency, consumers paid less. In 2018, the increased number of outlets really hit home, especially for the younger groups. Gen Xers and Millennials used some of their rising incomes to spend $2.15B more for the convenience of Pet Services.

Now, Veterinary Services

  • Boomers are still the biggest spenders in this segment, but they only lead the Gen Xers because they have more CUs.
  • The younger groups both have a consistently growing commitment to this Pet Parenting responsibility. The combined veterinary spending of Millennials and Gen Xers has increased $5.7B (+106%) since 2014.
  • Boomers – Ave CU spent $187.50 (-35.48); 2018 Veterinary spending= $8.21B, Down $1.76B (-17.7%)
    • 2014>2018: Down $2.17B; Like Food, the other “need” segment, they cut Veterinary spending by a double digit %.
  • Gen X – Ave CU spent $187.85 (+$22.42); 2018 Veterinary spending= $6.67B, Up $0.91B (+15.9%)
    • 2014>2018: Up $2.97B; Since 2016, their Veterinary spending has exceeded the CU Average. In 2018, although only by a margin of $0.35 per year, they took over the top spot in CU spending.
  • Millennials – Ave CU spent $126.25 (+$16.60); 2018 Veterinary Spending $4.40B, Up $0.82B (+23.0%)
    • 2014>2018: Up $2.73B; Their CU spending is up 100% since 2014. Veterinary has become a much bigger priority.
  • Silent Generation – Ave CU spent $115.68 (+$35.01); 2018 Veterinary spending $1.87B, Up $0.55B (+41.1%)
    • 2014>2018: Up $0.24B; Money is always a factor, but they are still committed to the health of their pets.
  • Greatest Generation– Ave CU spent $72.58 (+$39.79); 2018 Veterinary spending= $0.08B, Up $0.03B (+73.5%)
    • 2014>2018: Down $0.12B; Veterinary care is still a big priority for the remaining pet parents in this oldest group.

Gen Xers and Millennials have consistently increased their commitment to Veterinary Services. In 2014, their share of Veterinary Spending was 30%. It is now 52.1% – a 74% increase. This is a big, fundamental change in spending behavior.

One last chart to compare the share of spending to the share of total CU’s for the 4 largest generations.

  • Gen X Performance – Total: 118.5%; Food: 106.8%; Supplies: 127.6%; Services: 142.0%; Veterinary: 116.3%
    • In 2018 the Gen Xers took over the top spot in performance from the Boomers. They “earned their share” in every industry segment as well as Total Pet. They have increased their Total Pet Spending every year since 2014. During this time, their spending has become more diverse and their performance has improved. The only reason that they are not the leaders in Total $ is that the Boomers have more CUs. Gen Xers range in age from 38 to 53 so they are just entering the peak earning years. Expect their commitment and pet spending to continue to grow.
  • Baby Boomers Performance–Total: 113.1%; Food: 122.7%; Supplies: 104.1 %; Services: 94.9%; Veterinary: 116.1%
    • Boomers led the way in building the industry and are still the “top dogs” in $. They earn their share and in fact, are the still the spending leader in Total Pet and every segment but Services. However, their CU numbers are beginning to fall – down 1.3M (-3%) since 2016. Their spending drop in 2018 was by far the biggest ever and the only time that they spent less in every segment. They should hold the lead in Pet $ for several more years and be a major force for many more, but the Gen Xers and then Millennials are preparing to take their turn at the top.
  • Millennials Performance – Total: 81.2%; Food: 79.0%; Supplies: 87.1%; Services: 82.4%; Veterinary: 78.2%
    • Like the Gen Xers, Millennials have increased their pet spending every year since 2014. Their spending has also become more evenly balanced across the segments. They are growing in CU numbers but their future as the Pet Parenting spending leaders is still a long way off. They need increased income and a more stable home situation. They are educated and well connected. Indications are that they may lead the way in adopting new trends, especially in food. Their progress is good news, but in reality, their leadership is still more than a decade away.
  • Silent Generation Performance – Total: 69.4%; Food: 75.1%; Supplies: 60.2%; Services: 65.8%; Veterinary: 71.6%
    • This group ranges in age from 73 to 90. Pet Parenting is more challenging after age 75. The desire and the commitment to their pets is still there. This is evident in the fact that 0.92% of their total CU spending is on pets.

Baby Boomers are still the Pet $ leaders, but Gen Xers, followed by Millennials are ultimately the future of the industry. Both groups seem ready, willing and able to take their turn at the top. As these groups have risen, Pet Spending has become more balanced across the generations. This bodes well for the continued strong growth of the industry.