GLOBAL PET EXPO 2020…Showcasing The World of Pets!

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The premiere event of the U.S. pet industry gets under way on February 26th. This is the 62nd show in a tradition that began in 1958. Both the show and the industry have grown spectacularly since then. In 1960 spending in the pet industry totaled $1.1B. In 2018 it was $78.6B, with $49B in Pet Products alone. Even accounting for inflation, pet spending has grown 80% faster than H/H income and twice as fast as H/H spending. The GPE began as the APPMA with 17 exhibitors in 30 booths. It now is regularly over 1100 exhibitors, who occupy over 350,000 square feet of booths plus a 30,000 square foot new product showcase. Global Pet Expo is truly The Showcase of the World of Pets.

The industry’s growth over the past 60+ years was and is an evolutionary process. Perhaps, the most significant change was in our attitude towards our pets. Over the years they went from being pets to companion animals then to our pet children as pet parenting became the norm. Recently, this has gone a step further as we have personified and humanized our pets. We now project our needs to those of our pets.

The structure of the industry has also evolved as we saw the rise of pet chains and superstores and an explosion of “pet space” in mass market retailers which provided the room for the ever-growing product wants and needs of pet parents. The number of outlets selling pet supplies went from 86,000 in 1992 to over 200,000 today…plus the internet. This has produced a competitive market, unlike anything we have seen before. This competitive pressure has driven an ever increasing number of mergers and acquisitions and made it even more difficult for new companies to find success.

Then, in late 2018 the government also got involved. Even now, we are still dealing with the impact of the FDA warning on grain free dog food, concerns regarding CBD products and of course, the added tariffs on Supplies. Plus, Global is scheduled a month earlier this year. Some or all of these factors undoubtedly contributed to a small reduction in the number of exhibitors at the 2020 GPE, but the average booth size is again up 5%. Summary: No worries! Every product that you’re looking for and plenty that you’ve never seen are at GPE 2020. Let’s look at what awaits you in Orlando:

First, some 2020 GPE “booth” facts: (Note: These numbers reflect committed booths as of 1/25/20 – more to come)

  • 1064 booths – down 70 from the same time last year, but exhibitors are still opting in. Better late than never.
  • 349,000+ sq ft of exhibit booth space (Not counting the 30,000 sq ft new product area)
  • 20 x 10 is again the most popular size – 357 (33.6%), reflecting the need for more space.
  • Booths are larger than 2019 – the “average” booth is over 327 sq ft, up 5% from 2019.
  • Size matters – Booths 300 to 800 sq ft (29%) occupy 42% of the space. Those over 1000 sq ft (5%) cover 28%.

Will you see any new exhibitors or is it the usual group? The “usual” group is definitely there (760 from 2019) but…

  • 304 (28.4%) of the GPE 2020 Exhibitors didn’t exhibit at GPE19 – 2 of every 7 Exhibitors were not at GPE 2019!

Specially Designated “Floor Sections” at GPE account for 40% of Booths. Let’s compare them to last year.

  • International – Separate pavilions for 4 countries – China, Taiwan, Great Britain and Canada, Total: 59 Booths. However, this is only about 22% of the 268 exhibitors from 26 countries outside the U.S. – GPE is truly GLOBAL!
  • Natural – 174 Booths: Up 8 (+5%) “Natural” continues to have a very strong consumer appeal.
  • Boutique – 71 Booths: Up 9 (+14.5%) A continued resurgence, surpassing the previous peak (65) in 2014.
  • Aquatic – 37 Booths but 8 are still uncommitted. Popularity of this category is trending down.
  • 1st Time Exhibitors – 84 Booths, ↓27%. Most of the 193+ 1st Timers chose the regular floor or another special section. GPE is a “must do” for new companies and New – products and companies are a major focus of GPE.

There are large numbers of exhibitors in the “regular” floor space who would qualify for inclusion in these sections. You need to “work” the whole show to ensure that you get a full view of the product categories of interest to you. I will again be creating a GPE Exhibitor Visit Planner that allows attendees to plan their floor time by targeting the exhibitors with products of interest. The GPE 2020 SuperSearch will be made available on February 4th and be regularly updated with last minute changes. Now, let’s take a look at the results from this year’s research on exhibitors’ product offerings.

First, we’ll Compare Exhibitor Types – By function: By Animal type (Numbers are based assigned booths as of 1/25/20)

Because of the overall drop in booths, in this chart and others pay particular attention to the change in share. A change of (+/–) 0.5% is significant. In terms of booth count, any increase is significant and take note of any drop of 10% or more.

  • Dogs Still Rule – Although down a bit, to 4%, 5 out of every 6 booths are selling dog products.
  • Cats continue to gain share – In 2020, Cat Products are offered by 56% of exhibitors. Up from 40% in 2014.
  • Fish/Aquatic – This category had the biggest decrease and is down 42% since 2017.
  • Other Animals – All held their share and Small Animals and Horses gained ground.
  • Business Services – Besides wellness products, this is the other big trend in the Industry. The huge lift is driven by private label/OEM and reflects the changing needs in the industry. There were only 8 exhibitors in 2014.
  • Distributors – This segment remains stable but is still double the number that exhibited in 2014.
  • Gift/Gen Mdse – This category has been declining since peaking at 91 in 2016.

Dogs and Cats are the undisputed royalty of Pet. Because of their huge impact on the industry. I have divided the products designed for them into 33 subcategories. Let’s see how this year’s GPE Top Ten (by booth count) are doing.

There was a shuffling in the rankings but 6 of 10 categories gained share – 5 were up 0.5% or more. Food was the only one with an increase in # and share. Waste Pickup made it into the Top 10, replacing grooming tools which fell to #12.

  • Treats are still #1 and continue to gain share. 1 in 3 booths offers treats. (Many supplements are in treat form.)
  • OTC Meds/Supplements/Devices also continues to gain share. In 2014 there were only 113 exhibitors.
  • Food and Feeding Accessories both moved up in rank, but only Food increased in numbers and share.
  • Toys – It’s not all about health and nutrition. Toys held onto #3. They lost a few booths but gained share.
  • Collars, Leads & Harnesses – They held their share but are significantly below their 2015 count of 247.
  • Beds/Mats – They had the biggest drop in number and share and fell to 6th place…just barely.
  • Apparel – They lost a little in count and in share but fell from 7th to 8th mainly because of the lift by Food.
  • Waste Pickup – They moved into the top 10, from #11 because Grooming Tools lost 24 exhibitors. (20%)

Pet Parents’ concern for the overall health and wellness of their “pet children” is still the current biggest trend.

The last chart details the specifics for all 33 of the Dog/Cat product categories that I defined. Of note: All the data inputs for this report and the SuperSearch tool come from  a review of the GPE online exhibitor product listings AND visits to over 1100 websites. They’re not 100% accurate, but pretty close. Which categories are of interest to your business?

GPE 2020 showcases the World of Pets with products, services and education to fulfill every need. However, to reap the benefits, you need a plan. Exhibitors must showcase the “right” items. Attendees need to strategically analyze their data, determine what they need to improve their business and develop a plan to find the products to fulfill their needs. Then…execute the plan. If they do nothing else at GPE, attendees have 1 minute and 21 seconds to spend with each exhibitor. The GPE 2020 SuperSearch will be released next week. It can help. Try it out and…Good luck in Orlando!

 

 

 

 

2018 Pet Food Spending was $28.85B- Where did it come from…?

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As we continue to drill ever deeper into the demographic Pet spending data from the US BLS, we have now reached the level of individual Industry segments. We will start with Pet Food, the largest and arguably most influential of all. We have noted the trendy nature of Pet Food Spending – 2 years up then spending goes flat or turns downward for a year. This pattern began in 1997 but has become more pronounced since 2003. After the dip in 2016, Food spending increased by $4.6B in 2017 due to a deeper market penetration of super premium foods. We then expected a small increase in 2018 but what we got was a $2.27B decrease (-7.3%). This was likely due to the reaction to the FDA warning on grain free dog food. A pattern of over 20 years was broken by 1 statement. Let’s take a closer look.

First, we’ll see which groups were most responsible for the bulk of Pet Food spending and the $2.27B drop. The first chart details the biggest pet food spenders for each of 10 demographic categories. It shows their share of CU’s, share of pet Food spending and their spending performance (Share of spending/share of CU’s). 9 of the groups are the same as Total Pet. However, Pet Food spending by Age group has become more balanced and skewed slightly older. The categories are presented in the order that reflects their share of Total Pet Spending. This highlights the differences in importance. In Pet Food the # of earners is far less important while Marriage matters more. Also, while Income is still the highest performing demographic characteristic, it carries less weight in Food spending. Another big difference is that Total Pet had 6 groups performing at or above 120%. Pet Food had only 4. This indicates that Pet Food spending and Pet ownership is spread more evenly across demographic segments. Pet Products also had only 4 groups over 120%. This shows the influence of the Pet Food Segment which still accounts for 59% of Pet Products $ and 37% of all Pet Spending.

  1. Race/Ethnic – White, not Hispanic (83.2%) – down from 86.6%. This large group accounts for the vast majority of spending in every segment. Like 7 other big groups, their performance fell. It was down to 120.5% from 126.4%, but this category still ranks #4 in terms of importance in Pet Food Spending demographic characteristics. While Hispanics, African Americans and Asian American account for over 31% of U.S. CU’s, they spend only 17% of Pet Food $. However, this is up from 13% last year. Pet ownership is relatively high in Hispanic households and they fueled the growth, but it remains significantly lower for African Americans and Asian Americans.
  2. # in CU – 2+ people (80.3%) – down from 82.4%.The share of market for 2+ CU’s is over 80% for all segments but Services. Their overall Food performance fell from 115.6% to 113.8% largely because it was a bad year for 2 person CUs and a good year for singles. 2 Person households are still the performance leader but in the 2+ group only 4 person CU’s underperform…slightly. Their lowest performance rating is 94%, which is not bad. The old adage about Pet Spending is still true, “It just takes two.”
  3. Housing – Homeowners (76.8%) – down from 80.9%. Homeownership is a huge factor in pet ownership and more pet spending. However their share dropped and their performance fell from 128.6% to 121.0%. Homeownership went from 2nd to 3rd in terms of importance for increased pet Food spending. It was an incredibly bad year for Homeowners w/o a mortgage and a good year for renters.
  4. Income – Over $50K (68.7%) – down from 70.5%. Although their performance rating dropped significantly from 136.9% to 128.9%, CU income is still the single most important factor in increased Pet Food Spending. However, the over $50K income group has its smallest market share and lowest performance in the Food Segment. Since Pet Food is a “must buy” for Pet Parents, this is evidence that pet ownership is common across all income levels. The drop in share and performance was largely driven by a $2.9B decrease in spending by the $50>149K group.
  5. Education – Associates Degree or Higher (62.8%) – up from 55.4%. Education regained importance in Pet Food Spending. The performance of higher education grew from 102.4% to 115.2%. All groups with a formal degree after High School spent more. The other groups, especially HS grads w/some college spent less.
  6. Occupation – All Wage & Salary Earners (60.4%) – down from 67.7% – In an exact reversal of 2017, the spending of Blue-Collar workers dropped precipitously while the Self-employed spent more. Even though Tech/Sls/Clerical workers increased spending, the performance of All Wage & Salary earners fell from 110.8% to 98.9%. This big group is no longer “earning their share” in Pet Food Spending.
  7. # Earners – “Everyone Works” (58.2%) – down from 58.4%. There was little change from last year as their performance also fell slightly from 101.9% to 100.7%. Income matters most in Pet Food Spending but it appears that the # of Earners matters very little, regardless of whether overall spending in the segment is up or down.
  8. Age – 45>74 (60.4%) – down from 65.9%. There was a huge decrease by the 55>64-yr olds but the 35>54 yr olds also spent less. The 65>74 group increased spending by $0.92B so the “big” group became 45>74. The performance of the new group fell from 128.2% to 118.7% so “Age” category dropped out of the 120+% club.
  9. CU Composition – Married Couples (61.3%) – down from 62.5%. Although they lost a little in share and their performance fell from 126.3% to 123.5%, they moved up from 5th to 2nd place due to Married CUs with children.
  10. Area – Suburban (60.1%) up from 55.4%. Suburban areas are the biggest Food spenders and they gained share. Their performance jumped from 99.6% to 108.4% due to a bad year by Rural and a $1.5B gain by Suburbs >2500

9 out of 10 big spenders for Pet Food are the same as those for Total Pet and Pet Products but generally have a lower market share and performance. Pet Food spending fell $2.27B in 2018. We have strong initial indications that much of the drop came from a complete reversal of spending from the groups that upgraded in 2017, possibly due to the FDA warning. Income is still important but there are indications of more balanced spending in most demographic categories.

Now, we’ll look at 2018’s best and worst performing Pet Food spending segments in each category.

Even as we drill down to the Industry segment level, many of the best and worst performers are the ones that we would expect. In Pet Food spending, there are  7 that are different from 2017, which is 2 more than for Total Pet but the same as Pet Products. 7 of 12 winners are the same as Pet Products but all the losers match. This demonstrates the impact that the Food spending decrease had on overall Pet Products. Changes from 2017 are “boxed”. We should note:

  • Income is important in every segment. However, Food is the only segment in which the winner is not $200K+. Also, every income group above $50K is performing at or above 100% in Pet Food Spending.
  • # Earners – 1 Earner, 2+ CU’s took the top spot for the second consecutive year. While income is still the biggest factor, the number of earners is far less important in Pet Food than any other segment – more balanced spending.
  • Occupation & Education – The winners and losers returned to more “normal” segments.
  • Generation – As usual, the Boomers won, but the Millennials are no longer the worst performers – finally!
  • Age – Despite a terrible year, the 55>64-yr olds finished on top. The big news is the <25 group got off the bottom.
  • CU Composition – Married, Couples Only won for the 4th straight year.
  • Area – Rural won again but their performance fell from 238.9% to 154.2% and they dropped from 1st to 2nd

It’s time to “Show you the money”. Here are segments with the biggest $ changes in Pet Food Spending.

There is 1 repeat from 2017 – the South lost again. 17 of the 24 segments (71%) flipped from 1st to last or vice versa – talk about turmoil! 6 of the 12 categories had dual flips but we still had some surprise winners, like Millennials, 65>74 yr olds and Renters. It is at this level where the demographic uniqueness of the different industry segments truly shows up. Here are the specifics:

  • Income – The winner and loser flipped in 2018.
    • Winner – $150 to $199K – Pet Food Spending: $2.83B; Up $1.08B (+62.3%)
      • 2017: $40 to $69K
    • Loser – $50 to $69K – Pet Food Spending: $3.77B; Down $1.38B (-26.8%)
      • 2017: $150 to $199K
    • Comment – Only the $150>199K and $30>39K group spent more on Food in 2018, +$2.03B. The other groups – High, Middle and Low were down -$4.3B.
  • Generation – The Millennials finally earned some of their publicity with a win.
    • Winner – Millennials – Pet Food Spending: $6.04B; Up $0.99B (+19.6%)
      • 2017: Boomers
    • Loser – Boomers – Pet Food Spending: $11.78B; Down $3.93B (-25.0%)
      • 2017: Silent
    • Comment – Boomers are still the biggest spenders but are subject to big $ swings with their 4th consecutive flip.
  • Area Type – Rural gave back all of their 2017 gains and flipped from 1st to last.
    • Winner – Suburbs >2500 – Pet Food Spending: $12.97B; Up $0.78B (+6.4%)
      • 2017: Rural
    • Loser – Rural – Pet Food Spending: $3.70B; Down $2.47B (-40.0%)
      • 2017: Central City
    • Comment – Areas over 2500 pop. spent more, +$0.88B. Areas under 2500 spent a lot less, -$3.15B
  • Occupation – A dual flip from 2017.
    • Winner – Self-Employed– Pet Food Spending: $2.41B; Up $0.78B (+47.6%)
      • 2017: Blue-Collar Workers
    • Loser – Blue-Collar Workers – Pet Food Spending: $4.64B; Down $3.58B (-43.6%)
      • 2017: Self-Employed
    • Comment – This is where the spending flip becomes better defined. Blue-Collar Workers clearly backed down from their 2017 food upgrade, which was a likely reaction to the FDA warning. At the same time, the Self-Employed grew in number and took the opposite route by spending significantly more per CU on Pet Food.
  • Age – The 65>74 yr olds are truly a surprise winner.
    • Winner – 65>74 yrs – Pet Food Spending: $4.80B; Up $0.75B (+18.5%)                  
      • 2017: 55>64 yrs
    • Loser – 55>64 yrs – Pet Food Spending: $6.73B; Down $03.51B (-34.3%)
      • 2017: <25 yrs
    • Comment: The 55>64-yr olds flipped from 1st to last but all groups from 35>64 spent less. However, the older and younger groups spent more. The result was that Pet Food spending became more balanced in terms of age.
  • Housing – The unusual growth from renters came from both younger and older groups.
    • Winner – Renters – Food: $6.69B; Up $0.74B (+12.4%)
      • 2017: Homeowners w/o Mtge
    • Loser – Homeowners w/o Mtge – Food: $7.13B; Down $3.06B (-30.0%)
      • 2017: Homeowners w/Mtge
    • Comment – Homeowners w/o Mtge flipped from first to last but the decrease didn’t come from Retirees. Their spending was up. It likely came from Baby Boomers who have paid off their home but are still working.
  • # Earners – No Earner, Singles were the only group to increase CU spending on Pet Food.
    • Winner –– No Earner, Single – Pet Food Spending: $2.28B; Up $0.64B (+38.8%)
      • 2017: 1 Earner, 2+ CU
    • Loser – 1 Earner, 2+ CU – Pet Food Spending: $7.12B; Down $1.51B (-17.5%)
      • 2017: 2 Earners
    • Comment – 1 Earner, 2+ CUs flipped from biggest increase to biggest decrease but still remained the top performing group. This happened often in 2018 and shows just how big of a lead that they had on other groups.
  • Race/Ethnic – A dual flip as Hispanics moved to the top with a 29% spending increase.
    • Winner –– Hispanic – Pet Food Spending: $24.01B; Up $0.62B (+29.3%)
      • 2017: White, Not Hispanic
    • Loser – White, Not Hispanic – Pet Food Spending: $2.74B; Down $2.93B (-10.9%)
      • 2017: Hispanic
    • Comment – The U.S. is slowly becoming more racially/ethnically diverse. In 2014 White, Not Hispanics were 70.2% of U.S. CUs. In 2018 their share was down slightly to 69.0%. This group is by far the biggest spender in every Pet Industry Segment. However, they have their smallest share in Food, and it is slowly shrinking. In 2014 it was 86.7%. In 2018 it was down to 83.2%. Since it is a necessity, Food spending is one indicator of Pet ownership. Pet Ownership by Hispanics is relatively high. It may be increasing in Asian American and African American CUs.
  • CU Composition – A dual flip, but Married Couple Only is still the performance leader.
    • Winner – Married, Oldest Child <6 – Food: $1.16B; Up $0.56B (+93.4%)
      • 2017: Married, Couple Only
    • Loser – Married, Couple Only – Food: $9.06B; Down $2.05B (-18.4%)
      • 2017: Married, Oldest Child <6
    • Comment – In 2017 Married Couples with the oldest child <6 was the only segment in this category to have a decrease. In 2018, they were on top. However, Married, Oldest Child 6>17, Single Parents and Singles also spent more. Every other group spent less. It was an unusual year in Pet Food spending.
  • Education – Another dual flip and more evidence of the reversal of the 2017 upgrade.
    • Winner – Assoc. Degree – Food Spending: $3.4B; Up $0.52B (+18.0%)
      • 2017: HS Grad w/some College
    • Loser – HS Grad w/some College – Food Spending: $5.67B; Down $3.44B (-37.7%)
      • 2017: Assoc. Degree
    • Comment – Those with an Associate’s degree, College Grads, High School Grads and even those who didn’t finish High School all spent more on Food, but they couldn’t overcome the huge drop by HS Grads with some College.
  • # in CU – A final dual flip, but once again the loser remains the best performing segment in the category.
    • Winner – 3 People – Pet Food Spending: $4.67B; Up $0.47B (+11.2%)
      • 2017: 2 People
    • Loser – 2 People – Pet Food Spending: $12.28B; Down $2.53B (-17.1%)
      • 2017: 3 People
    • Comment: 3 person CU’s and singles were the only sizes with increased Food spending. This means that married couples with only 1 child had the biggest increase in pet food spending in 2018.
  • Region – Last year every region spent more. This year they all spent less.
    • Winner – West – Pet Food Spending: $6.78B; Down $0.14B (-2.1%)
      • 2017: Midwest
    • Loser – South – Pet Food Spending: $10.73B; Down $1.16B (-9.7%)
      • 2017: South
    • Comment – Although The South kept the “loser” position, the fact that every region spent less shows the widespread impact of the 2018 Pet Food spending reversal.

We’ve now seen the “winners” and “losers” in terms of increase/decrease in Pet Food Spending $ for 12 Demographic Categories. The results strongly reinforce our initial observations of a spending reversal by the groups that largely drove the $4.6B increase in 2017. Since the spending drop occurred in the second half, it is likely a reaction to the FDA warning about grain free dog food made in July of 2018. In this situation there were a number of segments with a huge decrease in spending. However, we have identified 11 of the 12 “winning” segments which unsuccessfully tried to reverse the $2.27B decrease in Pet Food Spending. They were not alone. Not every good performer can be a winner. Some “hidden” segments should also be recognized for performance. They don’t win an award, but they get…

HONORABLE MENTION

The spending lift by the <25 group may be the most significant because it signals increased involvement with pets. The $30>39K income group reflects the positive performance by Retirees. Asian Americans’ spending was up 35.5% which is a great sign as this group has the lowest percentage of pet ownership. Single Parents rarely win any spending awards. Their 13.7% increase deserves recognition. Also, the “bosses” generally get the credit, but the Tech/Sales/Clerical workers spent $0.54B more in 2018. Finally, the Millennials had the biggest increase, but the Gen Xers weren’t far behind, +$0.61B. The drop in Pet Food Spending was widespread, but 2018 wasn’t all bad news. 43 of 92 demographic segments, 46.7% spent more on Food.

Summary

As we have noted, the Pet Food spending drop in 2018 was unexpected as it broke a pattern of 2 years up followed by 1 year of flat or declining sales which has been going on since 1997. This trendy nature increased with the first significant move to premium foods in 2004. The Melamine crisis in 2007 intensified the pattern and resulted in a series of “waves” which became a tsunami with the introduction of Super Premium Foods.

The 25 to 34 yr old Millennials were the first to “get on board” with Super Premium in the second half of 2014. In 2015 a substantial portion of consumers began to upgrade to this new trend. The result was a $5.4B spending increase. These consumers were generally more educated, often worked as managers or were self-employed and had higher incomes. One negative was that they often paid for the upgrade by spending less in other segments. In 2016 the anticipated drop in spending happened. The “upgraded” group began value shopping for their new food and found great deals online and in some stores. They spent some of the $3.0B “saved” Food dollars in other segments but not enough to make up for the drop in Food. Total Pet Spending was down $0.46B. In 2017 we were ready for a new “wave”. Thanks to a very price competitive market, what we got was a deeper penetration of Super Premium foods. This group of upgraders was mostly middle-income, not college educated and often Blue-collars workers. Most also were in the 55>64 year old age group. The result was a $4.6B increase but this time there was no trading $ with other segments.

That brings us to 2018. We expected a small annual increase in Pet Food and spending in the first half was up $0.25B. Then the bottom dropped out as spending fell $2.51B in the second half. The timing of this spending drop, in correlation with the FDA warning on grain free is too close to be a coincidence. When we got the 2018 data, we began an in depth demographic analysis of Pet Food Spending. It turns out that the big decrease in pet food spending was coming directly from the groups who had fueled the big 2017 increase. They had obviously backed off from the previous year’s upgrade “en masse”. Fear for their pet’s welfare is the obvious reason for such an abrupt turnaround. This is especially true since the primary motivator for pet parents is the health and well-being of their pet children, especially regarding nutrition.

As you have seen from our analysis, it certainly caused turmoil in the segment as 71% of the demographic groups with the biggest change in Pet Food $ switched from first to last or vice versa from their position in 2017. However, It wasn’t all turmoil and bad news. 47% of 92 democratic segments increased pet food spending. They may have upgraded even more, added supplements or wanted more facts on grain free. The other good news is that the average gap between the best and worst performing segments in 12 categories fell by 23%. Pet Food spending is becoming even more demographically balanced in America. We’ll see what 2019 brings. Are we starting a new pattern or maybe no pattern?

Finally – 2018’s “Ultimate” Pet Food Spending CU is 2 people – a married couple, alone. They are 55>64 years old. They are White, but not of Hispanic origin. At least one has an advanced college degree and they both work in their own business. They earn $150 to $200K but are still paying for a mortgage on their house in a small suburb in the Midwest.

 

 

2018 Pet Products Spending was $48.65B – Where did it come from…?

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We looked at the Total Pet Spending for 2018 and its key demographic sources. Now we’ll start drilling down into the data. Ultimately, we will look at each individual segment but the first stop in our journey of discovery will be Pet Products – Pet Food and Supplies. Food and Supplies are the industry segments that are most familiar to consumers as they are stocked in over 200,000 U.S. retail outlets, plus the internet. Every week over 22,000,000 U.S. households buy food and/or treats for their pet children. Pet Products accounted for $48.65B (61.9%) of the $78.6B in Total Pet spending in 2018. This was down $1.046B (-2.1%) from the $49.69B that was spent in 2017. We have seen that this drop was caused by the reaction to the FDA warning on grain free dog food which drove food spending down in the second half combined with new tariffs on Supplies, which flattened spending in that segment in the second half.

Overall, in 2018 Pet Food spending fell -$2.27B, while Supplies spending growth slowed to +$1.22B. We’ll combine the data and see where the bulk of Pet Products spending comes from.

We will follow the same methodology that we used in our Total Pet analysis. First, we will look at Pet Products Spending in terms of the same 10 demographic category groups that were responsible for 60+% of Total Pet spending. Then we will look for the best and worst performing segments in each category and finally, the segments that generated the biggest dollar gains or losses in 2018.

The first chart details the biggest pet product spenders for each demographic category. It shows their share of CU’s, share of pet products spending and their spending performance (spending share/share of CU’s). Although their share of the total products $ may be different from their share of the Total Pet $, the biggest spending groups are the same. The categories are presented in the order that reflects their share of Total Pet Spending. This highlights the differences. In Pet Products spending, the # of earners and occupation are less important while marriage and area type matter more. We should also note that, like Total Pet Spending, Income is the highest performing demographic characteristic. In Pet Products there are 4 groups with a performance rating of over 120%, which is down from 5 last year. This is two less than Total Pet, which indicates that Pet Products spending is spread more evenly across the category segments.

  1. Race/Ethnic – White, not Hispanic (84.5%, down from 85.7%) They are no longer the largest group but still account for the vast majority of spending in every segment. With a 122.3% performance rating, this category still ranks #4 in terms of importance in Pet Products Spending demographic characteristics. Hispanics, African Americans and Asian American account for over 30% of U.S. CU’s, but they only spend 15% of Pet Products $. Although pet ownership is relatively high in Hispanic American households, it is significantly lower for African Americans and Asian Americans.
  2. # in CU – 2+ people (81.3%, down from 82.5%) The spending numbers for Pet Products are higher than those for Total Pet, 80.9%. If you put 2 people together, pets very likely will follow. If you have a pet, you must spend money on food and supplies. Their overall performance of 115.2% is lower because of a bad year for 2 person CUs and a great year for singles. Performance decreases as the number of people in the CU increases but all CU sizes with 2 or more people perform above 100% so they all “earn their share”. The key is “It just takes two.”
  3. Housing – Homeowners (78.1% down from 80.3%). Controlling your “own space” has long been the key to pet ownership, larger pet families and more pet spending. At 123.0% performance, homeownership fell from to second to third place in terms of importance for increased pet products spending. Homeownership increased by 0.6% in 2018, but Renters had a big year in Pet Products spending, +9.0%.
  4. Income – Over $50K (70.5%, down from 70.9%). Pet Parenting is common in all income groups but money does matter in spending behavior for all industry segments. With a performance rating of 132.4%, (down from 137.7%) CU income is still the single most important factor in increased Pet Products Spending. As a general rule,  Higher Income = Higher Pet Products Spending. However, in 2018 much of the decrease in share and performance was due to decreased spending by the middle income groups. $50>99K was down -$2.17B.
  5. Education – Associates Degree or Higher (65.0%, up from 59.0%). Their performance level also skyrocketed from 109.9% to 119.2%. In 2017 there was a big spending lift by High School Grads with some College. They reversed course in 2018, down -$3.3B. All education levels below Associates Degree spent less, every group with a formal degree spent more. Pet Parents don’t need a College degree, but higher education once again produces increased $.
  6. Occupation – All Wage & Salary Earners (62.4%, down from 66.1%). Pet ownership is widespread across all segments in this group. The low performance, 102.1%, down from 108.2%, reflects increased balance, but some turmoil. There was a big spending drop from blue-collar workers but a lift from Tech/Sls/Clerical and self-employed.
  7. # Earners – “Everyone Works” (61.2%, up from 59.9%). Their performance is 105.8%, up from 104.5%. In this group, all adults in the CU are employed. After a great 2017 by CU’s with 2+ people and only one earner, their spending fell $1.7B in 2018. 2 & 3 Earner CUs spent more in 2018, along with No Earner, Singles. Income is a still a priority in Pet Products Spending, but not how many people work to get it.
  8. Age – 35>64 (61.9%, down from 66.4%). Their performance also decreased from 124.3% to 117.0% and they dropped out of the 120+% performance club. Although the 35>54 group increased spending by $.45B, the 55>64 year old Baby Boomers’ spending fell $3.33B. Increases by every other age group made spending more balanced.
  9. CU Composition – Married Couples (62.7%, down from 63.1%). Pet parenting and marriage both represent strong commitments. Their performance decreased from 127.5% to 126.4%, but they moved up to 2nd place. Married Couples only spent less. Married w/children spent more but overall, Marriage is very important in Pet Products $.
  10. Area – Suburban (61.4%, up from 58.2%). Their performance also jumped from 104.7% to 110.7%. Suburban households are the biggest pet spenders. However, population truly mattered in 2018. Suburban and Rural areas under 2500 population were down $2.9B. Suburban areas over 2500 were up $1.5B and Center City was up $0.36B.

Although the biggest spending groups are the same for Pet Products as for Total Pet, there are subtle differences in market share and performance. Money still matters most but how you earn it matters less. It appears that Pet Products Spending is becoming more balanced  across almost all demographic categories.

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

Most of the best and worst performers are the ones that we would expect. However, there are 7 that are different from 2017. That is the same as last year but 2 more than Total Pet. Changes from 2017 are “boxed”.

We should note: Only 1 of the Product winners is different from Total Pet – 55>64 yr olds, who won despite a 30 point drop in performance. The performance of the matching segments is lower than Total Pet, with 1 exception – the Suburbs <2500. Their performance fell from 170% to 160% but they still grabbed 2nd place, behind the $200K+ group.

The average performance of the 2018 Product winners was 134.6%, down sharply from 142.8% – 9 were down. The average for the losers was 63.4%, up from 60.0% – 9 were up. The narrowing of the gap between best and worst reinforces that Pet Products spending is becoming more balanced across America. We should also note:

  • Generation – The biggest change was Gen X replaced the Boomers at the top for the first time since….
  • Occupation – Self-employed bounced back in income and their spending reflects the increase. Blue Collar workers were the group most affected by the second half drop in Food spending.
  • Region – The West held on to the top spot but now only 2 regions are performing above 100%
  • Age – The under 25 group got involved with pets and moved out of last place.

Except for Gen X, the winners are the ones we expected, but the gap between top and bottom has narrowed.

It’s time to “Show you the money”. Here are segments with the biggest $ changes in Pet Products Spending.

In this section we will see who drove Pet Products spending down. There is only one repeat from 2017 – the Midwest won again. There was definitely turmoil as 15 Segments switched positions – from first to last or vice versa. However, there are other surprises, like the performance of 65>74 yr olds, Tech/Sales/Clerical workers, Hispanics and Millennials.

  • Generation – Millennials edged out Gen X for the top spot and had the biggest lift of any segment in any category.
    • Winner – Millennials – Products Spending: $10.61B; Up $1.89B (+21.7%)
      • 2017: Baby Boomers
    • Loser – Baby Boomers – Products Spending: $18.65B; Down $4.55B (-19.6%)
      • 2017: Silent Generation
    • Comment – Only Boomers spent less, everyone else combined couldn’t make up the difference.
  • Area Type – After a big 2017, Rural flipped from first to last.
    • Winner – Suburbs >2500 – Products Spending: $21.86B; Up $1.49B (+7.3%)
      • 2017: Rural
    • Loser – Rural – Products Spending: $5.36B; Down $2.34B (-30.4%)
      • 2017: Central City
    • Comment –Urbanization? All areas under 2500 pop. down $2.9B; Areas over 2500 pop. up $1.85B.
  • Occupation – Another flip, as Blue-Collar workers gave back their big 2017 lift in food.
    • Winner – Tech, Sales, Clerical – Products Spending: $8.22B; Up $1.31B (+18.9%)
      • 2017: Blue-Collar Workers
    • Loser – Blue-Collar Workers – Products Spending: $7.88B; Down $3.34B (-29.8%)
      • 2017: Self-employed
    • Comment – The non-manager, white collar workers stepped up and the Self-Employed returned to prominence, but they couldn’t overcome the negative Blue Wave.
  • Education – In 2017 Education was less of a factor in Pet Products spending. In 2018 it returned to prominence.
    • Winner – BA/BS Degree – Products Spending: $14.16B; Up $1.28B (+9.9%)
      • 2017: HS Grad w/some College
    • Loser – HS Grad w/some College – Products Spending: $9.05B; Down $3.3B (-26.7%)
      • 2017: Assoc. Degree
    • Comment – Once again there is a simple dividing line. If you have a formal degree after HS, you spent more on Pet Products, +$2.3B. All other education segments spent less, -$3.35B.
  • Income – The lower Middle Income group was the most impacted by the decline in Food Spending.
    • Winner – $150 to $199K – Products Spending: $5.10B; Up $1.22B (+31.5%)
      • 2017: $40 to 69K
    • Loser – $50 to $69K – Products Spending: $6.39B; Down $1.32B (-17.1%)
      • 2017: $30 to $39K
    • Comment – The total middle-income group, $50>99K was down $2.17B. Only the Over $150K and the $30>39K groups generated positive numbers, but not enough to overcome drops from everyone else.
  • Housing – The 2017 winner and loser swapped places. This year’s winner also reflects the Millennial influence.
    • Winner – Renter – Products: $10.67B; Up $0.88B (+9.0%)
      • 2017: Homeowner w/o Mtge
    • Loser – Homeowner w/o Mtge– Products Spending: $12.14B; Down $2.78B (-18.6%)
      • 2017: Renter
    • Comment– The biggest group, Homeowners w/Mtges hasn’t been on the radar for 2 years. They were up $.88B.
  • # in CU – A dual flip. The loser reflects the spending drop by Married Couples Only – The Winner: Married, w/1 child.
    • Winner – 3 People – Products Spending: $8.08B; Up $0.75B (+10.2%)
      • 2017: 2 People
    • Loser – 2 People – Products Spending: $20.21B; Down $2.31B (-10.3%)
      • 2017: 3 People
    • Comment: All CU sizes spent more on Supplies but only singles and 3 person CUs spent more on Food. The result was that they were the only groups to increase Pet Products spending.
  • # Earners – Another dual flip but No Earner, Singles was truly a surprise winner.
    • Winner – No Earner, Single– Products Spending: $3.57B; Up $0.72B (+25.1%)
      • 2017: 1 Earner, 2+ CU
    • Loser –– 1 Earner, 2+ CU Products Spending: $11.25B; Down $1.69B (-13.0%)
      • 2017: No Earner, Single
    • Comment – The # of Earners is less of a factor in Pet Product spending, unless you have 2 or more people in your CU. In those cases, (81% of America) only CUs with 2 or more earners spent more.
  • CU Composition – One last dual flip. The winner reflects the strong performance by the younger groups.
    • Winner – Married, Oldest child <6– Products: $1.94B; Up $0.66B (+51.9%)
      • 2017: Married, Couple Only
    • Loser – Married, Couple Only – Products: $15.11B; Down $1.57B (-9.4%)
      • 2017: Married Oldest Child <6
    • Comment – Married Couples only are perennially the best performers but 2018 was a bad year…for Food. They spent more on Supplies. Married Couples with children, oldest child from 6>17 and singles also spent more on both Food and Supplies. The overall lift by Supplies for most groups couldn’t overcome the drop in Food.
  • Age – These results show that the Boomers’ product spending drop came from the younger members of the group.
    • Winner – 65>74 yrs – Products Spending: $7.15B; Up $0.66B (+10.1%)
      • 2017: 55>64 yrs
    • Loser – 55>64 yrs – Products Spending: $11.08B; Down $3.33B (-23.1%)
      • 2017: <25 yrs
    • Comment: All groups <45 or 65+ spent more on Products. The 45>64 yr olds spent less, but it gets complicated. The under 35 and over 75 groups spent more on both Food and Supplies. 35>64 age range spent less on food but more on Supplies. The “winning” 65>74 yr olds did the opposite. – A very good reason to look at each segment.
  • Race/Ethnic – White, Non-Hispanics account for 84.5% of Pet Products’ $, but the minorities are very slowly gaining.
    • Winner – Hispanic – Products Spending: $4.25B; Up $0.51B (+13.7%)
      • 2017: White, Not Hispanic
    • Loser – White, Not Hispanic – Products Spending: $41.09B; Down $1.50B (-3.5%)
      • 2017: Asian Americans
    • Comment – The spending by African Americans and Asians was essentially flat. However, the Hispanics stepped up with a big lift in Food $. The U.S. is becoming more ethnically/racially diverse. Let’s hope that Pet Products spending does too.
  • Region – The Midwest hung on to the top spot by having the biggest increase in Supplies Spending
    • Winner – Midwest – Products Spending: $11.12B; Up $0.39B (+3.6%)
      • 2017: Midwest
    • Loser – Northeast – Products Spending: $7.84B; Down $1.08B (-12.1%)
      • 2017: South
    • Comment – Every region spent less on Food but only the Northeast also spent less on Supplies.

We’ve now seen the “winners” and “losers” in terms of increase/decrease in Pet Products Spending $ for 12 Demographic Categories. 2018 was not a great year for Pet Products Spending due to Food. Many 2017 big spenders like Boomers, Blue Collar Workers, HS Grads with some College and Rural areas did a reversal in 2018. A lot of Segments spent more but their efforts failed to counter the drop in Food spending. Of course, not every good performer can be a winner but some of these “hidden” segments should be recognized for their outstanding effort. In 2018 there were actually quite a lot of them. I’ve narrowed it down to 6. They don’t win an award, but they deserve….

HONORABLE MENTION

Pet Products spending was down $1B in 2018. However, It was a mixed bag. An increase in Supplies couldn’t quite counter the big drop in Food. A significant increase, +39%, came from the <25 group. This bodes well for the future. It also wasn’t “all about money” as the $30>39K income group spent 25% more. Education once again became more important in Pet Products spending but not just college degrees. The Associates Degree group finished second behind the BA/BS group, but had a 19% increase. Marriage is the second most important factor in Pet Products spending but the CUs with Children were the drivers. Regardless of their children’s age, all groups increased spending. We can’t leave out singles. They are the worst performing group but are 30% of U.S. CUs. They stepped up with a 5% increase. Finally, the large Suburbs had the biggest increase, but Center City also spent more. In 2018, more population, at least in the West and Midwest, meant increased spending. Pet Products spending was down in 2018 but it wasn’t all bad news. 50 of 92 segments had an increase, so 54% spent more.

Summary

Spending on Pet Products has been on a roller coaster ride since 2015. Many consumers upgraded to Super Premium Food and cut back on Supplies in 2015. In 2016 they value shopped for Food and Spent some of the saved money on Supplies. In 2017 there was increased availability and value in both segments. More Consumers recognized the opportunity and spent $7B more.

2018 was calm, until the second half when the FDA warning on grain free caused many consumers to downgrade their food and new tariffs on Supplies flattened spending growth. On the surface, big changes weren’t immediately apparent. The demographic groups responsible for most of Pet Products Spending were the same as those in 2017. However, there were changes in their spending share and rankings. Higher Education and Marriage moved up while the number of Earners and Age became less important. In terms of their performance, Income, Marriage and Homeownership stayed on top. However, there were now only 4 groups with 120+% performance as the Age Group dropped out of the club. Total Pet has the same 4, Plus Age and Higher Education. This indicates that Pet Products spending is more balanced than Total Pet in certain demographic categories and this movement continues.

When we looked at the performance of individual segments, the winners were “back to normal” with the groups that we have come to expect through the years, with one major exception – Gen X replaced Baby Boomers as the top performing generation. This was a huge change and the impact became more apparent when we looked at $ changes.

The first thing that we note is that the Boomers spending fell $4.6B. You see the widespread impact as 2017’s big winners like Blue Collar, HS Grads with Some College and Rural “gave it all back” in 2018. In an apparent reaction to the FDA Dog Food warning, they undoubtedly downgraded their Food. This along with the new tariffs on Supplies created incredible turmoil in the 2018 market. 15 of the 24 segments switched positions compared to 2017, from 1st to last or vice versa. However, it wasn’t all bad news. 50 of 92 demographic segments (54%) actually increased Pet Products spending in 2018. Both young and old stepped up. You see this in the performance of winners like Millennials, Renters, 65>74 yr olds, Married with an oldest child under 6 and many more. Although they weren’t able to overcome the massive influence of the Boomers, it bodes well for the future. What about 2019? Hopefully, the Food segment will return to a more normal market. The big question is how will a full year of added tariffs affect Supplies spending?

Finally…The “Ultimate” 2018 Pet Products Spending CU is 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 them has an advanced College Degree. Both of them work in their own business, earning over $200K. They still have a mortgage on their house located in a small Suburb  in the West.