Petflation 2024 – September Update: Drops to +2.1% vs 2023

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The monthly Consumer Price Index peaked back in June 2022 at 9.1% then began to slow until turning up in Jul/Aug 2023. Prices fell in Oct>Dec 23, then turned up Jan>Sep 24. Despite a 0.2% increase in prices from August, the CPI slowed in September to +2.4% from +2.5% in August. Grocery prices rose 0.4% from August and inflation grew to 1.3% from 0.9%. After 12 straight months of double-digit YOY monthly increases, grocery inflation has now had 19 consecutive months below 10%. As we have learned, even minor price changes can affect consumer pet spending, especially in the discretionary pet segments, so we will continue to publish monthly reports to track petflation as it evolves in the market.

Petflation was +4.1% in December 2021 while the overall CPI was +7.0%. The gap narrowed as Petflation accelerated and reached 96.7% of the national rate in June 2022. National inflation has slowed considerably since June 2022, but Petflation generally increased until June 2023. It passed the National CPI in July 22 but fell below it from Apr>Jul 24. It exceeded the CPI in August, but in September it is again below it. We will look deeper into the data. The reports will include:

  • A rolling 24 month tracking of the CPI for all pet segments and the national CPI. The base number will be pre-pandemic December 2019 in this and future reports, which will facilitate comparisons.
  • Monthly comparisons of 24 vs 23 which will include Pet Segments and relevant Human spending categories. Plus
    1. CPI change from the previous month.
    2. Inflation changes for recent years (22>23, 21>22, 20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2024 vs 2019 and vs 2021 to see the full inflation surge.
    4. Average annual Year Over Year inflation rate from 2019 to 2024
  • YTD comparisons
    1. YTD numbers for the monthly comparisons #2>4 above

In our first graph we will track the monthly change in prices for the 24 months from September 22 to September 24. We will use December 2019 as a base number so we can track the progress from pre-pandemic times through an eventual recovery. This chart is designed to give you a visual image of the flow of pricing. You can see the similarities and differences in segment patterns and compare them to the overall U.S. CPI. The year-end numbers and those from 12 and 24 months earlier are included. We also included and highlighted (pink) the cumulative price peak for each segment. In September, Pet prices were down -0.4% from August. The price drop was driven by Pet Products. Prices in both of the Services segments were up.

In September 22, the CPI was +15.5% and Pet was +14.6%. Prices in the Services segments generally inflated after mid-2020, while Product inflation stayed low until late 21. In 22 Petflation surged. Food prices consistently grew but the others had mixed patterns until July 22, when all increased. In Aug>Oct Petflation took off. In Nov>Dec, Services & Food prices grew while Vet & Supplies prices stabilized. In Jan>Apr 23, prices grew every month for all segments except for 1 dip by Supplies. In May Products prices grew while Services slowed. In Jun/Jul this reversed. In Aug all but Services fell. In Sep/Oct this flipped. In Nov, all but Food & Vet fell. In Dec, Supplies & Vet  drove prices up. In Jan>Mar 24 Pet prices grew despite a few drops. In April, prices in all but Vet fell. In May, all but Food grew. In June, Products drove a lift. In July, all but Services fell. In August, Food drove a small drop in Pet prices. In September, Pet Products fueled a drop.

  • U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 21 and continued to grow until flattening out in Jul>Dec 22. Prices turned up Jan>Sep 23, dipped in Oct>Dec, then rose Jan>Sep 24, but 31.1% of the 22.7% increase in the 57 months since December 2019 happened from Jan>Jun 2022 – 10.5% of the time.
  • Pet Food – Prices were at December 19 levels from Apr 20>Sep 21. They grew & peaked in May 23. In Jun>Aug they fell, grew Sep>Nov, fell Dec>Feb, rose in Mar, fell Apr>May, grew in June, then fell in Jul>Sep. 99% of the lift was in 22/23.
  • Pet Supplies – Supplies prices were high in December 19 due to tariffs. They had a “deflated” roller coaster ride until mid-21 when they returned to Dec 19 prices & essentially stayed there until 22. They turned up in January and hit a record high, beating 2009. They plateaued Feb>May, grew in June, flattened in July, then turned up in Aug>Oct to a new record. Prices stabilized in Nov>Dec but grew in Jan>Feb 23. They fell in March, but set a new record in May. The rollercoaster continued with Dec>Feb lifts, Mar/Apr drops, May/Jun lifts, a July drop, an August lift & a September drop.
  • Pet Services– Inflation is usually 2+%. Perhaps due to closures, prices increased at a lower rate in 2020. In 2021 consumer demand increased but with fewer outlets. Inflation grew in 21 with the biggest lift in Jan>Apr. Inflation was strong in 22 but prices got on a rollercoaster in Mar>Jun. They turned up Jul to Mar 23 but the rate slowed in April and prices fell in May. Jun>Aug: ↑, Sep>Dec: ↓, Jan>Mar: ↑, Apr: ↓, May: ↑, June: ↓, Jul>Sep: ↑.
  • Veterinary – Inflation has been consistent. Prices turned up in March 20 and grew through 21. A surge began in December 21 which put them above the overall CPI. In May 22 prices fell and stabilized in June causing them to fall below the CPI. However, prices rose again and despite some dips they have stayed above the CPI since July 22. In 23>24 prices grew Jan>May, leveled Jun/Jul, fell in Aug, grew Sep>Dec, fell in Jan, grew Feb>May, fell Jun>Jul, then grew Aug>Sep.
  • Total Pet – Petflation is a sum of the segments. In December 21 the price surge began. In Mar>Jun 22 the segments had ups & downs, but Petflation grew again from Jul>Nov. It slowed in December, grew Jan>May 23 (peak), fell Jun>Aug, grew in Sep/Oct, then fell in November. In December prices turned up and grew through March 24 to a record high. Prices fell in April, rose in May>June (a record) then fell in Jul>Sep, but Petflation is again below the National CPI.

Next, we’ll turn our attention to the Year Over Year inflation rate change for September and compare it to last month, last year and to previous years. We will also show total inflation from 21>24 & 19>24. Petflation fell to 2.1%, from 2.8% in August, and it is now +12.5% below the National rate. Last month, it was +12.0%. The chart will allow you to compare the inflation rates of 23>24 to 22>23 and other years but also see how much of the total inflation since 2019 came from the current pricing surge. We’ve included some human categories to put the pet numbers into perspective.

Overall, prices were up 0.2% from August and were +2.4% vs September 23, down from +2.5% last month because there was a bigger Aug>Sep price lift in 2023 than in 2024. Grocery inflation rose to +1.3% from 0.9%. Only 3 segments had price decreases from last month – Pet Food, Pet Supplies & Total Pet. There were also 3 drops in August, but 5 in July. The national YOY monthly CPI rate of 2.4% is down from 2.5%. It is 35% below the 22>23 rate and 71% less than 21>22. The 23>24 rate is below 22>23 for all but Pet Supplies & Medical Services. In our 2021>2024 measurement you also can see that over 65% of the cumulative inflation since 2019 occurred in all but 3 segments – Medical Services, Haircuts & Grocery. 2 are Services categories. Service Segments have generally had higher inflation rates so there was usually a smaller pricing lift in the recent surge. Pet Products have a very different pattern. The 21>24 inflation surge provided 93% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were still recovering from a deflationary period. Services expenditures now account for 64.1% of the National CPI so they are very influential. Their current CPI is +4.7% while the CPI for Commodities is -1.3%. This clearly shows that Services are driving all of the current 2.4% inflation.

  • U.S. CPI– Prices are +0.2% from August. The YOY increase is 2.4%, down from 2.5%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 20+% higher than the target. In the last 12 months, we had 3 lifts and 9 drops, including 6 consecutive drops from Apr>Sep – much better. The current rate is below 22>23 but the 21>24 rate is still +14.9%, 65.4% of the total inflation since 2019. Inflation was starting in September 2021, +5.4%
  • Pet Food– Prices are -0.3% vs August and -0.9% vs September 23, down from -0.4% last month. They are still significantly below the Food at Home inflation rate of +1.3%. The YOY drop of -0.9% is being measured against a time when prices were 23.1% above the 2019 level and the current decrease is slightly more than the -0.8% drop from 2019 to 2020. The 2021>2024 inflation surge generated 96% of the 22.4% inflation since 2019, down from 100+%. Inflation began in 2021.
  • Food at Home – Prices are up 0.4% from August and the monthly YOY increase rose from 0.9% to 1.3%. This is still radically lower than Jul>Sep 2022 when it exceeded 13%. The 27.4% Inflation for this category since 2019 is 20.2% more than the national CPI but in 3rd place behind 2 Services expenditures. 62.8% of the inflation since 2019 occurred from 2021>24. This is lower than the CPI, but we should note that Grocery prices began inflating in 2020>21 then the rate accelerated. It appears that the pandemic supply chain issues in Food which contributed to higher prices started early and foreshadowed problems in other categories and the overall CPI tsunami.
  • Pets & Supplies– Prices were -0.5% from August and inflation fell to +1.5% vs September 23 from 3.1% in August and… they have the lowest rate vs 2019. Prices were deflated for much of 20>21. As a result, the 2021>24 inflation surge accounted for 88.7% of the total price increase since 2019. Prices set a record in October 2022 then deflated. 3 monthly increases pushed them to a new record high in February 23. Prices fell in March, rose in Apr/May to a new record, fell in Jun>Aug, grew Sep>Oct, fell in November, grew Dec>Feb, fell Mar>Apr, rose May>Jun (record), fell in July, rose in August, then fell in September.
  • Veterinary Services– Prices are +0.1% from August and +6.7% from 2023. They fell to #2 in inflation vs 23 but are still the leader in the increase since 2019 with +37.4% and since 2021, +28.1%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 22 & 23. It is still high in 24, so 75.1% of the cumulative inflation since 2019 occurred from 2021>24.
  • Medical Services – Prices turned sharply up at the start of the pandemic but then inflation slowed and fell to a low rate in 20>21. Prices rose +0.6% from August and inflation vs last year rose to +3.6% from +3.2%. Medical Services are not a big part of the current surge as only 54.3% of the 13.8%, 2019>24 increase happened from 21>24.
  • Pet Services – Inflation slowed in 2020 but began to grow in 21. In 24, prices surged Jan>Mar, fell in April, rose in May, fell in June, then rose Jul>Sep. Inflation peaked at +8.0% in March 23. In September, it was 7.3%, up from 6.3%. 69% of their total 19>24 inflation has occurred since 21. In December 23, it was 49%. Plus, they now have the highest 23>24 rate.
  • Haircuts/Other Personal Services – Prices are +0.1% from August and +4.8% from 23. 7 of the last 9 months have been 4.0+%. Inflation has been pretty consistent. Just 56.4% of the 19>24 inflation happened 21>24.
  • Total Pet– Petflation fell to 2.1% from 2.8% due to price drops in Products. It is still 63% less than the 22>23 rate and now 12.5% less than the U.S. CPI. 2.1% is 33.6% below the 3.1% average September rate since 1997. Vs August, prices fell -0.4%, driven by Food & Supplies. The biggest Aug>Sep price decrease, -0.5% was in 2020 but a drop has occurred in only 5 of the last 20 years, so this month’s data was a bit surprising. In terms of Petflation, 2024 appears to be moving back towards a more normal pattern. However, the path to get there will be unusual and there is still a ways to go.

Now, let’s look at the YTD numbers.

The inflation rate for 22>23 was the highest for 4 of 9 categories – All Pet – Pet Food, Services, Veterinary & Total Pet. The 23>24 rate is usually much lower than 22>23 for all but Medical Services. 21>22 still has the highest rate for Food at Home, the CPI & Pet Supplies. The average annual national inflation in the 5 years since 2019  is 4.2%. Only 2 of the categories are below that rate – Medical Services (2.8%) and Pet Supplies (2.2%). It comes as no surprise that Veterinary Services has the highest average rate (6.7%), but all 5 other categories are +4.4% or higher.

  • U.S. CPI – The 23>24 rate is 3.0%, down from 3.1% in August. It is also down 32% from 22>23, 64% less than 21>22 and 29% below the average YOY increase from 2019>2024. However, it’s still 30% more than the average annual increase from 2018>2021. 73% of the 22.7% inflation since 2019 occurred from 2021>24. Inflation is a big problem that started recently.
  • Pet Food – Ytd inflation is 0.7%, down from 0.9% in August and 94% less than the 22>23 rate. Now, it is also 92% lower than 21>22 and 38% below the average rate from 2018>2021. Pet Food has the highest 22>23 rate on the chart and remains in 2nd place in the 21>24 rates. Deflation in the 1st half of 2021 kept YTD prices low then prices surged in 2022 and especially in 2023. 96% of the inflation since 2019 occurred from 2021>24.
  • Food at Home – The inflation rate has slowed remarkably. At 1.1%, it is down 82% from 22>23, 91% from 21>22 and 58% from 20>21. Also, it is even 49% lower than the average rate from 2018>20. It is tied for 3rd place for the highest inflation since 2019 but still beat the U.S. CPI by 17%. You can see the impact of supply chain issues on the Grocery category as 73% of the inflation since 2019 occurred from 2021>24.
  • Pets & Pet Supplies – Prices rose Jan>Feb, fell Mar>Apr, rose May>Jun, fell in July, rose in August, then fell in September. Inflation in 2024 is 0.7% and is only higher than 19>20 & 20>21. Supplies have the lowest inflation since 2019. The only significant increases were 7.3% in 22 & 3.8% in 23. The 2021 deflation created a unusual situation. Prices are up 11.3% from 2019 but 107% of this increase happened from 2021>24. Prices are up 12.1% from their 2021 “bottom”.
  • Veterinary Services – Inflation was high in 2019 and steadily grew until it took off in late 2022. The rate may have peaked in 2023, but it is still going strong in 2024, +7.6%, the highest on the chart. They are also #1 in inflation since 2019 and since 2021. At +6.7%, they have the highest average annual inflation rate since 2019. It is 1.6 times higher than the National Average but 2.4 times higher than the Inflation average for Medical Services. Strong Inflation is the norm in Veterinary Services.
  • Medical Services – Prices went up significantly at the beginning of the pandemic, but inflation slowed in 2021. Ytd it is 2.5%. In a non-pandemic year, “normal” is between 2.1>2.9%. We are still seeing the impact of 2023 when prices actually deflated (-0.3%). This was the only deflationary year since the US BLS began tracking this category in 1935.
  • Pet Services – After falling in late 2023, prices surged in 2024, except for drops in Apr & Jun. The 23>24 inflation rate of 5.8% is 2nd to Veterinary on the chart. It is 15% less than 22>23 and 3% below 21>22. However, it is still 1.8 times higher than the 2018>21 average rate. Pet Services is 2nd in 19>24 inflation but only 4th in inflation since 21.
  • Haircuts & Personal Services – The services segments, essential & non-essential, were hit hardest by the pandemic. The industry responded by raising prices. Ytd inflation is 4.5%, which is 15% below its 21 peak, but 32% above the 18>20 average. Consumers are paying over 25% more than in 2019, which usually reduces the frequency.
  • Total Pet – Ytd Petflation is 2.7%, the same as Jul>Aug. It is 70% less than 22>23 but 16% higher than the 2018>21 average rate. Plus, YTD it is still 10% below the CPI. Despite the YOY lift in August, Petflation has slowed in 24. This is primarily being driven by drops in Pet Food prices, but Ytd Supplies inflation is also low. Services prices set a new record in September and Vet prices grew. The mixture of patterns produced stability in the August & September Ytd Total Pet CPIs.

The Petflation recovery paused in August then came back in September. At 2.1%, September was 33.6% below the average rate for the month since 1997 and is again lower than the National CPI. However, we should remember that the 1997>2023 CPI average includes 2 inflation surges – the recent price tsunami and one caused by the melamine crisis. The years from 2010 to 2021 were “normal”. The average September Petflation rate during those years was 1.6%. That means that the current rate of 2.1% is down but still 33% higher than “normal”. We also continue to focus on monthly inflation while ignoring one critical fact. Inflation is cumulative. Pet prices are 19.9% above 2021 and 24.8% higher than 2019. Those are big lifts. In fact, in September, prices for Services set a new record while prices for Total Pet & all other segments are less than 1.2% below the highest in history. Only Supplies prices (+10.6%) are less than 22% higher than 2019. Since price/value is the biggest driver in consumer spending, inflation will affect the Pet Industry. Services will be the least impacted as it is driven by high income CUs. Veterinary will see a reduction in visit frequency. The product segments will see a more complex reaction. Supplies will likely see a reduction in purchase frequency and some Pet Parents may even downgrade their Pet Food. Products will see a strong movement to online purchasing and private label. We saw evidence of this at both GPE 24 & SZ 24 as a huge # of exhibitors offer OEM services. Strong, cumulative inflation has a widespread impact.

2023 U.S. PET SUPPLIES SPENDING $23.02B…Up ↑$1.08B

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Total Pet spending grew to $117.60B in 2023, up $14.89B (+14.5%) from 2022. After a record $8.75B (+57%) increase in 2021 the Supplies segment fell $1.86B in 2022. They started to recover in 2023, up $1.08B (+4.9%) to $23.02B. (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys)

Supplies Spending fell -$4.6B 2018>20 due to Tarifflation and COVID. In 2021, Pet Parents caught up. Spending turned up in the 1st half then skyrocketed in the 2nd half. In 2022, it plateaued in the 1st half then fell sharply in the 2nd half. 2023 had a 1st half lift & a 2nd half drop. We’ll drill down into the data to determine what & who was drove the lift in Spending.

In 2023, the average household spent $171.08 on Supplies, up 4.5% from $163.64 in 2022. (Note: A 2023 Pet CU (68%) Spent $251.59) This doesn’t exactly match the 4.9% total $ increase. Here are the specific details:

  • 0.3% more CU’s
  • Spent 1.5% less $
  • 6.1% more often

Let’s start with a visual overview. The chart below shows recent Supplies spending history.

Since the great recession, spending in the Supplies segment has been driven by price. Although many supplies are needed by Pet Parents, when they are bought and how much you spend is often discretionary. When prices fall, consumers are more likely to buy more. When they go up, consumers spend less and/or buy less frequently.

2014 was the third consecutive year of deflation in Supplies as prices reached a level not seen since 2007. Consumers responded with a spending increase of over $2B. Prices stabilized and then moved up in 2015.

In 2015 we saw how the discretionary aspect of the Supplies segment can impact spending in another way. Consumers spent $5.4B for a food upgrade and cut back on Supplies – swapping $. Consumers spent 4.1% less, but they bought 10% less often. That drop in purchase frequency drove $1.6B (78%) of the $2.1B decrease in Supplies spending.

In 2016, supplies’ prices flattened out and consumers value shopped for their upgraded food. Supplies spending stabilized and began to increase in the second half. In 2017 supplies prices deflated, reaching a new post-recession low. The consumers responded with a $2.74B increase in Supplies spending that was widespread across demographic segments. An important factor in the lift was an increase in purchase frequency which was within 5% of the 2014 rate.

In 2018 prices started to move up in April and rapidly increased later in the year due to the impact of new tariffs. By December, Supplies prices were 3.3% higher than a year ago. This explains the initial growth and pull back in spending.

In 2019 we saw the full impact of the tariffs. Prices continued to increase. By yearend they were up 5.7% from the Spring of 2018 and spending plummeted -$2.98B. The major factor in the drop was a 13.1% decrease in purchasing frequency.

2020 brought the pandemic. Prices deflated but with retail restrictions and the consumers’ focus on needed items, both the amount spent and frequency of purchase of Supplies fell.

In 2021 the recovery began with a strong lift in the 1st half that reached record levels in the 2nd half. Pet parents bought all the supplies that they had been putting off for 2 years – the biggest lift in history. 2021 spending ended up where it was headed in 2018 before being “derailed” by outside influences. In 2022 inflation took off, especially in the 2nd half. Spending plateaued then fell -$2.44B in the 2nd half. In the 1st half of 2023 spending increased, primarily because of inflation. In the 2nd half inflation fell to 0.1%, but prices were still high so spending dropped.

That gives us an overview of the recent spending history. Now let’s look at some specifics regarding the “who” behind the 2023 lift. First, we’ll look at spending by income level, the most influential demographic in Pet Spending.

National: $171.08 per CU (+4.5%) – $23.02B – Up $1.08B (+4.9%).

Only the <$30 & $100>150K income groups spent less but the 50/50 $ divide moved up to $117K from $114K.

  • <$30K (21.3% of CUs)- $68.33 per CU (+7.7%); $1.95B– Down $0.07B (-3.4%). This group is very price sensitive, but they still need Supplies. Their Total Supplies $ only fell because they have 10.4% fewer CUs.
  • $30K>70K (28.3% of CUs)- $117.82 per CU (+5.3%); $4.48B – Up $0.14 (+3.2%). This big, lower income group matches both the national spending pattern and that of the $150K+ group. 2019 Tarifflation and 2022 inflation had big impacts. Despite fewer CUs, spending grew. Until 2019 they were the leader in Supplies $. Now, they rank 3rd.
  • $70>$100K (14.1% of CUs) – $180.19 per CU (+4.7%); $3.41B – Up $0.15B (+4.7%). This group had consistent spending until 2020 hit them hard. They rebounded strong in 21 and spending even grew slightly in both 22 & 23.
  • $100K>$150K (16.6% of CUs) – $214.74 per CU (-10.0%); $4.81B – ↓$0.15B (-3.0%). This group had the 2nd biggest COVID drop. In 21 they had the 2nd biggest recovery. In 22, they had the only significant lift but their $ fell 3% in 23.
  • $150K> (19.8% of CUs) – $314.49 per CU (+1.2%); $8.36B – Up $1.00B (+13.6%). This highest income group had the biggest $ drop in 22, which is not surprising after a $4.6B lift in 21. In 23 they provided 93% of the Supplies lift. This came from 12.3% more CUs. BTW, the $150>200K group was again the driver as $200K> spent -3.2% less per CU.

With high prices, income matters. While $30>100K spent a little more, almost all of the overall lift came from $150K>.

Now, we’ll look at spending by Age Group.

National: $171.08 per CU (+4.5%) – $23.02B – Up $1.08B (+4.9%)

2023 was an age group spending rollercoaster. Under 25: ↑; 25>34:↓; 35>54: ↑; 55>64: ↓; 65>74:↑; 75>: ↓

  • 45>54 (16.9% of CUs) $237.89 per CU (+18.1%); $5.41B – Up $0.84B (+18.3%). From 2007>2018 this highest income group was the leader in Supplies spending. They had a pandemic drop but strong growth in 21 & 22. The lift continued in 2023 as 0.1% more CU’s spent 19.8% more, 1.5% less often. They moved up from #2 to #1.
  • 35>44 (17.5% of CUs) $189.19 per CU (-0.9%); $4.47B – Up $0.11B (+2.6%) They are 2nd in income and expenditures. Strong inflation drove their $ down in 2019 but COVID had little impact. Spending took off in 21, fell in 22 then grew slightly in 23 as 3.5% more CUs spent 6.1% less $, 5.6% more often. They are #2, up from #3
  • 55>64 (17.8% of CUs) $183.28 /CU (-3.6%); $4.39B – ↓ $0.26B (-5.6%). Tarriflation caused a spending drop in 2019. Spending fell in 2020 as they binge bought pet food. They had a strong recovery in 21. Growth slowed in 22 then $ fell in 23 as 2.1% less CUs spent 12.9% less on Supplies, 10.7% more often. They fell from #1 to #3.
  • 25<34 (15.7% of CUs) $165.46 per CU (-5.5%); $3.49B – Down $0.17B (-4.7%). After trading Supplies $ for upgraded Food and Vet Care in 2016, these Millennials turned their attention back to Supplies. Tarriflation hit them hard in 2019 but they actually increased spending in the pandemic. The lift grew even stronger in 2021 but then spending fell slightly in 2022 and again in 2023 as 0.9% more CUs spent 1.0% less $, 4.6% less often.
  • 65>74 (16.0% of CUs) $145.29 per CU (+9.4%); $3.14B – Up $0.25B (+8.7%). This older group is very price sensitive so rising prices caused them to cut back on spending in 2019. Like the 25>34 yr-olds, they also increased spending in 2020 and spending soared in 2021. However, unlike the 25>34 yr-olds and despite high prices, their spending grew in 2022 and again in 2023 as 0.7% less CUs spent 2.2% more, 7.1% more often.
  • 75> (11.6% of CUs) $70.27 per CU (-9.8%); $1.10B – Down $0.09B (-7.8%). This low-income group is price sensitive but they are committed to their pets. Their spending was severely impacted by the Pandemic. They had a strong recovery in 21 & 22 but their $ fell in 23 as 2.2% more CU’s spent 23.6% less, 18.1% more often.
  • <25 (4.5% of CUs) $172.54/CU (+69.3%) $1.04B- Up $0.40B (+63.1%). Many moved in with other adults or got married. Many also added Pets to their CU. In 2023 3.7% less CUs spent 1.2% less $, 71.5% more often.

Supplies spending was on an age roller-coaster in 2023 with no clear pattern but the 45>54 group drove most of the lift.

Next, let’s take a look at some other key demographic “movers” in 2023 Pet Supplies Spending. The segments that are outlined in black “flipped” from 1st to last or vice versa from 2022. The red outline stayed the same.

In 2023, even with only a small increase, 63% of segments still spent more. In 2022 it was 52%. There was 1 Category – Housing, in which all spent more. That didn’t happen in 2022. In 2023 there were 9 “flips” and 5 that held their spot. In 2022 there were 15 “flips” and 1 “holdover”. 2023 was clearly better and more stable than 2022.

5 winners are the “usual suspects”:  • White, Not Hisp.    • $150>199K    • Gen X    • 45>54 yr-olds    • Homeown w/Mtge

5 are very surprising:  • Tech/Sls/Cler    • Rural    • 1 Earner, Single    • Singles    • HS Grad w/Some College

Among the losers, most often show up here. There are only 2 big repeat surprises:  • 2 Earners    • Adv. College Degree

After the post pandemic binge buy in 2021, Supplies spending fell $1.86B (-7.8%) in 2022. This was not surprising after the record $8.65B lift. It is very similar to the binge/bust pattern in Pet Food that occurred a year earlier. Although spending fell by $1.9B, 52% of 96 demographic segments spent more on Supplies. In 2023 spending grew $1.08B (+4.9%) as 63% of demographics spent more. There is a key factor to be considered to put 2022>23 Supplies spending in a better perspective. Many Supplies categories have been commoditized, so the segment has been very susceptible to price changes. Prices fell 2016>18 and spending grew by $5B. Prices rose in 2018/19 and spending fell -$4.6B. In 2022 the inflation rate was 7.7%. That means that the amount of Supplies purchased in 2022 was “really” -14.4%, almost double the actual $ drop. In 2023 Supplies spending grew by $1.08B (+4.9%). Annual inflation was 2.6% so the “real” lift was +2.3%. Inflation in the 1st half of 23 was 5.2% and spending was +$1.65B. In the 2nd half the CPI fell to 0.1% but spending was -$0.57B. That is the opposite of what we would expect. Supplies spending is definitely more discretionary, but many products are needed for a better life – both for Pets and Pet Parents. As Supplies spending moves more towards higher incomes, perhaps Pet Parents are becoming less price sensitive in this segment. We’ll see what happens. in 2024.

 

2023 U.S. PET FOOD SPENDING $45.50B…Up ↑$6.81B

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Total Pet spending reached a record high of $117.60B, up $14.89B (+14.5%). All segments increased sales. Pet Food and Veterinary spending had double digit growth while Supplies & Services $ were up 4.9+%. The big news was Pet Food. They had a record increase of $6.81B and are up 32% from 2021. However, strong inflation continued in every segment but supplies and drove much of the big lift. Here are the 2023 spending specifics

  • Pet Food – $45.50B; Up $6.81B (+17.6%)
  • Pets & Supplies – $23.02B; Up $1.08B (+4.9%)
  • Veterinary – $35.66B; Up $5.95B (+20.0%)
  • Pet Services – $13.42B; Up $1.05B (+8.5%)

The industry truly is a “sum” of its integral segments, and each segment has very specific and often very different buying behavior from the many consumer demographic segments. For this reason, we’re going to analyze each of the industry segments first. This will put the final analysis of Total Pet’s 2023 Spending into better perspective. Note: The numbers in this report come from or are calculated by using data from the current and past US BLS Consumer Expenditure Surveys. In 2023, this was gathered by the U.S. Census Bureau from over 42,000 interviews and spending diaries. The final data was then compiled and published by the US BLS. All inflation numbers are also provided by the US BLS.

We will start with the largest Segment, Pet Food (and Treats). In 2023 Pet Food Spending totaled $45.50B in the U.S., a $6.81B (+17.6%) increase from 2023. Pet Food inflation was 10.6% in 2023 so 64% of the record lift came from higher prices. In earlier research we discovered a distinct, long-term pattern in Pet Food Spending. In 2018 we broke the pattern due to outside influences – 1st the FDA warning, then with COVID in 2020. Here is Pet Food Spending since 1997 in full Retail Dollars and adjusted for inflation.

The pattern began in 1997. Retail Pet Food Spending increases for 2 consecutive years then reaches a plateau year or even drops. There was a notable exception in the period from 2006 to 2010. During this time, there were two traumas which directly impacted the Pet Food Retail market. The first was the Melamine recall, which resulted in radically increased prices as consumers insisted on made in USA products with all USA ingredients. The second affected everyone – the great Recession in 2009. This was the first time that annual U.S. retail spending had declined since 1956. The net result was that the plateau period was extended to include both 2009 and 2010.

For 20 years, Pet Food was driven by short term trends. A new trend catches the consumers’ attention and grows …for 2 years. Then sales plateau or even drop…and move to the next “must have”. After 2014, the changes  became bigger and the situation got more complex due to a number of factors starting with the move to high priced super premium foods, but including increased competition, especially from the internet, and behavioral changes, like increased value shopping. In 2018, outside influences came into prominence. The first was the FDA warning on Grain Free dog food. This caused many Pet Parents to back away from certain foods. When the warning was declared bogus, the Food segment began to recover. Then came COVID. Fear of possible shortages caused some groups to binge buy food. That ended and spending dipped in 2021. It turned up again in 2022>23. However, much of the lift was due to 10+% inflation. Of note: Considering inflation, only 40% of the 97>23 growth is real. Now, let’s take a closer look at spending since 2014.

First, some specifics behind the $6.81B (+17.6%) increase to $45.50B. In 2023, the average U.S. Household spent a total of $338.33 on Pet Food. This was an +17.2% increase from the $288.75 spent in 2022, which doesn’t exactly “add up” to the +17.6% increase in total Food Spending. With additional data provided from the US BLS, here is what happened.

  • 0.4% more U.S. CUs
  • Spent 10.3% more $
  • 6.3% more often

By the way, if 68% of U.S. CUs are pet parents then their annual Pet Food Spending is $497.54. Here’s a rolling history.

2014 marks the beginning of the Super Premium era. It began in the 2nd half of 2014 with the 25>34-year-old Millennials making the 1st move. In 2015 the Baby Boomers got on board in a big way, producing a $5.42B increase in spending, the biggest lift in history at the time. 2016 saw a spending change that was accelerated by the high prices of Super Premium Pet Foods. After consumers upgraded to a more expensive pet food, their #1 priority became, “Where can I buy it for less?” Value Shopping on the internet was a major contributing factor in the big spending drop in 2016.

2017 was an up year which should have been due to a “must have” trend. However, a closer look at the data showed that the $4B increase in Pet Food spending in 2017 came not from a new trend but from a deeper demographic penetration of Super Premium foods. Value shopping in a highly competitive market, especially on the internet, had made Super Premium pet foods more accessible to a broad swath of consumers.

Like Pet Food, human behavior has changed over the years in regard to our pets. In the 90’s, Pet Owners became Pet Parents. Then, after 2000 we began truly humanizing our pets, which is very accurately reflected in the evolution of Pet Food. We became more focused on fulfilling the health needs of our pets, beginning with the first move to premium foods in 2004. This radically increased after the Melamine scare in 2007. Now consumers read pet food labels, research ingredients and expect their pet foods to meet the same quality standards as the best human foods. This was very evident in 2018. It should have been a year of increased spending but the consumers’ reaction to the FDA grain free warning threw the pattern out the window. In 2019 the warning lost credibility. Pet Food spending stabilized in the 1st half of the year and then grew by $2.3B in the 2nd  half. Some Pet Parents began to return to the topline Super Premium Foods while others opted for even more expensive varieties. Also, new groups got on board the Super Premium Express.

After the 2019 recovery came the pandemic of 2020. There is nothing more necessary to a Pet Parent than pet food. This spurred binge buying, especially in the 1st half of the year and drove the biggest annual spending increase in history. However, binge buying doesn’t increase usage and it causes an overstock in home supply. In 2021, Pets “ate down” the extra food so spending fell. Another factor was the ongoing strong search for value & convenience which continues to drive many consumers online. In 2022, Pet Food spending returned to a more normal pattern. In 2023, there were 0.4% more CUs. They spent 10% more and bought 6% more frequently. Inflation was a big factor in the spending increase in transactions. The increase in frequency came from more regularly scheduled deliveries and in an effort to lower the transaction price due to skyrocketing inflation, some pet parents also downsized their purchases but bought more often.

The growth of Pet Food spending since 2014 reflects the rise of Super Premium but also another trend – the spectacular increase in the number and use of Pet Medications and Supplements, which are often produced in the form of treats. Together, the strength of Pet Food and these product subcategories reflect the Pet Parents’ absolute number 1 priority – the health, wellbeing and safety of their Pet Children, which starts with the quality of their food.

Now let’s look at some specific 2023 Pet Food Spending Demographics. The first is income. Prior to 2014 it was less of a factor in Food spending. However, the move to Super Premium has brought it more to the forefront. In 2015 the spending of the over $70K group exceeded the <$70K for the first time. In 2023, both <$70K & $70K> had 16+% lifts but <$70K was still only 64% of the $70K> spending. All big groups were up but $150K> had the biggest increase. In 2015, the 50/50 divide on Pet Food spending was about $70K. By 2020, it was up to $107K, breaking the $100K barrier. In 2021 it fell to $92K then down to $91K in 2022. In 2023 it rose to $93K. That’s 9% less than the average CU income but 15% more than the median income. Higher income is still important in Pet Food spending. $30>39K income CUs and all over $70K have 100+% performance ($ Share/CU Share) but the $150>199K group is the best at 149%. The chart below shows annual spending for major income groups from 2017>2023. This should put the 2023 numbers into better perspective.

In 2023, all big groups spent more on Food. Previously, 2017 was the only year since 2015 with spending growth in every major income group. Since 2017, we have seen the major impact on various groups by outside influences. In mid-2018 it was the FDA grain free warning. In 2020 it was the pandemic and in 2022 it was the first inflation spike. In 2023, consumers adapted to high prices. However, any group with a lift below 10.6% actually bought less Pet Food in 2023.

2023 National: $338.33 per CU (+17.2%); $45.50B; Up $6.81B (+17.6%);  2017>2023: Up $14.39B (+46.3%); Avg: +6.5%

The biggest lifts came from the Highest and lowest income groups, which clearly demonstrates the importance of their children’s health to Pet Parents. The smallest spending increase was by the low income $30>70K group. This was not unexpected because in 2022 they had the largest increase.

Here are 2023 specifics:

  • Under $30K: (21.3% of CU’s) – $230.58 per CU (+45.7%) – $6.63B – Up $1.89B (+39.7%). Obviously, this group is very price sensitive. The number of CU’s was down 10.4% in 2023. Much of the drop was due to an 8.3% lift in average income. Their CU count is down 30.4% from 2015 but the average U.S. CU income is up 46.2%. Their spending lift in 2023 was likely due to an upgrade in Food. They are still fully committed to their Pets. This is evidenced by the fact that they spend 1.16% of their Total CU expenditures on their pets, including 0.68% on Pet Food. The national averages are: Total Pet: 1.13%; Pet Food: 0.44%.
  • $30K>$70K: (28.3% of CU’s) – $291.97 per CU (+12.1%) – $11.10B – Up $0.55B (+5.3%). They are also very price sensitive, so inflation had an impact. Their average income was up 0.3% while the national average increased by 8.3%. They had a 2.0% decrease in the number of CUs and a 2.4% increase in CU spending. Their total Pet Food spending was up but it was 100% driven by the $30>39K group. The $30>39K group lost 1.7% in CUs but CU spending was +73.1% & $ were +$1.74B (+70.8%). The $40>49K group fell -3.2% in CUs and their CU Food spending was -15.3%. Their $ were -$0.82B (-28.0%). $50>69K lost -1.4% in CUs and spent -4.4% less per CU on Pet Food. Their Pet Food Spending dropped by $0.4B (-7.7%). Behavior was mixed – upgrading, downgrading & value shopping. They are still committed to their pets, spending 1.18% of total expenditures on their pets and 0.55% on Pet Food.
  • $70K>$100K: (14.1% of CU’s) – $316.88 per CU (+4.6%) – $6.44B – Up $0.63B (+10.9%). This group has a regular up/down spending pattern. They committed to Super Premium food in 2017, but they have been very sensitive to outside influences – the FDA warning in 2018, COVID in 2020 and inflation in 2022. They have big family responsibilities and are under monetary pressure. They got used to inflation and made a comeback in 2023.
  • $100>150K (16.6% of CU’s) – $399.09 per CU (+22.5%) – $8.38B – Up $1.67B (+25.0%). This group was the driver in the binge buying of Food in 2020. It was pure emotion, but they had the $ to do it. In 2021, they had an expected big drop. In 2022, mostly due to inflation and a 9.6% increase in CU’s they had a 23% increase in $. In 2023 they had 7.4% more CUs but spent 22.5% more $ per CU. Pet spending is 1.23% of their total; Pet Food is .44% = Commitment
  • $150K> (19.8% of CU’s) – $490.64 per CU (+7.1%) – $12.95B – Up $2.06B (+19.0%). Their Pet Food CU spending grew by 7.1%. With a 12.3% increase in CUs, their total $ were up 19.0%. When you factor inflation into the numbers, they actually bought 3.1% less pet food per CU but 7.5% more overall. In performance, share of $/share of CUs, their score of 144.0% is the clear winner. Higher income is still important.

The pandemic certainly caused turmoil. First, the fear-based binge buy which caused a record increase in 2020. This couldn’t be repeated so spending fell in 2021. Spending returned to more normal, positive behavior in 2022 as only the $70>100K group spent less. In 2023 Inflation was even higher at 10.6% but the welfare of their Pet children mattered more than the price so most Pet Parents just paid more. The record lift was driven by <$40K & $100K>. It is significant in this 2nd year of record inflation that the 50/50 income divide in Pet Food $ rose only slightly from $91K to $93K.

Now, Spending by Age Group…

2023 National: $338.33 per CU (+17.2%); $45.50B; Up $6.81B (+17.6%);  2017>2023 – Up $14.39B (+46.3%); Avg: +6.5%

The <45 and 65> yr-old groups spent more, while 45>64 yr-olds spent less.

  • 65>74 (16.0% of CU’s) – $413.49 per CU (+31.4%) – $9.00B – Up $2.35B (+35.4%). This group is all Baby Boomers. They are starting to retire but many are still working (0.7 per CU). Their Pets are a major priority. They spent 1.40% of their total CU expenditures on their pets and 0.64% on Pet Food, the highest percentages of any group. They are also the only group to spend more on Pet Food every year since 2016. In 2023, 3.1% more CUs spent 16.4% more $, 12.9% more often. They overcame the impact of Inflation and continued their commitment to their pet children.
  • 55>64 (17.8% of CU’s) – $351.72 per CU (-2.2%) – $8.48B – Down $0.12B (-1.4%). This group has been at the forefront of recent major spending swings. In 2015 they upgraded to Super Premium. In 2016 they shopped for a better price. In 2017 they led a deeper penetration of the upgrade. In 2018 they had a -$3.5B reaction to the FDA warning. They began to recover in 2019 but then came 2020, which saw a huge lift in spending. There were 3 major factors. First was panic, binge buying due to pandemic. They also were still recovering from the FDA warning. Finally, the pandemic caused the loss of over 2 million <25 CUs. Many of them moved back with their parents bringing their pets with them. In 2021, there was a big drop in food $ as they “ate up” the “panic” extra stock and many of their kids moved out again. In 2022 inflation brought a big lift. In 2023 they increased value shopping as 0.8% more CUs spent 5.8% less $, 3.8% more often.
  • 35<44 (17.5% of CU’s) – $352.55 per CU (+16.6%) – $8.43B – Up $1.25B (+17.4%). They are 2nd in income and CU spending but have the biggest families. Until 2023 their spending pattern matched the 45>54 yr-olds. In 2023 their total Pet Food spending exceeded the older group as 0.7% more CUs spent 11.6% more $, 4.5% more often.
  • 45>54 (16.9% of CU’s) – $336.12 per CU (-4.9%) – $7.45B – Down $0.42B (-5.3%). This group is #1 in income and total CU expenditures. Up until 2015 they were #1 in Pet Food spending. They didn’t “buy in” to Super Premium until 2017. They were negatively impacted by the FDA warning but strongly rebounded. In 2020, their spending dropped significantly. Much of the decrease was due to value shopping on the internet. In 2021, they opted for even more expensive food, spending 24% more on each purchase. In 2022, despite strong inflation, their purchase frequency and $ grew. In 2023, this reversed as 0.4% fewer CUs spent 3.7% more $, 8.3% less often. The result: -5.3% in $.
  • 25>34 (15.7% of CU’s) – $328.49 per CU (+46.5%) – $6.82B – Up $2.02B (+42.2%). In the early Super Premium years their spending often foreshadowed the overall market for the next year. In pandemic 2020 they spent 22.3% more, then held their ground in 21>22. In 23, their $ surged as 2.9% fewer CUs spent 35.2% more $, 8.3% more often.
  • 75> (11.4% of CU’s) – $233.03 per CU (+53.2%) – $57B – Up $1.35B (+60.5%). Pet Parenting becomes harder as we age. They strongly moved to Super Premium Food in 2021. In 2022, inflation impacted them as many downgraded. In 2023 with an influx of Boomers, they strongly rebounded. 4.8% more CUs spent 28.7% more $, 19.0% more often
  • <25 (4.5% of CU’s) – $271.36 per CU (+37.0%) – $1.75B – Up $0.37B (+27.1%). Many moved in with other adults or got married. They value shopped, but also added pets. 7.2% less CUs spent 6.3% more $, 28.8% more often.

In 2020 the 55>64 yr olds binge bought Pet Food. In 2021 their spending naturally plummeted, the only decrease by any age group. In 2022 we had high inflation. It affected everyone. In 2023, driven by both the older and younger groups, spending surged. Pricing matters but quality pet food remains a higher priority for Pet Parents.

Next, let’s take a look at some other key demographic “movers” in 2023 Pet Food Spending. The segments that are outlined in black “flipped” from 1st to last or vice versa from 2021. The red outline stayed the same.

The first thing that you notice is that the biggest increases are almost always radically larger than the biggest decreases. We should also note that in 5 demographic categories all segments spent more on Pet Food in 2023 than in 2022. The lift was also widespread as 82% of 96 demographic segments spent more in 2022. These are good signs that Pet Food spending is doing well.

You also see that 4 of the 24 segments flipped from last to first or vice versa. Last year there were 12. 4 held their position from 2022. In 2022 there were 2. There was a lot of change but a little more stability.

Only 4 of the winners are the “usual suspects”:

  • Suburbs 2500>      ●   White, Not Hispanic      ●   BA/BS Degree      ●   Homeowners, w/Mtg

But there are 5 surprise winners:

  • Retired      ●   Singles (1 Person)      ●   65>74      ●   <$30K       ●   No Earner, Single

These winners indicate that despite high inflation and the resulting high prices, there is a strong commitment to premium pet foods that is widespread across demographic categories.

Among the losers, 4 of the segments are not unexpected, but Asians and Center City had spending increases:

  • Asian     ●   Center City     ●   Single Parents     ●   $40>49K

There were 5 surprises. Rural had a big increase. The others are high income. The drop was likely due to value shopping.

  •    Gen X     ●   Managers & Professionals     ●   Rural     ●   45>54     ●   3+ Earners

The $6.81B (+17.6%) increase was the biggest in history. It was widespread across 82% of 96 demographic segments. However, 10.6% inflation was a problem. The amount of Pet Food sold in 2023 was really only +6.3% from 2022 and only 56% of segments bought more. Pet Food spending is now up $14.3B from 2019, +45.9%, a growth rate of 9.9%, 87% more than the 5.3% from 2014>19. The downside is that 59% of that growth came from inflation…almost all in 22>23. Real 19>23 growth: 4.4%. Inflation fell below 10% in August 23. We’ll see what happens to prices & spending.