2023 U.S. VETERINARY SERVICES SPENDING $35.66B…Up ↑$5.95B

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Veterinary Services is the 2nd largest segment in the Pet Industry. For years, high inflation has been a problem in the segment. Spending grew 24.0% from 2014>2019. Prices rose 17.4%, an avg of 3.3%. This caused a reduction of visit frequency and only 28% of the growth was “real” (avg real growth: +1.3%). In late 2020 & 2021, COVID focused Pet Parents on their “children’s” needs, including Veterinary Services. In 2021 Veterinary Spending reached $32.76 with 87% “real” growth. In 2022 the binge was not repeated so spending dropped -$2.95B (-9.0%) to $29.71B. Inflation was still high in 2023, 9.4%. However, the higher incomes again focused on the needs of their pet children and drove a $5.95B (+20.0%) increase in Veterinary Services spending to a new record high of $35.66B.

In this report, we’ll take a closer look at the demographics behind the 2023 numbers. Note: All 2023 numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Interview Survey, rather than their Diary report. The low frequency of Veterinary Visits is still generating an extremely high variation in Diary data. Interview is a more logical and accurate way to track Veterinary Services Expenditures.

Let’s get started. Veterinary Spending per CU in 2023 was $265.02 up 19.6% from $221.60 in 2022. (Note: A 2023 Pet CU (68%) Spent $389.74. More specifically, the 20.0% increase in Veterinary spending came as a result of:

  • 0.3% more CU’s
  • Spending 12.5 more $
  • …6.3% more often

We’ll take a closer look. But first, the chart below gives an overview of recent Veterinary Spending.

The big drop in the first half of 2015 was tied to the upgrade to Super Premium Foods – Trading $. Then consumers began value shopping for Food and the savings freed up $ for Veterinary Services. Spending began to climb until it flattened out at the beginning of 2017. Inflation slowed in the 2nd half and spending took off. In 2018 prices turned up and consumers held their ground through 2019. The initial COVID reaction in 2020 was a drop in spending but “need focused” consumers then drove a huge increase through 2021. In 2022, inflation grew to 8.8% and spending dropped. Inflation got even higher in 2023, 9.4% but the highest incomes drove a $6.1B lift in the 2nd half.

Now, let’s look at Veterinary spending by some specific demographics. First, here is a chart by Income Group

Veterinary Spending is even more driven by income. All groups but <$30K & $50>70K spent more in 2023. The biggest lift came from the $150>199K group. +$1.92B. However, all income groups over $70K had an increase over $1B. This caused the 50/50 spending break point in $ to increase significantly from $115K in 2022 to $124K in 2023.

National: $265.02 per CU (+19.6%) – $35.66B – Up $5.95B (+20.0%)

  • Over $150K (19.8% of CUs) – $508.69/CU (+18.8%) $13.53B, Up $3.38B (+33.3%) This highest income group is the biggest Veterinary Spender as 19.8% of CUs generated 37.9% of 2023 $ but also 56.8% of the increase from 2022.
  • $100>150K (16.6% of CUs) – $368.32/CU (+12.9%) $8.25B, Up $1.47B (+21.7%) Spending by this middle/upper income group slowed in 2019 but took off in 20>21, stabilized in 22 but grew over 20% in 23.
  • $70K>100K (14.1% of CUs) – $285.15/CU (+40.5%) $5.40B, Up $1.56B (+40.5%) Steady growth 2016>19. Then $ fell in 2020 due to monetary pressures. 21 had a big lift. High 22 inflation caused a drop, but spending recovered in 23.
  • $30K>70K (28.3% of CUs) – $171.26/CU (+13.1%) $6.51B, Up $0.64B (+10.9%) From 2016 to 2020 their pattern was remarkably similar to the big spending $150K+ group. That changed in 2021 as they were the only group to spend less in Vet $ while $150K> had the biggest lift. In 2022>23 the pattern match returned – a drop in 22 & a lift in 23.
  • Under $30K (21.3% of CUs) $68.86/CU (-28.5%) $1.97B, Down $1.11B (-35.9%) This group is very price sensitive. After the big spending dip in 2018, they slowly but consistently increased Veterinary spending until the small drop in 2022. In 2023, their spending plummeted, -35.9% – the only drop. Now, their $ are just a little above 2018.

Now, here is Veterinary Spending by Age Group

All groups spent more. 55>64 & 35>44 had the only lifts over $1B. 45>54 was only +0.01B but had the biggest lift in 22.

National: $265.02 per CU (+19.6%) – $35.66B – Up $5.95B (+20.0%)

  • <25 (4.5% of CUs) – $181.64/CU (+201.2%) – $1.10B – Up $0.72B (+190.1%) Many combined into group CUs and some got married. Many also added pets so 3.7% less CUs spent 72.4% more $ …74.7% more often.
  • 25>34 (15.7% of CUs) – $227.53/CU (+13.3%) – $4.80B – Up $0.60B (+14.3%) The commitment of these Millennials to their pets is growing. Spending was stable 2017>19. The pandemic caused Vet spending to take off In 2020>21. A 22 drop was not unexpected, but they came back strong in 23 as 0.9% more CUs spent 6.8% more $ …6.0% more often
  • 35>44 (17.5% of CUs) – $274.97/CU (+22.8%) – $6.49B – Up $1.38B (+27.1%) In 2019, they radically increased their spending and became #1 in Veterinary $. In 2020, unlike most groups, spending dropped. In 21 they had the biggest % increase. In 22 their spending fell but grew $1.4B in 23 as 3.5% more CUs spent 7.0% more $ …14.8% more often.
  • 45>54 (16.9% of CUs) – $304.10/CU (+0.05%) – $6.91B – Up $0.01B (+0.2%) This group has the highest income, but value is important. In 2017, the slowed inflation caused them to spend significantly more money. In 2018, prices turned up and continued to inflate in 2019. Spending dropped precipitously to their 2016 level, and they lost #1 spot in Veterinary $. 2020 brought a big spending lift which continued into 2021>22. In 22, They returned to #1 in Vet $. In 23 their spending stabilized as 0.1% more CUs spent 2.8% more $…2.7% less often. They fell from #1 to #2.
  • 55>64 (17.8% of CUs) – $346.64/CU (+37.9%) – $8.29B – Up $2.15B (+35.0%) This group was the leader in Veterinary Spending prior to 2015. In 2015 they upgraded to Super Premium Food and Vet Spending fell. In 2016 inflation slowed and they regained the top spot. In 2018 Veterinary prices began to strongly inflate again. Their spending fell and continued down into 2019. In 2020 they moved back to the top in Veterinary Spending. They stayed there with the biggest lift in 2021. In 2022 their spending binge ended and inflation soared to 8.8% so they fell to #2. In 2023 inflation was 9.4% but 2.1% less CUs spent 24.8% more $, 10.5% more often. Their $2B lift pushed them back to #1.
  • 65>74 (16.0% of CUs) – $253.66/CU (+17.0%) – $5.47B – Up $0.76B (+16.2%) This group is all Boomers, so they are committed to their pets. They had consistent annual growth from 2018>2021. In 2022 they had a small dip but in 23 they came back as 0.7% less CUs spent 27.6% more $, 8.3% less often. It appears that inflation now matters less.
  • 75> (11.6% of CUs) – $166.45/CU (+11.4%) – $2.59B – Up $0.32B (+13.9%) This group of oldest Pet Parents has a strong commitment to their pets. In 2015, they had a $1B increase in Veterinary Spending. In 2016 & 2017, they focused on Food, Supplies and Services. In 2018, they turned their attention back to Veterinary. However, their spending has slowly but consistently grown every year since 2015 – the only group to accomplish this. In 2023 2.2% more CUs spent 5.1% less $ …17.5% more often. This produced an 13.9% increase in spending.

Now, let’s take a look at some other key demographic “movers” behind the 2023 Veterinary Spending numbers.

Veterinary spending rose by $5.95B (+20.0%) in 2023. With a high 9.4% inflation rate, the real lift in the amount of Veterinary services bought was only 9.7% (Real: 48.5%). 79 of 96 demographic segments, 82.3% spent more on Veterinary Services in 2023 than in 2022, a big change from last year when 77.1% of segments spent less. BTW – Considering inflation, only 67.7% “really” spent more in 2023. There was still turmoil as 12 of 24 flipped from first to last or vice versa while only 1 segment maintained its position from 2022. 7 of the flips were from last to 1st. We should also note that there were 4 categories in which all segments spent more. In 2022 in 3 categories, all spent less.

All of the “winners” are often found at the top. There were no true surprises. They have a common trait – higher income

In the “losing” group, most were expected. There were 3 that were somewhat surprising.

    ∙ 45>54 yr olds (had the smallest increase after the biggest lift in 2022)  ∙ 4 People   ∙ Married, Oldest Child 18>              

This group is surprising because they have higher incomes. The other “losers” all have below average incomes.

Despite the $3.09B drop from 2021 to mid-yr 2023, Veterinary spending has increased +$14.95B (72.2%) from mid-yr 2020 through 2023. In Veterinary spending, inflation is always a factor. It has traditionally been high but 87% of the 2020>21 growth was real. However, prices rose 8.8% in 2022 and 9.4% in 2023 for a 2021>23 inflation rate of 19.1%. That means that the 9.2% 2021>23 spending lift was really an -8.4% drop in the amount of Veterinary Services sold. High inflation is still a big problem in the Veterinary segment.

The 2022 decrease was widespread across Income and Age groups as all income groups spent less and only 2 age groups spent more. The drop was also widespread as 77% of all segments spent less including 3 categories – Housing, Area and CU Size, where all segments had decreased Veterinary Services spending. The 2023 $5.95B (20.0%) lift had the opposite pattern as 82% of demographics spent more and 4 categories had no segments with a spending decrease – Region, Area Type, Housing and Age Range.

Prior to 2020 there was a youth movement in Veterinary Spending from <45. That changed in 2020 as 45> accounted for 94% of the $3B increase. In 2020, 2021 & 2023 the 55>64 yr-olds were on top. In 2022 it was the 45>54 yr-olds. The $ are skewing older but have also become a little more balanced from 25>74. Although Veterinary services are needed by all Pet Parents, higher income is by far the biggest driver in spending. This is best illustrated by comparing 2023 segment performance (Share of $/Share of CUs): <$30K: 26.0%; $30>69K: 64.6%; $70K>99K: 107.6%; $100>149K: 139.0%; $150>199K: 179.5%; $200K>: 201.0%. Yes, Vet Services are needed by all but are becoming less affordable for many.