Retail Channel $ Update – November Monthly & December Advance

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In December, YOY Commodities’ deflation rose to 0.3% from -0.2%. Even with -0.2% deflation for 2024, high cumulative inflation vs 21 can still impact consumer spending and slow $ales growth.  We saw more evidence of this in December. Total Retail $ were +3.8% vs 23, -11% below the average 92>23 lift. Relevant Retail was +4.1%, 3% above the December average, but the lift for 24 was 3.6%, -22% below average. This shows that there is still a long road to full recovery. We’ll continue to track the retail market with data from 2 reports provided by the Census Bureau and factor in a targeted CPI.

The Census Bureau Reports are the Monthly and the Advance Retail Sales Reports. Both are derived from sales data gathered from retailers across the U.S. and are published monthly at the same time. The Advance Report has a smaller sample size so it can be published quickly – about 2 weeks after month end. The Monthly Report includes data from all respondents, so it takes longer to compile the data – about 6 weeks. Although the sample size for the Advance report is smaller, the results over the years have proven it to be statistically accurate with the Monthly reports. The biggest difference is that the full sample in the Monthly report allows us to “drill” a little deeper into the retail channels.

We will begin with the November Monthly Report and then go to the December Advance Report. Our focus is comparing to last year but also 21 & 19. We’ll show both actual and the “real” change in sales as we factor inflation into the data.

Both reports include the following:     (Note: December Ytd data = Year-End, Annual Numbers)

  • Total Retail, Restaurants, Auto, Gas Stations and Relevant Retail (removing Restaurants, Auto and Gas)
  • Individual Channel Data – This is more detailed in the Monthly reports, and we’ll focus on Pet Relevant Channels.

The data will be presented in detailed charts to facilitate visual comparison between groups/channels. The charts will show 11 separate measurements. To save space they will be displayed in a stacked bar format for the channel charts.

  • Current Month change – % & $ vs previous month
  • Current Month change – % & $ vs same month last year and vs 2021.
    • Current Month Real change vs last year and vs 2021 – % factoring in inflation
  • Current Ytd change – % & $ for this year vs last year, 2021 & 2019.
    • Current Ytd Real change % for this year vs last year and vs 2021 and 2019
  • Monthly & Ytd $ & CPIs for this year vs last year and vs 2021 which are targeted by channel will also be shown. (CPI Details are at the end of the report)

First, the November Monthly. Only Relevant & Total were up from October and there were 3 actual sales drops –  all in Gas Stations. We should note: Gas Stations are still selling less product than in 2019. Also, Relevant Retail is all positive again. They have been all positive in 10 of the last 13 months and now in 6 of the last 7. ($ are Not Seasonally Adjusted)

The November Monthly is $2.9B more than the Advance report. Restaurants: +$1.3B; Auto: +$1.1B; Gas Stations: +$0.1B; Relevant Retail: +$0.5B. Relevant Retail was the driver in the $ales lift vs October. All others were down. An Oct>Nov increase in Total Retail  has happened in 75% of the years since 1992. However, the  1.18% lift was 3% below average. There were 3 drops in actual sales – Monthly vs 23 & 21 and Ytd vs 23 for Gas Stations. There were only 2 “real” sales drops, down from 3 last month. All but Gas Stations were all positive. Restaurants still have the biggest increases vs 21 & 19 but Relevant Retail stayed at the top of “real” performance vs 2019. However, only 51% of their growth is real.

Now, let’s see how some Key Pet Relevant channels did in November in the Stacked Bar Graph Format

Overall– 6 of 11 were up from October. vs Nov 23, 7 were actually and “really” up. Vs Nov 21, 7 were up but only 5 were real increases. Vs 2019, All were actually up but Off/Gift/Souv and Disc Dept Stores were both really down.

  • Building Material Stores – The pandemic focus on home has produced sales growth of 32.2% since 2019. Prices for the Bldg/Matl group have inflated 10.2% from 2021 and 22.0% from 2019 which is having an impact. Sales vs October were -9.9% for HomeCtr/Hdwe and -16.2% for Farm Stores. Vs other years, HomeCtr/Hdwe are only really down monthly & Ytd vs 23, but Farm stores are actually and really down in all comparisons but vs 2019. Plus, only 27% of the Building Materials group’s 19>24 lift was real. Avg 19>24 Growth: HomeCtr/Hdwe: 5.6%, Real: 1.5%; Farm: 6.5%, Real: 2.4%
  • Food & Drug – Both are truly essential. Except for the pandemic food binge buying, they tend to have smaller changes in $. In terms of inflation, the Grocery rate is now 4 times higher than the rate for Drug/Med products. Drug Stores are positive in all measurements and 66% of their 2019>24 growth is real. Supermarkets’ actual $ are up in all measurements and they are only “really” down vs 2021. However, only 6% of their 19>24 increase is real growth. Avg 19>24 Growth: Supermarkets: +5.2%, Real: +0.4%; Drug Stores: +5.3%, Real: +3.7%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up 8.9% from October but their only other positives are actual & real Ytd vs 19. Prices are still deflating, -2.8% vs 23. Deflation started in April 23 and is a big change from +1.1% in 22>23 and +7.9% in 21>22. The result is that 60% of their 34.4% lift since 19 is real. Avg 19>24 Growth Rate is: +6.1%; Real: +3.8%.
  • Gen Mdse Stores – All actual & real sales were up for Club/SupCtrs & $ stores. However, even with an 11.9% increase from October, Discount Dept Stores were only actually up vs 19. All of their real measurements are negative so none of their growth since 2019 is real. The other channels average 47% in real growth. Avg 19>24 Growth: SupCtr/Club: 6.0%, Real: 2.8%; $/Value Strs: +6.4%, Real: +3.2%; Disc. Dept. Strs: +1.5%, Real: -0.5%.
  • Office, Gift & Souvenir Stores – After a big lift in October, Sales fell -29.2% in November. They are only actually up vs Nov 23 & Ytd vs 19 and all of their real sales numbers, but vs Nov 23 are negative. Their recovery started late, and their progress has stalled again. Avg Growth Rate: +0.02%, Real: -1.9%
  • Internet/Mail Order – Sales are +13.0% from October and set a new monthly record of $132.9B. All measurements are positive, but their Ytd growth, +10.3%, is still only 64% of their average since 2019. However, 82.0% of their 110.5% growth since 2019 is real. Avg Growth: +16.0%, Real: +13.8%. As expected, they are by far the growth leader since 2019.
  • A/O Miscellaneous – Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level of $100B for the first time in 2021. In 2022 their sales dipped in January, July, Sept>Nov, rose in December, fell in Jan>Feb 23, grew Mar>May, fell in Jun>Aug, rose in Sep>Nov, fell in Dec>Jan 24, grew in Feb>May, fell in Jun>Sep, grew in October, then fell in Nov. All measurements are again positive and they are in 2nd place, behind the Internet, in the % increase vs 19 and vs 21. Also, 73% of their 53.7% growth since 2019 is real. Average 19>24 Growth: +9.0%, Real: +6.8%.

Nov had its usual lift vs Oct, but the Rel Retl lift was -30% below avg as only 6 small channels were up. The YOY lift was also below avg – Total (-6%), Relevant (-14%), but 7 smaller channels and 4 of 5 big groups were up vs Nov 23. Prices are still deflating in 7 channels but cumulative inflation is impacting $ as only 5 channels were really up vs Nov 21. The Retail Recovery has slowed. The Nov commodities CPI was -0.2% but rose to 0.3% in December. Let’s see if it impacts Retail.

Nov>Dec sales were up for all but Gas Stations. A Nov>Dec Total Retail lift has happened in 100% of the years since 1992 but the 7.5% lift is -50% below average. All but 4 actual YOY $ measurements are positive. 3 of the drops are from Gas Stations and 1 from Restaurants. The Total Retail lift of 3.8% vs Dec 23 was only the 6th  biggest increase in 24 and -11% below avg. The Relevant Retail lift vs Dec 23 (+4.1%) was 3% above their 92>23 average and the Auto lift was 65% above average. Restaurants (avg: 6.0%) & Gas Stations (avg: 4.2%) had $ drops. Inflation is still a factor. The CPI for all commodities rose to 0.3% but it is down to 5.9% from 6.6% vs 21. There is some other “real” news. 3 measurements were “really” down. In November, there were 2 but back in September there were 5. Auto, Total & Relevant Retail were YOY all positive. After 2 months with a negative, Relevant Retail has now been all positive in 7 of the last 8 months.

Overall – Inflation Reality – For Total Retail, inflation rose to +0.3% but YOY sales grew 3.8% vs 23. For Restaurants, inflation remains high, +3.5% and their $ vs Dec 23 are now down. Gas prices fell but that group is still in turmoil. Auto prices rose but are still deflating. Their sales grew +7.5% vs Dec 23 and they are again all positive. Inflation grew to 0.5% from 0.4% for Relevant Retail but YOY sales are still all positive. Their progress continues but may be slowing.

Total Retail – Since June 20, every month but April 23 & June 24 has set a monthly sales record. In 2023>24, Sales were on a roller coaster. Up Jul>Aug, down Sept, up Oct>Dec, down Jan 24, up Feb>Mar, down April, up May, down June, up Jul>Aug, down in Sep, up in Oct>Dec. Prices are now +0.3% and YOY sales are up less than expected. Year-End $ are up 3.0% vs 23, -35% below their 92>23 avg growth. Plus, only 39.1% of the 19>24 growth is real. YOY pricing in Total Retail deflated -0.2% in 24 but we see its cumulative impact in YE sales. Growth: 23>24: 3.0%; Avg 19>24: +6.7%, Real: +2.8%.

Restaurants – They were hit hard by the pandemic and didn’t begin recovery until March 2021. However, they have had strong growth since then, exceeding $1T for the 1st time in 2023. December $ are down vs 23 but they have the biggest YE increases vs 23, 21 & 19. Inflation slowed to 3.5% in December but is still +17.8% vs 21 and +27.5% vs 19. YE sales are up 4.6%, -18% below their 19>23 avg. Plus, just 33.6% of their 48.2% growth since 19 is real and they remain 3rd in performance behind Relevant & Total Retail. Recovery started late but inflation started early. Growth: 4.6%; Avg 19>24:+8.2%, Real: +3.1%. They just account for 13.4% of Total Retail $, but their strong growth has helped Total Retail.

Auto (Motor Vehicle & Parts Dealers) – They worked to overcome the stay-at-home attitude with great deals and advertising. They finished 2020 up 1% vs 2019 and hit a record $1.48T in 2021 but much of it was due to skyrocketing inflation. In 22, sales got on a rollercoaster. Inflation started to drop mid-year, but it caused 4 down months in actual $, the only sales negatives by a big group in 21>22. Their YE real 2022 sales numbers were even worse, -8.2% vs 21 and -8.9% vs 19. 2023 started a true sales rollercoaster but the $ set a new record, $1.595T. $ fell in Jan 24, grew Feb>Mar, fell Apr, grew May, fell June, grew Jul>Aug, fell Sep, grew Oct, fell Nov, then grew in Dec. YE $ were +2.5%,-42% below avg. All comparisons are positive, but only 18.8% of 19>24 growth is real. Growth: 2.5%; Avg 19>24: +5.6%, Real: +1.2%

Gas Stations – Gas Stations were hit hard by “stay at home”. They started recovery in Mar 21 and inflation began. Sales got on a rollercoaster in 22 but set a record, $583B. Inflation started to slow in Aug and prices slightly deflated in Dec & Feb 23, then strongly fell in Mar>Jul to -20.2%. In Aug they rose to -3.7%. In Sep they were +2.7% but began deflating to -4.2% in Feb 24. In Mar>May they grew, fell June, rose July, then fell Aug>Dec. Actual $ are down monthly vs 23 & 21 & YE vs 23. Real sales are down YE vs 21 & 19. 92>23 avg growth: +5.4%. Growth: -2.8%; Avg 19>24: +4.2%, Real: -0.7%. They show the cumulative impact of inflation and demonstrate how deflation can be both a positive and a negative.

Relevant Retail – Less Auto, Gas and Restaurants – They account for ≈60% of Total Retail $ in a variety of channels, so they took many different paths through the pandemic. However, their only down month was April 2020, and they led the way in Total Retail’s recovery. Sales got on a roller coaster in 2022, but all months set new records with December reaching a new all-time high, $481B, and an annual record of $4.81T. In 2023, the roller coaster continued. A December lift set a new monthly record of $494.7B & an annual record of $4.997T. Sales fell in Jan>Feb 24, rose in Mar, fell in Apr, rose in May, fell in June, rose Jul>Aug, fell Sep, then rose in Oct>Dec. The Dec 4.1% YOY lift is 3% above their 92>23 avg but their 3.6 YE lift is -22% below avg. However, 51% of their 40.9% 19>24 growth is real – #1 in performance. Growth: 3.6%; Avg 19>24: +7.1%, Real: +3.9%. In 2024 their inflation rate dropped from 3.2% to 0.1% but its cumulative impact slowed growth. Their YE 3.6% lift was -22% below avg, but it was equal to 2018>19, so we are approaching “normal”.

In 2024 inflation slowed, but its cumulative effect is very visible as YOY Sales changes vs 23 are lower. Overall, progress has slowed. The differences from November are a mixed bag. The Actual drops increased from 3 to 4 and real drops grew from 2 to 3. Restaurant $ fell vs Dec 23 but Auto is again all positive. Gas Stations remain in turmoil. Relevant Retail’s YE Sales increase was -22% below avg but all measurements are positive for the 7th time in the last 8 months. Total Retail’s YE 3.0% lift was -35% below avg but they are all positive too. The recovery is slow but continues.

Here’s a more detailed look at December by Key Channels in the Stacked Bar Graph Format

  • Relevant Retail: Growth: +3.6%; Avg: +7.1%, Real: +3.9%. 10 were up from Nov. Vs Dec 23: 9 were up, Real: 9, Vs Dec 21: 8 were up, Real: 8. Vs 19: Only Dept Stores were actually & really down. Furnishing stores were also really down.
  • All Department Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Sales are up 32.6% from November but their actual and real numbers are all negative. They are even actually & really down vs 2019. Their avg 92>23 YE change is actually a -0.9% drop. Growth: -1.3%; Avg 19>24: -0.6%, Real: -2.5%.
  • Club/SuprCtr/$- They fueled a big part of the recovery because they focus on value which has broad consumer appeal. $ales are +11.1% from Nov, and they are positive in all measurements. However, only 44% of their 33.9% 19>24 lift is real. Their YE 3.5% growth is -56% below their 92>23 average. Growth: 3.5%; Avg 19>24: +6.0%, Real: +2.8%.
  • Grocery- These stores depend on frequent purchases, so their changes are usually less radical. Actual $ are +2.8% from Nov and positive in all comparisons. However, cumulative inflation has hit them hard. Real $ are only up YE vs 23 & 19 and only 6% of 19>24 growth is real. Their YE growth is -36% below avg. Growth: 2.0%; Avg 19>24: +5.2%, Real: +0.3 %.
  • Health/Drug Stores – Many stores are essential, but consumers visit less frequently than Grocery stores. $ are up 12.8% from Nov and they are positive in all comparisons. Because inflation has been relatively low, 66% of their 29.2% growth from 2019 is real. Their YE growth is -44% below average. Growth: 2.9%; Avg 19>24: +5.3%, Real: +3.6%
  • Clothing and Accessories – Clothes mattered less when you stayed home. That changed in March 2021 with strong growth through 2022. Sales are up 38.9% from Nov and actual sales are up in all comparisons. Real sales are only down YE vs 21 and 62% of their 19>24 growth is real. YE growth is -15% below average. Growth: 2.6%; Avg 19>24: +3.3%, Real:+2.1%
  • Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices are still deflating but they were high in 2022. Sales are up 1.5% from Nov and only negative in actual YE vs 23 & 21 and real YE vs 21 & 19. YE they are -2.2%. Their 92>23 avg growth is 3.2%. Growth: -2.2%; Avg 19>24: +2.4%, Real: -0.1%
  • Electronic & Appliances – This channel has had many issues. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 21. $ are +17.9% from Nov and they are positive in all comparisons but actual YE vs 21. They have had strong deflation and their 2023>24 growth is only 0.9%, -54% below their 2.1% avg. Growth: +0.9%; Avg 19>24: +0.4%, Real: +3.5%.
  • Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. In 2022 the lift slowed as inflation grew to double digits. Prices are still deflating, but sales are -9.3% from Nov. Actual sales are only positive. YE vs 21 & 19. However, Real sales are positive in all comparisons but monthly & Ytd vs 21, but just 26% of their 19>24 sales growth is real. Their 92>23 avg growth is 4.4%. Growth: -0.8%; Avg 19>24: +5.7%, Real: +1.6%.
  • Sporting Goods, Hobby and Book Stores – Consumers turned their attention to recreation and Sporting Goods stores sales took off. Book & Hobby Stores recovered more slowly. They have been on a sales rollercoaster since June but $ are+28.4% vs Nov & +52.4% from Oct. However, only actual sales vs Dec 23 & YE 19 and real sales vs Dec 23 & 21 and YE vs 19 are positive. 74% of their 19>24 growth is real. Avg 92>23 lift: +2.8%. Growth: -2.7%; Avg 19>24: +4.6%, Real: +3.5%.
  • All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 at +0.9% but sales took off in March 21 and have continued to grow. Sales are +10.3% vs Nov and positive in all comparisons. They are still 2nd in the % increase vs 19 but only 4th vs 21. 66.7% of their 38.7% 19>24 growth is real. Plus, their 5.5% YE lift is actually 45% above their 3.8% 92>23 avg. Growth: +5.5%; Avg 19>24: +6.8%, Real: 4.7%.
  • NonStore Retailers – 90% of their $ comes from Internet/Mail Order/TV. The pandemic accelerated online spending. They ended 2020 +21.4%. The growth continued in 2021 as sales exceeded $100B for the 1st time and they broke the $1 Trillion barrier. $ are +10.2% from Nov, but YE growth was +8.2%, -15% below their 9.6% 92>23 avg. They are positive in all comparisons and 81% of their 95.4% 19>24 growth is real. Growth: 8.2%; Avg 19>24: +14.3%, Real: +12.1%.

Note: Almost without exception, online sales by brick ‘n mortar retailers are recorded with their regular store sales.

Recap – The Retail recovery from the pandemic was largely driven by Relevant Retail and by the end of 2021 it had become very widespread. In 2022, there was a new challenge, the worst inflation in 40 years. Overall, inflation has slowed considerably from its June 22 peak and 7 channels are currently deflating. Any deflation should help the Retail Situation. As expected, $ grew for 10 of 11 from Nov, but the 10.6% lift for Relevant Retail was -52% below their 92>23 avg. However, their 4.1% lift vs Dec 23 was 3% above average. 9 of 11 channels had a YOY $ lift and 9 sold more product. There were only 4 months with above average lifts in 2024, so it is not surprising that the Year-End 3.6% lift was -22% below average. In the 11 smaller channels only Miscellaneous had a YE lift above their 92>23 average. However, 7 had a sales increase and 9 sold more product. Perhaps the best news is that Relevant Retail has been positive in all comparisons in 7 of the last 8 months. The recovery strongly restarted in October. In November & December it slowed but continued. We still have a ways to go. We need many more “Octobers” to fully recover.

Finally, here are the details and updated inflation rates for the CPIs used to calculate the impact of inflation on retail groups and channels. This includes special aggregate CPIs created with the instruction and guidance of personnel from the US BLS. I also researched data from the last Economic Census to review the share of sales by product category for the various channels to help in selecting what expenditures to include in specific aggregates. Of course, none of these specially created aggregates are 100% accurate but they are much closer than the overall CPI or available aggregates. The data also includes the CPI changes since 2021 to show cumulative inflation.

Monthly YOY CPI changes of 0.2% or more are highlighted. (Green = lower; Pink = higher)

Here are some answers to some obvious questions. ALSO NOTE: 7 of the 11 December “pinks” are just slowed deflation

  1. Why is the group for Non-store different from the Internet?
    • Non-store is not all internet. It also includes Fuel Oil Dealers, the non-motor fuel Energy Commodity.
  2. Why is there no Food at home included in Non-store or Internet?
    • Online Grocery purchasing is becoming popular but almost all is from companies whose major business is brick ‘n mortar. These online sales are recorded under their primary channel.
  3. 6 Channels have the same CPI aggregate but represent a variety of business types.
    • They also have a wide range of product types. Rather than try to build aggregates of a multitude of small expenditure categories, it seemed better to eliminate the biggest, influential groups that they don’t sell. This method is not perfect, but it is certainly closer than any existing aggregate.
  4. Why are Grocery and Supermarkets only tied to the Grocery CPI?
    • According to the Economic Census, 76% of their sales comes from Grocery products. Grocery Products are the driver. The balance of their sales comes from a collection of a multitude of categories.
  5. What about Drug/Health Stores only being tied to Medical Commodities.
    • An answer similar to the one for Grocery/Supermarkets. However, in this case Medical Commodities account for over 80% of these stores’ total sales.
  6. Why do SuperCtrs/Clubs and $ Stores have the same CPI?
    • While the Big Stores sell much more fresh groceries, Groceries account for ¼ of $ Store sales. Both Channels generally offer most of the same product categories, but the actual product mix is different.

Petflation 2024 – December Update: Drops to +2.0% vs 2023

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The monthly Consumer Price Index peaked back in June 2022 at 9.1% then began to slow until it turned up in Jul/Aug 2023. Prices fell in Oct>Dec 23, then turned up Jan>Oct 24. Prices fell -0.1% in November but rose 0.04% in December. The CPI rose to +2.9% from +2.7% in November. Grocery prices rose 0.1% from November and inflation grew from 1.6% to 1.8%. However, after 12 months of 10+% YOY monthly increases, grocery inflation has now been below 10% for 22 months. 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 Dec 21 while the overall CPI was +7.0%. The gap narrowed as Petflation accelerated and reached 96.7% of the national rate in June 22. National inflation has slowed considerably since then, but Petflation generally increased until June 23. It passed the CPI in July 22 but fell below it from Apr>Jul 24. It exceeded the CPI in August, fell below in Sep>Oct, rose above in Nov, then fell below in Dec. As we drill into the data, all 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 (Note: December YTD = Annual)
    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 Dec 22 to Dec 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 from 12 and 24 months earlier are included. We also included and highlighted (pink) the cumulative price peak for each segment. In December, Pet prices were down -0.2% from November. The drop came from a mixture of patterns. Food (-0.6%) & Services (-0.5%) were down while Vet (+0.4%) & Supplies (0.1%) were up.

In Dec 22, the CPI was +15.5% and Pet was +16.0%. The Services segments generally inflated after mid-20, while Product inflation stayed low until late 21. In 22 Petflation surged. Food prices generally increased 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 Supplies dip. 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, Supp. & Vet  drove prices up. In Jan>Mar 24 Pet prices grew desspite a few dips by individual segments. 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 Aug, Food drove a drop. In Sep, Products fueled a drop. In Oct, Services drove a lift. In Nov, all were up. In Dec, the segments were split but Total Pet fell.

  • 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 rose Jan>Sep 23, dipped Oct>Dec, rose Jan>Oct 24, fell in Nov, then rose in Dec but 29.9% of the 22.8% increase in the 60 months since Dec 19 happened from Jan>Jun 22 – 10% of the time.
  • Pet Food – Prices were at the Dec 19 level from Apr 20>Sep 21. They grew & peaked May 23. Jun>Aug ↓, Sep>Nov ↑ Dec>Feb ↓, Mar ↑, Apr>May ↓, June ↑, Jul>Oct ↓, Nov ↑, Dec ↓. 91% of the lift was in 22/23.
  • Pet Supplies – Supplies prices were high in Dec 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 Jan 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 Mar, but set a new record in May. The rollercoaster continued with Dec>Feb ↑, Mar/Apr ↓, May/Jun ↑, July ↓, Aug ↑, Sep/Oct ↓ & Nov/Dec ↑.
  • 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>Mar 23 but the rate slowed in April and prices fell in May. Jun>Aug ↑, Sep>Dec ↓, Jan>Mar 24 ↑, Apr ↓, May ↑, June ↓, Jul>Nov ↑, Dec ↓.
  • Veterinary – Inflation has been consistent. Prices turned up in Mar 20 and grew through 21. A surge began in Dec 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 Aug, grew Sep>Dec, fell Jan, grew Feb>May, fell Jun>Jul, grew Aug>Dec.
  • Total Pet – Petflation is a sum of the segments. In Dec 21 the price surge began. In Mar>Jun 22 the segments had ups & downs, but Petflation grew again from Jul>Nov. It slowed in Dec, grew Jan>May 23 (peak), fell Jun>Aug, grew Sep/Oct, then fell in Nov. In December prices turned up and grew through March 24 to a record high. Prices fell in April, rose May>June (record), fell Jul>Sep, rose Oct>Nov (record), then fell in Dec. Petflation is again below the National CPI.

Next, we’ll turn our attention to the Year Over Year inflation rate change for December 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 2.0%, from 2.9% in November, and it is again below the National inflation rate (by -31.0%). 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 0.04% from November and were +2.9% vs Dec 23, up from +2.7% last month. Grocery inflation rose to +1.8% from 1.6%. Only 3 had price decreases from last month – all Pet: Food, Services & Total. There were 2 drops in Oct & Nov but 3 in Aug & Sep and 5 in July. The national YOY monthly CPI rate of 2.9% is up from 2.7%, but it is 15% below the 22>23 rate and 55% less than 21>22. The 23>24 rate is below 22>23 for all but Pet Supplies, Medical Services, Pet Services & Haircuts. In our 2021>2024 measurement you also can see that over 65% of the cumulative inflation since 2019 has only occurred in Total Pet and all Pet segments. Except for Pet Services, where prices have skyrocketed, Service Segments have in the past generally had higher inflation rates so there was 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 64.6% of the National CPI so they are very influential. Their current CPI is +4.4% while the CPI for Commodities is 0.3%. This clearly shows that Services are driving virtually all of the current 2.9% inflation. The situation in Pet is even more pronounced. Petflation: 2.0%. The combined CPI for the 2 Service Segments is 6.2%. The Pet Products CPI is -0.9%.

  • U.S. CPI– Prices are +0.04% from Nov. The YOY increase is 2.9%, up from 2.7%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are now 45+% higher than the target. The December increase was the 3rd straight lift after 6 consecutive drops from Apr>Sep. The current rate is below 22>23 but the 21>24 rate is still +13.2%, 57.9% of the total inflation since 2019. Inflation was growing in December 2021, +7.0%
  • Pet Food– Prices are -0.6% vs Nov. but -1.7% vs Dec. 23, down from -1.2%. They are still far below the Food at Home inflation rate of +1.8%. The YOY drop of -1.7% is being measured against a time when prices were 23.0% above the 2019 level but the current decrease is still more than double the -0.75% drop from 2019 to 2020. The 2021>2024 inflation surge generated 91% of the 20.9% inflation since 2019. Inflation began in June 2021.
  • Food at Home – Prices are up +0.1% from November and the monthly YOY increase grew from 1.6% to 1.8%. This is radically lower than Jul>Sep 2022 when it exceeded 13%. The 27.6% Inflation for this category since 2019 is 21.1% more than the national CPI but only in 3rd place behind 2 Pet Services expenditures. 55.4% 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 +0.1% from November and inflation fell to +1.5% vs Dec 23 from 2.8%. They still have the lowest rate vs 2019. Prices were deflated for much of 20>21. As a result, the 2021>24 inflation surge accounted for 99% of the total price increase since 2019. Prices set a record in October 2022 then deflated. 3 monthly increases pushed them to a record high in Feb 23. Prices fell in March, rose Apr/May (record), fell Jun>Aug, grew Sep>Oct, fell Nov, grew Dec>Feb, fell Mar>Apr, rose May>Jun (record), fell in July, rose in Aug, fell Sep>Oct, then rose Nov>Dec.
  • Veterinary Services– Prices are +0.4% from Nov and +6.2% from 2023, down from 7.0%. They are #2 in inflation vs 23 but still the leader in the increase since 2019 with +38.9% and since 2021, +28.0%. 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 72.0% 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 +0.1% from Nov, but inflation vs last year slowed to +3.4% from +3.7%. Medical Services are not a big part of the current surge as only 55.0% of the 12.9%, 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, rose Jul>Nov, then fell in Dec. Their 11.5% rate is almost double the 6.3% rate in Aug. 68.2% of their total 19>24 inflation has occurred since 21. In Dec 23, it was 49%. Plus, they again have the highest 23>24 rate.
  • Haircuts/Other Personal Services – Prices are +0.03% from Nov and +4.8% from Dec 23. 10 of the last 12 months have been 4.0+%. Inflation has been pretty consistent. 57.2% of the 19>24 inflation happened 21>24.
  • Total Pet– Petflation fell to 2.0% from 2.9% due to a lower rate in all segments. It is 61% less than the 22>23 rate and now 31% below the U.S. CPI. Plus, 2.0% is 31% below the 3.1% average December rate since 1997. Vs Nov, prices fell -0.2%, primarily driven by Food. The Nov>Dec decrease was far below the +0.2% average change and a bit unexpected. A drop has only occurred in 8 of the last 25 years. Another factor in the big CPI drop was that prices rose 0.2% in Nov>Dec 23. In December, the recovery strongly restarted, and we are getting closer to a full recovery.

Now, let’s look at the YTD numbers. (Note: December YTD = Annual)

The 23>24 rate is lower than 22>23 for all but Medical Services & Pet Services (their highest rate). The 22>23 inflation rate was the highest for only 2 of 9 categories – Both Pet – Pet Food & Veterinary. 21>22 has the highest rate for the CPI, Food at Home, Haircuts, Pet Supplies & Total Pet. The average national inflation in the 5 years since 2019 is 4.2%. Only 2 of the categories are below that rate – Medical Services (2.7%) and Pet Supplies (2.1%). It is no surprise that Veterinary Services has the highest average rate (6.7%), but all 5 other categories are +4.2% or higher.

  • U.S. CPI – The 23>24 rate is 2.9%, slightly below 3.0% in November, but it is down 29% from 22>23, 64% less than 21>22 and 31% below the average annual increase from 2019>2024. However, it’s still 93% more than the average annual increase from 2018>2020. 70% of the 22.7% inflation since 2019 occurred from 2021>24. Inflation is a big problem that started recently.
  • Pet Food – Ytd inflation is 0.2%, down from 0.3% in Nov. and 98.1% less than the 22>23 rate. Now, it is also 98.0% lower than 21>22 and 87% 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 they 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 1.2%, it is down 76% from 22>23, 89% from 21>22 and 66% from 20>21. Also, it is even 45% lower than the average rate from 2018>20. It is only in 3rd place for the highest inflation since 2019 but still beat the U.S. CPI by 18%. You can see the impact of supply chain issues on the Grocery category as 69% of the inflation since 2019 occurred from 2021>24.
  • Pets & Pet Supplies – In 24, prices rose Jan>Feb, fell Mar>Apr, rose May>Jun, fell in July, rose in Aug, fell Sep>Oct, then rose Nov>Dec. Inflation in 24 is 0.9% and is only higher than 19>20. Supplies have the lowest inflation since 2019. The most significant lift since 2019 was 7.7% in 2022. The 2021 deflation created a unusual situation. Prices are up 11.1% from 2019 but 105% of this lift happened from 21>24. Prices are up 11.6% 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, +7.4%, 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 2.5 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. In 24 it was 2.8%, just slightly above the 2.7% 2019>24 average rate. However, it is being measured against 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 & Dec. The 23>24 inflation rate of 7.0% is 2nd to Veterinary on the chart. It is their highest annual rate and is 2.1 times higher than their 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. 2024 inflation was 4.5%, 17% below its 22 peak, but 27% above the 18>20 average. Consumers are paying over 25% more than in 2019, which usually reduces the purchase frequency.
  • Total Pet – 2024 Petflation is 2.6%, the same as November. It is 68% less than 22>23 but 8% higher than the 2018>21 average rate. Plus, it is 10.3% below the CPI. Despite the YOY lifts in Aug & Nov, Petflation has slowed in 24. This was primarily driven by lower inflation in Pet Food & Supplies, while prices in Services (Nov) & Vet (Dec) reached new record highs. The patterns were mixed but Products dominate the Pet Industry, so Petflation slowed.

The Petflation recovery paused in Aug, came back Sep>Oct, paused in Nov, then resumed in Dec. At 2.0%, Dec was 37% below the 25 yr monthly average and the 2.6% rate for 2024 was 17% below the annual average. We tend to focus on monthly/annual inflation while ignoring one critical fact. Inflation is cumulative. Pet prices are 18.8% above 2021 and 24.2% higher than 2019. Those are big lifts. In fact, current prices for all segments are within 2% of the highest in history. Only Supplies prices (+10.6%) are less than 20.9% 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 proof of this at both GPE & SZ as a huge # of exhibitors offer OEM services. Strong, cumulative inflation has a widespread impact.

2023 Pet Food Spending was $45.50B – Where did it come from…?

/in /by

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. In 2018 we broke a 20 year pattern – 2 years up then spending goes flat or turns down. We expected a small increase in 2018 but we got a $2.27B decrease. This was due to the reaction to the FDA warning on grain free dog food. The warning lost credibility and spending rebounded in 2019, +$2.35B. In 2020 the market was hit by a bigger outside influence – the pandemic. In Pet Food, it created a wave of panic buying, resulting in a $5.65B lift. The panic buying was over so spending fell -$2.44B in 2021. In 2022 spending returned to more “normal” behavior with a strong $4.29B, +12.5% increase to $38.69B. In 2023, spending skyrocketed with a record $6.81B (+17.6%) lift and reached $45.5B. Note: With 10.6% inflation, the lift was really only 6.3%.  Let’s take a closer look.

First, we’ll see which groups were most responsible for the bulk of Pet Food spending and the $6.81B increase. 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). All but Education are the same as Total Pet. It was expanded to reach the 60% goal, which was unreachable for Food in 3 categories. The categories are presented in the order that reflects their share of Total Pet Spending. The big difference is that $70K> income has the smallest share of Food $. This difference is magnified in performance. Being Married is the most important factor in Food spending. In Total Pet and other segments, Income is the most important. Food spending is also more balanced than Total Pet Spending. This is evident by the fact that the Performance of only 3 groups exceeds 120%. In Total Pet there were 5 and Pet Products had 4. In 2023, Pet Food accounted for 66.4% of Pet Products $ and 38.7% of Total Pet, up from 63.8% and 37.7% in 2022. Pet Food is the largest segment but its importance to the Pet Industry is still growing.

  1. Race/Ethnic – White, not Hispanic (79.9%) – down from 83.4%. This large group accounts for the vast majority of spending in every segment. They lost share and their performance decreased to 120.4% from 124.1%, but this category stayed #3 in terms of importance in Pet Food Spending demographic characteristics. Hispanics, African Americans and Asians account for 33.7% of U.S. CU’s and they now spend 20.1% of Pet Food $, up from 16.6% in 2022. All groups had double digit % increases. Hispanics and African Americans both spent over $1.2B more.
  2. # in CU – 2+ people (76.7%) – down from 80.2%. The share of market fell for 2+ CUs and is again well below 80% for Pet Food. Their performance also dropped from 116.3% to 109.9% and their rank fell from #6 to #7. All CUs spent more. In the 2+ group, 2 & 3 People CUs spent $3.5B more while the combined lift for 4 & 5+ CUs was only $0.36B. Singles led the way with a $2.96B, +38.8% increase in Food spending. This caused the drops in share & performance.
  3. Housing – Homeowners (77.6%) – down from 80.8%. Homeownership is a huge factor in pet ownership and pet spending. In 2023, homeowners lost share and their performance fell from 124.1% to 119.2%. They dropped out of the 120% club and fell from 3rd to 4th in importance. All segments had double digit % lifts. However, Renters were up +36.9%. Homeowners were only +13.0%. The $2.74B lift by Renters caused the drops for Homeowners.
  4. Age – 35>74 (73.3%) – down from 78.3%. This expanded group is another indicator of increasing balance. Their performance fell from 114.5% to 107.4% and age dropped from #5 to #8 in importance. All but 45>64 spent more. Pet Food Share by Age: 25>34: 15.0%; 35>44: 18.5%; 45>54: 16.4%; 55>64: 18.6%; 65>74: 19.8%. Very Balanced!
  5. Area – Suburban + Rural (73.8%) down from 74.1%. Their performance fell from 113.1% to 112.7%. but their importance grew to #5, from #8. All segments spent at least $1.86B more. The Suburbs had the biggest $ lift, +$3.09B but Center City had the highest percentage, +18.5%. Overall, the lift was very balanced.
  6. Income – Over $70K (61.0%) – up from 60.5%. Their performance dropped from 127.9% to 120.9% but they stayed 2nd in importance. High income is still very important in Pet Food Spending but is not at the top of the list. The 50/50 $ divide rose slightly from $91K in 2022 to $93K in 2023 but it is still 9% below the average CU income. Only $40>49K & $50>69K spent less (Total: -$1.22B) but the 2 biggest lifts came from the 2 lowest income groups. <$30K led the category with a $1.89B lift but $30>39K was a close second, +$1.74B. All groups with an income over $70K and now $30>39K perform at 100+%. Prices are high but Food is so important that many low income CUs find the $.
  7. # Earners – “Everyone Works” (59.3%) – down from 62.9% and their performance also decreased from 107.8% to 101.1% but they stayed 9th in importance. No Earner CUs were up over 36%. 3 Earner CUs spent less and 2 Earner CUs were only +9.5% (less than inflation). Together, these factors drove the drop in share & performance.
  8. Occupation – All Wage & Salaried Workers (58.8%) – down from 62.4% – The group’s performance fell below 100% from 103.4% to 97.6%. Occupation is again last in importance. Mgrs/Prof and A/O, Unemployed spent less. Retirees were +48.6%. Self-Employeed: +32.4%. This combination caused the group’s drops in share & performance.
  9. CU Composition – Married Couples (59.4%) – down from 61.3%. They lost share and their performance fell from 128.3% to 123.3%, but they stayed #1 in importance. All Married CUs spent more but their lift was only 14.0%. Singles and Unmarried, All Adult CUs spent $4.22B, +32.6% more. This caused the Married Group’s drops.
  10. Education – Assoc. Degree> (64.7%) – down from 66.6%. Performance fell from 115.4% to 110.9% but higher education moved up from 7th to 6th in importance. Associates spent less and Adv Degrees were only +9.6% (less than inflation). Other HS Grads had a great year, +$3.38B, +20.5%. This caused the drops in share and performance.

All of the big spenders for Pet Food but Education  are the same as Total Pet. 2022 brought a return to a more normal spending pattern. In 2023 we had a record lift that was widespread and more balanced. This is best illustrated by the fact that in 2023 the performance for only 3 groups exceeds 120% with the highest at 123.3%. In 2022 there were 4, with the highest at 128.3%. To put the balance into better perspective, in 2020 there were 8 at 120+%, 5 over 130%.

Now, we’ll look at 2023’s best and worst performing Pet Food spending segments in each category.

Almost all of the best and worst performers are the ones that we would expect. 2023 produced just 2 surprise winners – Married, + Adults and 65>74 yrs old. There are 6 different winners from 2022 and 5 different losers. This is the same total as 2022, but it had 4 new winners and 7 new losers. More new winners reflects the widespread nature of 2023’s record increase in Pet Food spending. Changes from 2022 are “boxed”. We should also note the performance gap between winner and loser narrowed in 11 of 12 categories. Overall, the average gap fell from 73.5% in 2022 to 59.1% in 2023. This is strong evidence of increased spending balance. Here are some more performance specifics:

  • Income – $40>49K replaced <$30K on the bottom. The gap narrowed from 112% to 86%, and is now below 100%.
  • # Earners – Winner & loser are new. The Winner has only an average income. The gap narrowed from 71% to 39%.
  • Occupation – Self Employed replaced Mgrs/Prof. on top. The gap narrowed from 54% to 38%.
  • Age, Generation- Boomers moved to the top in both and the oldest stayed on the bottom. Both gaps fell -16+%.
  • Race – The usual winner. Asians replaced African Americans on the bottom. The gap narrowed from 94% to 83%.
  • Education – Both are new but a college degree still mattered in Pet Food spending. The gap fell from 54%.to 35%.
  • Housing – Owning a home is always important. The usual winner & loser returned. The gap narrowed – 97% to 74%.
  • Area – The usual winner/loser – Rural on top & Center City on the bottom. The gap narrowed a little 85% to 82%.
  • Region – Both kept their spots but this category had the only increase in the performance gap – 24.5% to 30%.
  • CU Comp, CU Size– Size: No change. Married, +Adults was a surprise. Both gaps narrowed. Comp: -11%; Size: -6%

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

There are 4 repeats from 2022 and 4 flipped from 1st to last or vice versa. Last year there were 2 repeats and 13 flips -much more turmoil. The Surprise winners were Retired, 65>74, <$30K and 3 different singles. The surprising losers were Gen X, Mgrs, 45>54 and 3+ Earners. Spending grew 17.6% as 87.5% of demographic segments spent more. (With inflation, it was 80%) Plus, all segments in 5 categories had increases. In 2022 there was 1. Here are the specifics:

  • Race/Ethnic – Both White, Not Hispanics and Asians held their positions.
    • Winner – White, Not Hispanic – Pet Food Spending: $36.33B; Up $4.07B (+12.6%)                              2022: White, Not Hispanic
    • Loser – Asian – Pet Food Spending: $0.94B; Up $0.11B (+12.6%)                                                               2022: Asian
    • Comment – The U.S. is becoming more racially/ethnically diverse but White, Not Hispanics are by far the biggest spender in every Pet Segment. All segments spent more. Asian Americans had the smallest lift. African Americans & Hispanics had $1B increases. African Americans almost doubled their spending, +95.5%.
  • Generation – Millennials are a new winner. Gen X flipped to the bottom
    • Winner – Millennials – Pet Food Spending: $12.67B; Up $3.87B (+44.1%)                                                      2022: Gen X
    • Loser – Gen X – Pet Food Spending: $11.43B; Down $1.65B (-12.6%)                                                               2022: Born <1946
    • Comment – Much of the 2020>21 Pet Food spending boom and bust was due to the Boomers. Gen X took over the top spot in 21 & 22. In 2023, they had the only spending decrease. Millennials edged out Boomers, +$3.87B to $3.23B for the win. We should note that Millennials increased their Pet Food spending $5.43B 2021>2023.
  • Occupation – The 2022 winner & loser flipped in 2023. This was the only dual flip in 2023 Pet Food.
    • Winner – Retired – Pet Food Spending: $10.60B; Up $3.47B (+48.6%)                                                   2022: Mgrs & Professionals
    • Loser – Mgrs & Professionals – Pet Food Spending: $12.43B; Down $0.53B (-4.1%)                          2022: Retired
    • Comment – Only Mgrs/Professionals and A/O, Unemployed spent less. Retirees had the biggest lift in both $ & %. In fact, their increase was double the size of 2nd place – +$1.73B by Tech/Sls/Cler.
  • Area Type – The Suburbs won again and Center City stayed on the bottom, even though they tied for the loss.
    • Winner – Suburbs 2500> – Pet Food Spending: $19.95B; Up $3.09B (+18.3%)                                                           2022: Suburbs
    • Loser – Center City/Rural – Ctr City: $11.91B; Up $1.86B (+18.5%); Rural: $13.64B; Up $1.86B (+15.8%)            2022: Ctr City
    • Comment – All segments spent more. The Suburbs won with a $3B lift and Center City tied for the bottom spot despite having a lift of $1.86B.
  • Education – Both winner and loser are new. A college degree is still important..
    • Winner – BA/BS Degree – Food Spending: $14.44B; Up $2.98B (+26.0%)                                                   2022: HS Grads or less
    • Loser – Asssociate’s Degree – Food Spending: $4.01B; Down $0.27B (-6.2%)                                            2022: Adv College Degree
    • Comment – Only Associates Degrees and those without a HS diploma spent less. This was not surprising because in 2022 they both had $1+B lifts. In 2023, HS grads with no additional degree spent $3.4B more. BA/BS had a strong year but Adv. Degrees were only up 9% after a drop in 2022.
  • CU Composition – The winner & loser are both new
    • Winner – Singles – Food: $10.60B; Up $2.96B (+38.8%)                                                                      2022: Married, Oldest Child 18>
    • Loser– Single Parents – Food: $1.33B; Down $0.74B (-35.7%)                                                           2022: Married, Couple Only
    • Comment – Only Single Parents spent less. There were strong increases in unexpected segments. Singles account for 30.2% of CUs. Their spending performance is still low, but they had a $2.96B, 38.8% lift. Unmarried, 2+ All Adult CUs. (16.5% of CUs) spent $1.25B, 23.8% more. Spending became more balanced in this category.
  • # in CU – Again, the winner and loser are new.
    • Winner – 1 Person – Pet Food Spending: $10.60B; Up $2.96B (+38.8%)                                        2022: 3 People
    • Loser – 4 People – Pet Food Spending: $5.63B; Up $0.17B (+3.1%)                                                 2022: 2 People
    • Comment: All segments spent more but the larger CUs, 4 & 5 people had lifts <4.5%. 1 person led the way and 3 People was a little above average at +17.7%. Only 2>4 People CUs perform above 100%.
  • Region – The West flipped from last to 1st.
    • Winner – West – Pet Food Spending: $11.35B; Up $2.79B (+32.6%)                                                      2022: Midwest
    • Loser – South – Pet Food Spending: $14.81B; Up $0.97B (+7.0%)                                                           2022: West
    • Comment – All Regions spent more and all but the South had double digit percentage lifts.
  • Housing – Homeowners w/Mtges held onto their position on top. w/o Mtge replaced Renters at the bottom.
    • Winner – Homeowners w/Mtge – Food: $23.66B; Up $2.76B (+13.2%)                                            2022: Homeowners w/Mtge
    • Loser – Homeowners w/o Mtge – Food: $11.66B; Up $1.30B (+12.6%)                                              2022: Renters
    • Comment – All segments spent more with double digit % lifts. Arguably, Renters had the best year. Their $2.74B lift was only $0.02B behind the winner and their +36.9% increase was far better than all Homeowners.
  • Age – The Winner and loser are both new and surprising.
    • Winner – 65>74 yrs – Pet Food Spending: $9.00B; Up $2.35B (+35.4%)                                             2022: 55>64 yrs
    • Loser – 45>54 yrs – Pet Food Spending: $7.45B; Down $0.42B (-5.3%)                                                 2022: 75+ yrs
    • Comment: 45>64 spent less while <45 and 65> spent more. The drop was driven by Gen Xers while Millennials & Boomers drove the lift. The biggest % increase came from 75> group. They spent $1.35B, 60.5% more.
  • Income – Both the winner & loser are new and the winner is a big surprise.
    • Winner – <$30K – Pet Food Spending: $6.63B; Up $1.89B (+39.7%)                                                    2022: $100 to $149K
    • Loser – $40 to $49K – Pet Food Spending: $2.11B; Down $0.82B (-28.0%)                                          2022: $70 to $99K
    • Comment – Only the $40>69K groups spent less. Under $40K spent $3.63B more, which was only slightly less than the $3.74B increase by $100K>. The $30>39K group joined the groups over $70K with 100+% performance.
  • # Earners – The winner and loser are both new
    • Winner –– No Earner, Single – Pet Food Spending: $4.67B; Up $1.63B (+53.9%)                             2022: 2 Earners
    • Loser – 3+ Earners – Pet Food Spending: $4.53B; Down $0.11B (-2.3%)                                              2022: No Earner, 2+ CU
    • Comment – 3+Earners had the only spending decrease, and it was only -2.3%. All other segments had increases over $1B. No Earner CUs were up $3B, +49%.

We’ve now seen the “winners” and “losers” in terms of increase/decrease in Pet Food Spending $ for 12 Demographic Categories. In 2020, very specific segments binge bought Pet Food. In 2021, their pets “ate up” the overstock so Pet Food spending fell. 2022>23 brought a new challenge, strong inflation. However, most of America remains firmly committed to high quality Pet Food. Super premium Food already had high prices, so income is still very important in Pet Food spending. The 2023 result was 87.5% of all demographic segments spent more which drove a record lift of $6.81B, +17.6% to $45.5B. Even considering inflation, 80% spent more on Pet Food. We have identified the winning segments in performance and $ increase but 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

This group clearly demonstrates that the lift in Pet Food spending was very widespread. The first thing that you notice is that while food prices are high, lower income groups like African Americans and $30>39K still “found a way” and increased their spending… over 70%. Gen Z continues to reinforce their commitment to Pet Parenting and in 2023 the oldest American joined the movement. Both spent over 50% more. Also, many groups that usually finish at or the bottom in spending comparisons stepped up in 2023. Renters and Center City are still the worst performers in their category but in 2023 they both increased their Pet Food spending over $1.8B. Income is important in Pet Food spending but family commitment is still #1. The strong performance of these segments demonstrates just how widespread the commitment to our Pet “Children” has become.

Summary

Pet Food has been ruled by trends over the years. The drop in 2018 due to the FDA grain free warning broke a 20 year pattern of 2 years up followed by 1 year of flat or declining sales. This trendy nature increased with the move to premium foods in 2004. The 2007 Melamine crisis 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 2nd  half of 2014. In 2015, many more groups began to upgrade. The result was a $5.4B spending lift. These consumers were generally more educated with higher incomes. Unfortunately, they often paid for the upgrade by spending less in other segments. In 2016, spending dropped as many value shopped, especially online. They spent some of the $3B “saved” Food $ in other segments but not enough so Total Pet Spending was down $0.46B. In 2017, due to a price competitive market, we got a deeper penetration of Super Premium. These upgraders were mostly middle-income and not college educated. The result was a $4.6B increase but this time there was no trading of segment $.

In 2018 we were “due” a small annual increase in Pet Food, but spending fell $2.26B in reaction to the FDA warning on grain free dog food. The big decrease came directly from the groups who had fueled the 2017 increase. In fact, 71% of the demographic groups with the biggest change in Pet Food $ switched from first to last or vice versa from 2017.

That brought us to 2019. The FDA warning was false, so Pet Parents returned to Super Premium or even pricier options. Supplement $ also grew as the health of their Pet Children remained the #1 priority. Pet Food $ grew $2.35B with 75% of demographic segments spending more. Income and related categories mattered more, and Pet Food Spending became less demographically balanced. In 2020 the Pandemic accelerated this trend. Fear of shortages led to binge buying and a $5.65B increase. This behavior was driven by very specific groups. This spending disparity was manifested in the fact that the performance of 8 of 10 big spending groups exceeded 120% while 49% of all segments spent less.

In 2021, the retail market strongly recovered but the turmoil in Pet Food continued. The 2020 binge buying didn’t increase usage, so Pet Food spending fell by $2.44B. Every segment with the biggest increase in 2020 had the biggest decrease in 2021. The resulting drop in $ hid the fact that 65% of all demographic segments spent more on Pet Food.

In 2022 the situation returned to a more normal, balanced pattern in spending. Pet Parents renewed their commitment to high quality food for their children. Despite strong inflation, 82% of demographic segments increased spending generating a $4.29B (+12.5%) lift and reaching a new record high of $38.69B – even exceeding the 2020 binge by $1.85B.

In 2023 inflation got even stronger, +10.6%, but so did Pet Parents’ commitment to their Pet Children. Most prioritized their spending which put Pet Food high on their shopping list. The 22>23 lift of $6.81B set a new record and was widespread. In 5 categories, all spent more and overall,  87.5% of demographics increased spending. Even considering inflation, 80% spent more. 2023 was also more balanced as only 3 big groups performed over 120% and the average discrepancy between the best and worst performers dropped from 73.5% to 59.1%. 2023 was a great year for Pet Food.

Finally – The Ultimate Pet Food Spending CU is 3 people – a married couple and 1 other adult. They are 65>74 years old and White, but not Hispanic. At least one has an Advanced College Degree and 2 of them work in their own business. This generates an income of $200K>. They are still paying the mortgage on their house in a small Midwestern suburb.

2023 Pet Products Spending was $68.52B – Where did it come from…?

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We looked at the Total Pet Spending for 2023 and its key demographic sources. Now we’ll start drilling down into the data. The first stop in our journey of discovery will be Pet Products – Pet Food and Supplies. These are the industry segments that are most familiar to consumers. They are stocked in over 200,000 outlets, plus the internet. Every week over 21,700,000 households buy food and/or treats for their pet children. Pet Products accounted for $68.52B (58.3%) of the $117.60B in Total Pet $ in 2023. This was up $7.89B (+13.0%) from the $60.63B that was spent in 2022. However, inflation in 2023 was 7.4% so the “real” lift was 5.2%. Pet Food had a record lift after the small increase in 2022 that followed the binge/bust in 20/21. Supplies also was on a spending rollercoaster. After falling in 2020, there was a record surge in 2021. As expected, spending fell in 2022, but there was a small lift in 2023.

Overall, in 2023 Pet Food spending rose +$6.81B and Supplies spending increased $1.08B. 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 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 2023.

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). All but 1 of the biggest spending groups are the same as Total Pet. To reach 60%, Education added Associates. The categories are shown in the order that reflects their share of Total Pet Spending. This highlights any differences. There is only 1. The bigger education group obviously has a bigger share of spending than College grads only. However, we should note that, like Total Pet Spending, Income is the highest performing demographic characteristic. In Pet Products there are only 4 groups with a performance rating of 120+%, the same as last year and 1 less than Total Pet in 2023. This reflects the fact that Pet Products spending, especially on Food, is spread more evenly across the category segments.

  1. Race/Ethnic – White, not Hispanic (81.1%) down from 82.7%. They are the 3rd largest group but still account for the vast majority of spending in every segment. Their performance fell from 123.1% to 122.2% but they stayed 3rd in terms of importance in Pet Products Spending demographic characteristics. All groups spent more but while Hispanics, African Americans and Asian American account for 33.7% of U.S. CU’s, they only spend 18.9% of Pet Products $. Although the minority share of Pet Poducts $ is still low, it is up 47.7% from 12.8% in 2020. Pet ownership is relatively high in Hispanic households, but it is significantly lower for African Americans and Asians.
  2. # in CU – 2+ people (78.2%) down from 81.4%. The share for Pet Products is now lower than for Total Pet, 79.7%. However, If you put 2 people together, pets very likely will follow and you must spend money on food and supplies. Their 112.0% performance is down from 117.9%. Only 4 People CUs spent less but the lift was below average overall and for all segments but 3 people. The big driver in the drops was a 32.2% increase by Singles.
  3. Housing – Homeowners (77.9%) down from 80.0%. Controlling your “own space” has long been the key to pet ownership and more pet spending. Their performance fell from 123.0% to 119.7% but they stayed 4th in terms of importance for increased pet products spending. However, they are only still in the 120% club if you round up their performance. Both Homeowners and Renters spent more on Pet Products in 2023 but the increase for Renters was +25.3% while the lift for Homeowners was only +9.9%. This drove the drops in share and performance. BTW – Those w/o a mortgage were +8.3% while those w/Mtge were +10.7%.
  4. Age – 35>74 (74.1%) down from 77.1%. Their performance also fell from 112.8% to 108.5%. All age groups but 55>64 had increases. However, the only above average lifts were from <35 & 65>. In fact, the share of spending is now 18.8% for all groups 35>64. The drops came because spending is becoming increasingly balanced by age group.
  5. Area – Suburban & Rural (73.4%) up from 72.7%, and their performance grew from 111.0% to 112.1%. Suburban households are the biggest pet product spenders but all segments had double digit % increases. However, Rural was again the best peformer as their 17.4% lift was the only above average increase.
  6. Income – Over $70K (64.7%, up from 64.3%). Pet Parenting is common in all income groups but money is a big driver in the spending behavior for all industry segments. Although their performance fell to 128.2% from 136.0%, CU income continues to be the single most important factor in increased Pet Products Spending. As a rule,  Higher Income = Higher Pet Products Spending. 2023 didn’t always follow that rule. Only $40>49K & $50>69K spent less but $30>39K had the biggest lift. A big factor in the share lift & performance drop was a 7.2% increase in $70K> CUs.
  7. # Earners – “Everyone Works” (63.4%) down from 65.3%. Their performance is 108.0%, down from 111.9%. In this group, all adults in the CU are employed. All Earner segments spent more but the drop in share and performance for Everyone Works comes from a couple of factors. Their lift was 9.6% while the other segments were +19.5%. No Earners CUs were even 31+%. Also, the Everyone Works group had 0.7M more CUs while the other group was -0.2M. Income is the top priority in Pet Products Spending, but how many people work to get it is less important.
  8. Occupation – All Wage & Salary Earners (62.4%) down from 64.7%. Their performance also fell from 107.2% to 102.4%. Only Mgrs/Professionals spent less but the Wage & Salary group was only +9.0%. Self-Employed were +27.7% and Retirees were +33.0%. This caused the drops in share & performance.
  9. CU Composition – Married Couples (60.0%) down from 61.1%. Their performance fell from 134.4% to 127.8% but they stayed 2nd in importance. Only Married, with an Oldest Child 18> and Single Parents spent less. The drops in share and performance were largely due to a huge, 32.2% spending lift by Singles.
  10. Education – Assoc Degree> (66.5%) down from 68.6%. The performance of the expanded group also dropped from 118.9% to 114.0%. However, Education remains 5th in importance in Pet Products spending. The drops in share and performance were due to a combination of factors. Associates had a small drop, which was the only decrease in the category. The other <College segments were +20% while College Grads were +11.9% with 2.6% more CUs.

For Pet Products, only the Education spending group is different than Total Pet, but there are subtle differences in market share and performance. Money matters most but how many earners, their occupation and education matters less. It also appears that Pet Products Spending is becoming more balanced  across most demographic categories.

Now, let’s drill deeper and look at 2023’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 2022, 2 less than last year but the same as Total Pet this year. Changes from 2022 are “boxed”. We should note that half of the Product winners are different from Total Pet. This reflects the influence of Services and the differences between Services & Product spending behavior. These differences are usually minor and often a contiguous segment.

The average performance of the 2023 Product winners was 130.4%, down from 136.1% – 9 were down. The average for the losers was 64.7%, up from 60.7% – 9 were up. The gap between best and worst narrowed from 75.4% to 65.7% indicating that Pet Products spending became more balanced across America in 2023. We should also note:

  • Generation – Baby Boomers replaced Gen X at the top. The Gen Z surge should keep Born <1946 on the bottom.
  • Education – BA/BS replaced Adv. Degree but only won by 1.9%. These 2 are the only 100+% Education performers.
  • Income, # Earners – There were no changes in winners or losers. All are at or near the top or bottom of the income “ladder”. The importance of income is reinforced in many categories like Age, Occupation and Education.
  • CU Composition – The winner’s oldest child is younger, 6>17 rather than 18>. Single Parents replaced singles at the bottom, which is no surprise. All Married CUs perform at 100+%.
  • Race/Ethnic – White, Not Hispanic are the perennial winners in the pet industry but we do see an exception to the high income rule. Asians have the highest income but the worst performance – because they have fewer pets.
  • Occupation – Self-Employed has the highest income & are bosses. They replaced Managers on top. Young Retirees had a great year & were replaced on the bottom by Service Workers, who have the lowest income of any worker.

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

In this section we’ll see who drove Pet Products spending up. There are 5 repeats from 2022 and only 4 Segments flipped from first to last or vice versa. This is much less turmoil than 2022 which had only 2 repeats but 12 flips. Most of the winners are somewhat surprising but in 5 categories, all segments spent more. Also, 86% of 96 demographic segments spent more. Considering 7.4% inflation, that number falls to 77%. Here are the specifics:

  • Race/Ethnic – Both White, Non-Hispanics and Asians held their spots.
    • Winner – White, Not Hispanic – Products Spending: $55.57B; Up $5.43B (+10.8%)                          2022: White, Not Hispanic
    • Loser – Asian – Products Spending: $1.61B; Up $0.11B (+7.3%)                                                             2022: Asian 
    • Comment – All groups spent more. African Americans (+40.1%) and Hispanics (+19.8%) led the way. All spent a lot more on Food and African Americans had the only drop in Supplies. They made up for it with a 95.5% lift in Food. Food was the big driver as all but Asians had a $1+B increase.
  • Generation – Millennials stayed on top, but Gen X replaced Born <1946 on the bottom.
    • Winner – Millennials – Products Spending: $19.33B; Up $4.18B (+27.6%)                                           2022: Millennials
    • Loser – Gen X – Products Spending: $19.14B; Down $0.97B (-4.8%)                                                      2022: Born <1946
    • Comment – Millennials stayed on top with a big lift in Food. In 2022, Supplies was the driver. Gen X had a 2nd consecutive drop in Product $. In 2022, it was due to a big drop in Supplies. In 2023, Food was -$1.65B.
  • CU Composition – Both the winner and loser are new…and neither is married, which is unusual.
    • Winner – Singles – Products: $14.95B; Up $3.64B (+32.2%)                                                                 2022: Married, Oldest Child 18>
    • Loser – Single Parents – Products: $1.93B; Down $0.93B (-32.6%)                                                    2022: Married, Oldest Child 6>17
    • Comment – Single Parents and Married, Oldest Child 18> were the only segments to spend less on Pet Products. Overall, Married couples were up 11.0% in Products (Avg: 13.0%) and had lifts in both Food & Supplies. However, 2023 was spectacular for Singles. Products: +32.2%; Food: +38.8%; Supplies: +18.6%.
  • # in CU – Both the winner and loser are new. Only 4 People CUs spent less on Products
    • Winner – 1 Person – Products Spending: $14.95B; Up $3.64B (+32.2%)                                             2022: 3 People
    • Loser – 4 People – Products Spending: $8.49B; Down $0.30B (-3.4%)                                                2022: 5+ People
    • Comment: 1 Person was the runaway winner but all spent more on Food. Only 2 & 4 spent less on Supplies.
  • Housing – Homeowners w/o Mtge flipped from 1st to last but all segments spent more on both Food & Supplies.
    • Winner – Homeowner w/Mtge – Products: $15.93B; Up $3.50B (+10.7%)                                       2022: Homeowner w/o Mtge
    • Loser – Homeowner w/o Mtge – Products Spending: $12.10B; Up $1.33B (+8.3%)                        2022: Renter
    • Comment– Renters had the biggest % lift, +25.3% and were only 0.02B behind the winner.
  • Occupation – Both the Winner and Loser flipped.
    • Winner – Retired – Products Spending: $13.61B; Up $3.38B (+33.0%)                                                2022: Mgrs & Professionals
    • Loser – Mgrs & Professionals – Products Spending: $20.57B; Down $0.76B (-3.6%)                       2022: Retired
    • Comment – All but Managers/Professionals and All Other/Unemployed spent more. They also had the only drops in Food but 5 of 8 spent less on Supplies. Tech/Sls/Cler had the biggest % lift in Products, +40.8%.
  • Education – Both winner and loser are new.
    • Winner – BA/BS Degree – Products Spending: $21.76B; Up $3.38B (+18.4%)                                   2022: HS Grad or Less
    • Loser – Associate’s Degree – Products Spending: $7.21B; Down $0.09B (-1.3%)                              2022: Adv College Degree
    • Comment – Only Associates spent less. HS Grads w/some College had the biggest % lift, +31.3%, while Adv. Degrees had the lowest, +4.5%. Overall, <College were +14.4% and College Grads were +11.9% -2 straight wins.
  • Area Type – The winner and loser held their spots and again all Area Types spent more.
    • Winner – Suburbs 2500> – Products Spending: $29.88B; Up $3.18B (+11.9%)                                 2022: Suburbs 2500>
    • Loser – Center City – Products Spending: $18.24B; Up $1.68B (+10.1%)                                            2022: Center City
    • Comment – Rural had the biggest % lift, +17.4%. The only drop was that Center City spent -2.8% less on Supplies.
  • Region – All regions spent more but both the winner and loser are new.
    • Winner – Northeast – Products Spending: $12.67B; Up $2.99B (+30.9%)                                           2022: Midwest
    • Loser – South – Products Spending: $21.80B; Up $0.32B (+1.5%)                                                         2022: West
    • Comment – All regions spent more on Food. The South and West spent less on Supplies.
  • Age – The 55>64 yr-olds flipped from first to last – a 2nd consecutive flip.
    • Winner – 65>74 yrs – Products Spending: $12.13B; Up $2.60B (+27.3%)                                            2022: 55>64 yrs
    • Loser – 55>64 yrs – Products Spending: $12.87B; Down $0.38B (-2.9%)                                             2022: 75> yrs
    • Comment: 55>64 had the only Product $ drop. They spent less in Food & Supplies. The only other Food drop came from 45>54. 25>34 & 75+ also bought less Supplies. The lift for 65>74 was driven by a big increase in Food.
  • # Earners – Both the winner and loser are new, but all segments spent more.
    • Winner – 1 Earner, Single – Products Spending: $9.30B; Up $2.31B (+32.9%)                                  2022: 1 Earner, 2+ CU
    • Loser – 3+ Earners – Products Spending: $8.39B; Up $0.45B (+5.7%)                                                 2022: No Earner, 2+ CU
    • Comment – While income matters most, the # of Earners is still not a major factor in Pet Products spending as 1 Earner segments won in 22 & 23. In 23, No Earner segments were up 31+% and 3+ Earners had the smallest lift.
  • Income – Both the loser and winner are low income – unusual!
    • Winner – $30>39K – Products Spending: $5.39B; Up $1.91B (+55.0%)                                                2022: $100>149K
    • Loser – $40>49K – Products Spending: $3.16B; Down $1.00B (-24.0%)                                               2022: $200K>
    • Comment – A limited spending rollercoaster: <$40K = +$3.73B; $40>69K = -$1.24B; $70K> = +$5.38B. Only Drops: <30K: Supplies; $40>49K: Products, Food & Supplies; $50>69K: Products & Food; $100>149K: Supplies

We’ve now seen the winners and losers in terms of increase/decrease in Pet Products $ for 12 Demographic Categories. 2023 was a good year for Pet Products Spending. Food $ took off with a record lift after the small increase in 2022. Supplies spending seems to be mirroring Food. A Binge, a Bust and now a Small lift. The 2023 result was a 13.0% lift in which 86% of 96 demographic segments spent more on Pet Products. Even with inflation, that number was 77% – Still Very Good! Of course, not every good performer can be a winner but some of these “hidden” segments should be recognized for their outstanding effort. I’ve narrowed the group down to 6. They don’t win an award, but they deserve…

Honorable Mention

Pet Products spending was up $7.89B in 2023 from a record increase in Food and a small lift in Supplies. The lift in Pet Products spending was widespread as 86% of 96 demographic segments spent more. Income was still the most important factor, but spending became a little more balanced. In our honorable mention group, you see that Gen Z continued their growing commitment to Pet Parenting with a 59% lift after doubling their Pet Products spending in 2022. Some other low-income segments that often finish on the bottom in spending also had a good year. No Earner, 2+CUs, Renters, <$30K and Single Parents all increased spending by 25+% and had lifts over $1.5B. The number of Earners is less important but so is being “the Boss”. The lower level White Collar Technical/Sales/Clerical group has an average income, but they are firmly committed to their Pets. They spent $3.3B (+40.8%) more on Pet Products in 2023. Formal, higher education is also a little less “necessary” as HS Grads w/some college had a $2.7B (+31.3%) increase in Pet Products spending. The lift in Pet Products spending was definitely widespread and more balanced so there were many “heroes”.

Summary

Pet Products spending has seen a lot of turmoil since 2015. 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. They seized the opportunity and spent $7B more. In 2018 the FDA warning on grain free dog food caused many consumers to downgrade their food and new tariffs on Supplies flattened spending growth. Products $ fell -$1B. In 2019 Pet Food spending rebounded to a record level but the higher prices in the Supplies segment really hit home. Supplies Spending fell $2.98. Pet Products $ fell -$0.64B, the second consecutive decrease.

2020 brought the COVID pandemic. Pet Parents binge bought Pet Food in the 1st half of the year. As Pet Parents focused on “needs”, discretionary Supplies $ dropped significantly. However, Pet Products spending still grew by $3.99B to $52B.

In 2021, the Food binge was not repeated so spending fell, but Pet Parents caught up on purchasing all the Supplies that they had postponed buying. The result was a record increase in Supplies and a $6.21B increase in Pet Products $.

2022 was more normal. Pet Food spending increased $4.29B, +12.5%. The Supplies binge was not repeated but Supplies spending only fell -7.8%. The net was a $2.42B, +4.2% increase which pushed Pet Products $ up to $60.63B. The lift was widespread as 70% demographic segments spent more. The $ moved towards their older members in the 45>54 yr-old age group. However, the youngsters also made their presence felt as Gen Z more than doubled their Pet Products spending. Spending also became more demographically balanced. The most visible feature of this change was in the big groups doing at least 60% of the dollars. In order to reach the 60% minimum, the Education group was downgraded from College Grads to those with an Associate’s Degree or more. However, the balancing act was not limited to Education. 10 of 12 categories narrowed the gap between their best and worst performing segments. Overall, the average gap narrowed from 92.3% in 2021 to 75.4% in 2022. It definitely improved

In 2023, Food had a record lift while Supplies $ rose 4.9% as they began to recover from their 2022 “bust”. The $7.89B (+13.0%) lift was widespread as 86% of demographic segments had increases. Even with 8.0% inflation, 77% spent more. While Income remains the most important factor, Pet Products spending continued to become a little more balanced. The best way to measure this is to compare the disparity between the best and worst performers. Overall, the disparity fell from 75.4% in 2022 to 65.7% in 2023. Again, the gap narrowed in 10 of 12 categories. Area & Region were the only exceptions. Gen Z’s growth also continued, and they were joined by the 65> group. 2023 was a great year.

Finally,… The “Ultimate” 2023 Pet Products Spending CU is 3 people, a married couple with a child 6>17. They are in the 45>54 age range and are White, but not Hispanic. At least one has an Advanced College Degree. They own their own business and everyone works, including their child (part time), producing a CU income of $150>199K.They still have a mortgage on their house located in an area with a population <2500 in the Midwest.