Archive for category: Pet Market

The first six reports of our Pet Spending Demographics analysis have been very detailed, data driven and intense. We looked at the industry as a whole and each of the individual Industry segments separately. 2017 was a year of Value and consumers responded with a $9.8B Pet spending increase. 2018 was a different story. We saw the very real impact of outside influence on the industry. The mid-year FDA warning on grain free dog food caused an immediate $2.3B drop in spending in the second half as many consumers reversed their 2017 upgrade. New tariffs flattened spending in Supplies in the second half, after a $1B lift in the first 6 months. Inflation increased in Veterinary and the small spending lift came almost totally from price increases. On the upside, the Service segment had the best year ever. There were unusual “heroes” and “villains” in the 2018 Pet story. Baby Boomers have long driven the growth of the industry. 2018 was their worst year ever – spending drops in every segment – Total: -$6.5B. The good news is that everyone else stepped up, especially the Gen Xers and Millennials. This produced a small increase, but these younger groups have different characteristics, so the spending demographics changed to reflect the younger lifestyle.

We have often referenced the similarities and differences in spending between Total Pet and the individual industry segments. Total Pet Spending is a sum of the parts and not all parts are equal. In this final report we are going to put the segments side by side to make the parallels, differences and changes from 2017 more readily apparent. We will address:

• “The big spenders” – those groups which account for the bulk of pet spending
• The best and worst performing segments in each of twelve demographic categories
• The segments with the biggest changes in spending $ – both positive and negative
• And of course, the “Ultimate Spending CUs”

The emphasis is on “visual” side by side comparisons to allow you to quickly compare the industry segments. We’ll try to minimalize our comments. You can always reference one of the specific reports for more details. We’ll also break the charts up into smaller pieces that are demographically related to make the comparison more focused and easier.

Before we get started, let’s take a look at the current market share of the industry segments. The following 2 charts show the 2018 share of spending for each segment and the evolution over the past 26 years. 1992 was the last year that the Food Segment accounted for 50% of Total Pet Spending. By the way, Total Pet Spending was $16.2B in 1992. We have come a long way – +385%; annual growth rate of 6.26%. This will help put our comparisons into better perspective.

Food: 36.7%; Down from 40.3%

Supplies: 25.2%; Up from 24.1%

Veterinary: 27.0%; Up from 26.8%

Services: 11.1%; Up from 8.8%

The Food segment dropped below the 40% level again, to its lowest level since 2011. In 2015 it was 43.5%, the highest level since 1998. All other segments increased share, although the Veterinary gain was slight. The biggest gain was by Services as they reached a historic new high. Prior to this year their share had been relatively stable, as was Veterinary Services. The most visible long term trend has been the decline of Food share as Supplies gained in importance. The 90’s brought “Pet Parents”, the rise of Pet Chains and Super Stores and a big expansion in the Mass Market. Retailers filled their shelves with Supplies and Consumers filled their Homes. The 2012 and 2018 shares for Food and Supplies look fairly stable but they mask an annual roller coaster ride caused by new premium food trends and deflation in Supplies.

Now let’s get started with a look at the “Big Spenders”. The following 2 charts will compare the market share and performance in all Pet Industry segments by the groups responsible for the bulk of the spending in 10 demographic categories. These are the groups that we identified in our Total Pet analysis to generate at least a 60% market share of spending. As you recall, in some segments, we had to alter some groups slightly to better target the spending. However, to have a true side by side comparison we need to use the same groups for all. The market share dips below 60% in 3 situations, to a low of 53.5%. Two are related to Food, which is yet more evidence that pet parenting is demographically widespread. The other is in Services and reflects the urbanization trend. Even the low point is within 10.8% of our target and 94% of all measurements meet or exceed the 60% requirement, so the comparison is very valid.

The chart makes it especially easy to compare performance across categories. Remember, performance levels above 120% show a very high level of importance for this category in terms of increased spending. Unfortunately, it also indicates a high spending disparity among the segments within the category. There are 2 charts, each with 5 categories.

• White, Non-Hispanic – This group has an 83+% market share in every Segment. Minorities account for 31.5% of CUs but only 9 to 17% of spending in any segment. Factors: Lower income for Hispanics and African Americans and lower Pet ownership in Asians and African Americans. They maintained share in Total, but loss share in Food and Services. Food replaced Supplies at the bottom. Supplies and Veterinary gained share and slightly increased performance.
• 2+ People in CU – 2 is the magic number in pet ownership. In the past, performance has been remarkably even across all segments. This year, all segments but Supplies fell in share and performance because Singles had a great year. This group is still under 120% because spending tends to go down in larger CU’s, with the exception of 4 person CUs in Supplies. In both Service segments the performance of 5+ person CUs is actually worse than singles.
• Homeowners – Homeownership is very important in Pet Ownership and subsequently in all Pet Spending. It also increases with age. Due to the youth movement, this group’s share of spending fell below 80% for the first time. Veterinary and Supplies gained some ground, but Food and Services had big drops. It was also a pretty good year for Renters which correlates to the urbanization movement.
• Over $50K Income – INCOME MATTERS MOST IN PET SPENDING! Food still has the lowest share and performance as Pet Ownership remains common across lower incomes. The importance of income increases as spending in industry segments becomes more discretionary – like Supplies and Services, or higher priced – like Veterinary. This group gained share in all segments but Food. Performance fell slightly in all but Services due to a subpar year by some groups in the $50>99K range.
• Associates Degree or Higher – Higher education often correlates with higher income and we see a similar spending pattern. The group gained in share and performance in all segments, but especially in Food where the less educated groups reversed their 2017 upgrade. Formal Education after HS returned to prominence in all pet spending.

First Note: 2 Big groups have segments with performance under 100%. This truly indicates more balanced spending.

• All Wage & Salary Earners – Incomes vary widely in this group, so performance tends to be lower. However, all segments, but Food gained in share and performance. The drops in Food were driven by Self-employed and Retirees who were among the few groups to spend more on Pet Food.
• Everyone Works – Income is important, but the # of Earners tends to be less important, with one new exception. Younger CUs have more earners. Services spending skewed younger in 2018, in part because they recognized and needed the convenience. This was the first segment to break the 120% mark for this group.
• 35 to 64 yrs – Includes the 3 highest income segments. This group increased both share and performance in all segments but Food. Gen Xers and Millennials both had a very good year, so spending is becoming more balanced across age groups and even moving younger as the 55>64 year olds had a bad year. The exception is Food where the Boomers still dominate.
• Married Couples – Being married makes a big difference in spending in all segments. A minimum performance of 122% says it all. However, Singles had a great year in 2018, so Married Couples fell in share and performance in all but Supplies. Married Couples w/children spent more. It was Married Couples only that caused the drop.
• All Suburban – Most Pet $ are spent here but the share and performance of this group has become more volatile. Supplies and Veterinary have been fairly stable. However, in 2017 the Suburbs lost ground in Food due to a spending lift by Rural. In 2018, this turned around but was replaced by a huge lift in Services by Central City.

Now we’ll drill a little deeper to look at the Best and Worst performing segments in each category. Color Highlighted cells are different from Total Pet; * = New Winner/Loser; ↑↓ = 5+% Performance Change from 2017. We will divide the categories into related groups. First, those related to Income.

• Income – Higher Income = Higher Performance. Lower Income = Lower performance. Income matters and it matters most in the nonfood segments. Last year the top performer in Food was the over $200K group but it is still a high income group. The performance and disparity are astronomical in the service segments. The winning performance in these segments is dropping, but so is the losing one. This shows that gains are being made in the mid-range.
• # Earners – More earners = more income. Once again, income is even more important to the nonfood segments. In Food, the 1 Earner, 2+ CUs had a bad year as their spending fell -17.5% but they still hung on to the top spot and the performance disparity gap is closing. In Supplies and Services, the number of Earners is becoming more important.
• Occupation – Self-Employed and Mgrs & Professionals are #1 and #2 in CU income and expenditures. They now occupy all the top spots. The Self-Employed rebounded incredibly strong after a bad 2017. Blue Collar workers won in Food last year, but the victory was short lived as they dialed back their upgrade in 2018. As you can see by the arrows, the disparity is growing in 2 segments and Total Pet. This category clearly demonstrates the importance of income in Pet Spending.

Next are demographics of which we have no control – Age, Generation and Racial/Ethnicity

• Racial/Ethnic – As expected, White Non-Hispanics are the top performer in all segments. African Americans have the lowest average income and only 25% own Pets. Asians have high income but only 24.7% own pets. (Ownership data from the 2017 American Housing Survey)
• Age – The 55>64 group had a bad year. They were replaced at the top by 35>44 in Services and 45>54 in Total. The 45>54 year olds have the highest income and the most CU expenditures. Now they are the leaders in pet spending.
• Generation – 55>64 are all Boomers. The vast majority of 45>54 and 35>44 are Gen Xers so this data closely mirrors the age group category. We should also note that Millennials got off the bottom in both Food and Services.

Now, we’ll go back to demographics in which we have some control.

• Education – Winning and losing is closely tied to more and less Education which also correlates with income.
• CU Composition – Married Couples Only had a bad year but are still on top in 3 categories. In Supplies and Services, you see the family/youth trends. Singles had a good year but are still at the bottom in 3 segments, but not Total.
• CU Size– “2” is still the top number in Pet but 2>4 are all strong. Performance drops off at both ends of the CU size spectrum – 1 or 5+.

• Housing – Homeowners w/Mortgage and Renters are the perennial winner and loser.
• Area– Areas <2500 population (which includes Rural) perform the best except for the new winner, Central City in Services. In terms of worst performer, it is Central City in the Products segments and Rural in the Services segments.
• Region – Same winners as 2017 with the West on top. The South is the overall worst but 92.5% is not too bad.

Here are two summary charts. The first compares the averages.

It is immediately apparent that the difference grows as you move from Food to Supplies to Services. Spending becomes more discretionary. The difference between winners and losers dropped significantly in Total Pet and all segments but Supplies. This indicates a growing balance in spending in these segments.

• Food – In Food the best and worst are actively moving together – more balance in more demographics.
• Supplies – In Supplies the relative performance remained rather stable. The increase in the difference came from slightly poorer performance by the worst segments.
• Veterinary – The winners performance fell significantly, and the losers turned up a little, so the gap narrowed.
• Services – The record spending increase positively affected 91% of 92 demographics segments and the Best and Worst moved closer together.

This chart shows the number of new winners/losers.

 

 

Next, we will look at Pet Services. They are by far the smallest Segment at $8.72B but in 2018, they made the most “noise”. Spending increased $1.95B (+28.9%). This was by far the biggest increase in history. The number of outlets offering Services has been strongly increasing in recent years as brick ‘n mortar retailers look for a way to combat the growing influence of online outlets. After all, you can certainly buy products, but you can’t get your dog groomed on the Internet. This created a highly price competitive market for Pet Services. In 2017 there was a slight increase in visit frequency, but Pet Parents just paid less. This resulted in a 1.0% decrease in Services spending. In 2018 consumer behavior changed as a significant number decided to take advantage of the increased availability and convenience of Pet Services and spending literally took off.

To better appreciate the significance of this huge spending lift, let’s put it into historical perspective. The $1.95B increase in Pet Services spending was larger than the total annual spending for the segment for every year prior to 1999. It was also more than twice as big as the previous largest increase of $0.82B in 2012. This is great news as Pet Services now has a stronger “presence” at the Pet Industry “table” and Pet Spending becomes a little more balanced. Let’s look a little deeper into the demographics.

Let’s start by identifying the groups most responsible for the bulk of Services spending in 2018 and the $1.95B increase. The first chart details the biggest Pet Services spenders for each of 10 demographic categories. It shows their share of CU’s, share of Services spending and their spending performance (Share of spending/share of CU’s). The differences from the products segments are immediately apparent. In order to better target the bulk of the spending we had to alter the groups in three categories – income, education and area. The performance level should also be noted as 7 of 10 groups have a performance level above 120%. This compares to 6 for Total Pet, Veterinary and Supplies but only 4 for Food. These big spenders are performing well but it also indicates that there is a large disparity between the best and worst performing segments. Income is absolutely the biggest factor in Services Spending. The categories are presented in the order that reflects their share of Total Pet Spending which highlights the differences of the 7 matching groups.

1. Race/Ethnic – White, not Hispanic (85.5%) down from 87.9%.This big group accounts for the vast majority of spending in every segment but Services Spending became slightly more diverse in 2018 as their performance fell from 128.3% to 123.8%. However, they are still tied for 5th in terms of importance.
2. # in CU – 2+ people (77.3%) down from 79.8% The share of market for 2+ CU’s is very close for all segments but lowest in Services and the only one with a share less than 80%. Their performance of 109.6% is down from 111.9% also last. The explanation is that Singles had a great year. They are 29.5% of CUs and spent 44% more on Services.
3. Housing – Homeowners (80.8%) down from 86.4%. Homeownership is a big factor in pet ownership and spending in all industry segments. The Homeowners’ share of Services spending fell sharply in 2018 as did their performance, from 137.4% to 127.3%. Homeownership fell from 3rd to a tie for 5th in terms of importance for increased Services spending. Homeowners w/mtge spent 34% more, but those w/o a mtge spent 5% less and … Renters $ were up 82%.
4. Income – Over $70K (72.3%) up from 71.2% This group’s performance rating is 179.4%, down from 185.2% but still shows that CU income is the single most important factor in increased Pet Services Spending. The slight gain in share with a slight drop in performance can be explained by the slowly growing CU income. CUs under $70K spent 27% more on Services but they had 2% fewer CUs. The over $70K spent 23% more but gained 6% in CUs.
5. Education – College Grads (68.9%) up from 68.8% Income generally increases with education. Services spending moves up with each increasing level of education. This is why we again shifted the group up to College Grads. Performance of 157.9% was down from 161.9% but a college education is still the 2nd most important factor.
6. Occupation – All Wage & Salaried (71.4%) up from 64.1% – Last year we had a special group called “I’m the Boss” which consisted of Mgrs & Professionals, Self-employed and Retirees. This year regular workers took the lead. Their performance rating increased from 104.9% to 116.9%, but Occupation is no longer a member of the influential 120% club. As many “non bosses” stepped up, Services spending became more balanced in terms of Occupation.
7. # Earners – “Everyone Works” (71.5%) up from (64.9%) All adults in the CU are employed. Income is important so a relatively high market share is expected. However, their performance grew to 123.8% from 113.3% and they returned to the 120% club at #5. This lift reflects the youth movement. Younger CUs generally have more earners.
8. Age – 35>64 (63.7%) up from 61.0%. Their performance also increased significantly from 114.3% to 120.4%. A big lift in spending by the 35>44 yr olds caused the big spending group to grow younger from 45>74 yr olds. Services spending is becoming a little more balanced in this category, but age still ranks 7th in importance for Services $.
9. CU Composition – Married Couples (62.8%) down from 64.5%. Married couples are a big share of $ and have 120+% performance in all segments. Their performance fell to 126.6% from 130.3% but they moved up to 4th place in terms of importance to Services spending. Married Couples spent 25.5% more on Services but that wasn’t as big a lift as the +44% by Singles or even the +30% by Single Parents, so they lost a little ground.
10. Area – City/Suburbs >2500 (85.3%) up from 79.8% in share, while performance increased from 97.7% to 104.7%. Last Year the big group was all Suburban. In 2018 Central City virtually tied Suburbs >2500 for the spending lead. To get 60% and properly reflect the urban trend in this segment, we combined those 2 groups.

We changed 3 of the groups for Services – Income, Education and Area, to better target the biggest spenders. Income is even more important to Services spending than it is to Veterinary, where we only changed Income. The performance levels in Services spending in categories related to income – Income, # Earners, Occupation and Education, are markedly higher than Veterinary which shows an even  bigger spending disparity between the segments in Services.

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

Most of the best and worst performers are not a surprise. However, there are 8 that are different from 2017, the most of any segment – 4 of the best and 4 of the worst. Also, half the changes were in 2 categories – Age & Generation. The 4 new winners, Gen X, 35>44, Center City and Married, Oldest Child < 6, do reflect the very definite “youth movement” behind the big 2018 lift in Services Spending. Changes from 2017 are “boxed”. We should note:

• Income is even more important to Pet Services. While the 364.0% Performance by the $200K> group is less than last year’s 398.8%, it is 41% higher than Veterinary and 130% higher than the best performing income segment in Food.
• Generation – Gen X took over the Top Spot from the Boomers and Millennials got off the bottom. It was a good year for the younger generations.
• Age – The 35>44 group reflects the youth movement. They are the best performers and spend the most $. It is also significant that the <25 group got off the bottom. All groups from 35>64 perform at 100+%. In 2017 it was 45>74.
• Area –Center City became the performance leader, going from 90% to 117.3%, and was within $0.02B of taking the Spending $ lead from Suburbs >2500. Areas >2500 pop. were up $2B and accounted for 85.3% of total Services $.
• CU Composition – Married Couples, with an oldest child <6 may seem like a surprise, but they won in 2016. They also had the biggest % increase of ANY segment, +152.6%. Marriage and children are important factors in Services spending. Married Couples only and those with children of any age all perform over 100%. They all earn their share.

In Pet Services spending performance, we see 2 major factors – income, which is not a surprise in this most discretionary segment and youth, which is a surprise in a segment that has skewed older.

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

Pet Services Spending was up $1.95B, the biggest lift in history. In this chart you see the strong demographic impact as 9 of 12 categories had an individual segment that accounted for at least 47% of the increase. At the same time, the drops were small. The largest was only $0.17B. In fact, 6 of 12 categories had no segments that spent less. There were 7 repeats, 4 winners and 3 losers from 2017 but only 5 of 24 segments switched their position from first to last or vice versa, the same as Supplies. All of this indicates little turmoil, just strong, widespread growth. Here are the specifics:

• Area Type – The winner and loser flipped as spending became more urbanized. Areas >2500 were up $2.04B.
  • Winner – Center City – Pet Services Spending: $3.71B; Up $1.51B (+68.5%)
    • 2017: Suburbs <2500
  • Loser – Suburbs <2500 – Pet Services Spending: $0.94B; Down $0.07B (-7.0%)
    • 2017: Center City
  • Comment – Center city won in 2015 & 2016 then lost in 2017. In 2018, they returned to the top.
• Race/Ethnic – African Americans flipped from 1^st to Last but all racial/ethnic groups spent more.
  • Winner – White, Not Hispanic – Services: $7.46B; Up $1.51B (+25.3%)
    • 2017: African American
  • Loser – African American – Services: $0.41B; Up $0.10B (+33.3%)
    • 2017: Hispanic
  • Comment – White, Non-Hispanics returned to their “usual” position at the top of this category.
• Generation – The Winner and Loser are repeats.
  • Winner – Gen X – Services: $3.34B; Up $1.44B (+75.9%)
    • 2017: Gen X
  • Loser – Baby Boomers – Services: $2.76B; Down $0.17B (-5.9%)
    • 2017: Baby Boomers
  • Comment – Gen X became the biggest Services Spenders in 2018, taking over from the Baby Boomers. Boomers spent less in all segments, but their smallest decrease was in Services. Over 1/3 of their decrease came from fewer CUs, down 2.1%.
• Housing – The winner and loser in Housing are also repeats from 2017.
  • Winner – Homeowner w/Mtge – Services: $5.19B; Up $1.31B (+33.7%)
    • 2017: Homeowner w/Mtge
  • Loser – Homeowner w/o Mtge – Services: $1.86B; Down $0.11B (-5.4%)
    • 2017: Homeowner w/o Mtge
  • Comment – Renters also spent a lot more, +$0.88B. The drop by Homeowners w/o mtge is tied to Retirees.
• Occupation – The high income group, Mgrs & Professionals, was a repeat winner.
  • Winner– Mgrs & Professionals – Pet Services Spending: $3.89B; Up $1.06B (+37.5%)
    • 2017: Mgrs & Professionals
  • Loser – Retired – Pet Services Spending: $1.23B; Down $0.17B (-12.1%)
    • 2017: Self-employed
  • Comment – The Services spending increase was widespread as only Retirees spent less.
• # Earners– No repeats or flips. 2 Earners was the big winner and No Earner, 2+ CUs was the only group to spend less.
  • Winner – 2 Earners – Pet Services Spending: $3.91B; Up $1.01B (+34.9%)
    • 2017: 1 Earner, 2+ CU
  • Loser – No Earner, 2+ CU – Pet Services Spending: $0.53B; Down $0.04B (-7.4%)
    • 2017: 3 Earners
  • Comment – The # of Earners became more important as “Everyone Works” CUs provided 94% of the increase.
• Age – No repeats or flips and no real surprise as the 35>44 year olds do have the second highest income.
  • Winner – 35>44 yrs – Pet Services Spending: $2.00B; Up $0.96B (+93.3%)
    • 2017: 75+ yrs
  • Loser – 65>74 yrs – Pet Services Spending: $1.24B; Up $0.01B (+0.5%)
    • 2017: 55>64 yrs
  • Comment: All age groups spent more on Services as even the 65>74 yr olds eked out a $0.01B increase. The 35>44 yr olds led the way, followed by 45>54, then 25>34. In fact, CUs under 55 spent $1.89B more on Services, 97% of the increase. CUs 55 and over are 44% of the population but only generated 3% of the increase.
• Region – The Midwest flipped from 1^st to last, but the South is a new winner.
  • Winner – South – Pet Services Spending: $3.05B; Up $0.96B (+45.6%)
    • 2017: Midwest
  • Loser – Midwest – Pet Services Spending: $1.63B; Up $0.14B (+9.1%)
    • 2017: West
  • Comment – All regions spent more and all, but the Midwest, had at least a 21% increase.
• Education – College Degree flipped from last to first and returned to the top after a year in the cellar.
  • Winner – Adv. College Degree – Pet Services Spending: $3.09B; Up $0.91B (+41.5%)
    • 2017: BA/BS Degree
  • Loser – HS Grad – Pet Services Spending: $0.55B; Up $0.02B (+3.8%)
    • 2017: Adv. College Degree
  • Comment – Again, all segments in this category spent more on Services. BA/BS had the second biggest increase, so College Grads accounted for 70% of the $1.95B spending lift.
• # in CU – 2 Person CUs were the repeat winner.
  • Winner – 2 People – Pet Services Spending: $3.58B; Up $0.63B (+21.4%)
    • 2017: 2 People
  • Loser – 5+ People – Pet Services Spending: $0.52B; Up $0.06B (+12.3%)
    • 2017: 4 People
  • Comment: All size CUs spent more on Services. Singles finished a strong second with a $0.61B increase,
• CU Composition – The winner and loser are both new and Singles are definitely an unusual winner.
  • Winner – Singles – Services: $1.98B; Up $0.61B (+44.2%)
    • 2017: Unmarried, 2+ Adults
  • Loser – Single Parents – Services: $0.21B; Up $0.05B (+30.0%)
    • 2017: Married, Oldest Child <6
  • Comment – CUs of every possible composition spent more on Services. Singles won, but Married Couples with children of any age spent $0.59B more, a 31% increase.
• Income – The winner is new but not unexpected. The loser is a repeat from 2017.
  • Winner – $200K+ – Pet Services Spending: $2.07B; Up $0.58B (+38.5%)
    • 2017: $100 to $149
  • Loser – $30 to $39K – Pet Services Spending: $0.27B; Down $0.08B (-22.8%)
    • 2017: $30 to $39K
  • Comment – All income groups but one spent more on Pet Services. However, as expected the increase was skewed more towards the higher income groups. Income groups over $100K represent 25.8% of all CUs. They spent $1.36B more on Services, 69.7% of the increase. The $30>39K group had the only decrease. This income range corresponds to the average income of Retirees, so they undoubtedly were the primary negative driver.

We’ve now seen the winners and losers in terms of increase and decrease in Services Spending $ for 12 Demographic Categories. 2018 was a fabulous year. In 6 categories all segments spent more. Moreover, the winning increase in each category averaged +$1.04B up from +$0.25B in 2017, while the biggest decreases averaged -$0.02B up from -$0.27B.  That certainly shows a widespread lift . The major trend was definitely to the younger groups. Income reasserted its importance, certainly in terms of the number of Earners. Singles definitely stepped up and we also saw a spending move back to more populated areas. The $1.95B increase was the biggest in history and we have detailed the winners in performance and $. However, there were many who performed well but didn’t win an award. They deserve….

HONORABLE MENTION

It wasn’t all higher incomes, the $40>49K group more than doubled their Services Spending. With +$.75B, Renters definitely contributed. The Blue Collar workers rolled back their Food Spending in 2018 but increased Services $ by 70%. The 2017 winner for biggest increase, 1 Earner, 2+ CU actually did better in 2018. Gen X won the awards, but the Millennials weren’t far behind. The 45>54 yr olds are mostly Gen Xers and they did their part, finishing 2^nd in Age Groups. The spending increase was widespread. In fact, only 8 of 92 demographic segments less on Pet Services in 2018. That means 84 (91.3%) spent more.

Summary

The Services segment has usually been “above” changes in other segments. Since 2010 prices have steadily increased but so did Spending …until 2017. An increase in outlets offering Services created a much more competitive environment. While prices didn’t deflate, inflation slowed significantly, and “deals” abounded as Retailers began a pitched battle for Consumers’ Services $. The net result was turmoil and a 1% decrease in spending. In 2018, the abundance of outlets and competitive prices finally had their intended impact. Many more consumers took advantage of the convenience of Pet Services and spending literally took off.

Pet Services are definitely needed by some groups. However, for most demographics, Services are a convenience and spending is very discretionary in nature. The result of this is that CU income is of paramount importance to increased Services spending. This impacts many demographic categories and we adjusted the big spender groups in 2 categories specifically to accommodate this difference in behavior and to better target where most of the $ are coming from. Just how important is income? 40.3% of CU’s have an income over $70K and account for 72.3% of Services Spending. This is a performance rating of 179.4% – the highest rating earned by any group in any category in any industry segment.

Performance is an important measurement. We identified 7 categories with high performing big groups. There were 6 for Veterinary and Supplies but only 4 for Food. This indicates greater demographic disparity in Services Spending.

• Income  · Occupation     · Higher Education     · Homeownership    · CU Composition     · Race/Ethnicity    · Age

3 of these groups are directly related to income – Education, Occupation and Income. However, for 2 – Race/Ethnicity and Age, the consumer has no control over their inclusion. They can’t control their age, but it turns out that age was the single biggest factor in Pet Services spending in 2018. The biggest spending group changed from 45>74 to 35>64. However, it wasn’t just the added Gen Xers. The Millennials also stepped up.

Although the lift was widespread, as 91% of all demographic segments spent more on Services, there was a big disparity in the amount spent. This is apparent as 10 of the 12 best performing segments also had the biggest $ increase and the average increase was $1B, up from $0.25B in 2017.

The Youth movement was apparent in the improved performance of segments which reflect their demographics:

• Preference for Urban areas
• Higher education
• More CU Earners
• Presence of children…or Singles

… to name a few. In 2018, the Gen Xers and Millennials stepped up and took a position of prominence in Services Spending and raised the visibility of the Services Segment.

At Last – The “Ultimate” Pet Services Spending Consumer Unit consists of 3 people – a married couple, with 1 child under 6. They are White, but not of Hispanic origin. At least one of them has an advanced College Degree. They are 35 to 44 years old and both of them work, in managerial positions. They’re doing well with an income over $200K. They live in the Center City of a metropolitan area of over 2.5 million in the Western U.S. and are still paying off their mortgage.

 

 

 

 

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

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

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

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

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

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

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

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

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

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

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

HONORABLE MENTION

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

Summary

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

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

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

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

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

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HONORABLE MENTION

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

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

Summary

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

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

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

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

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

 

 

In 2018 Total Pet Spending in the U.S. was $78.6B, a $1.47B (1.9%) increase from 2017. This was a huge change from the $9.84B increase in 2017. There were a number of factors behind the smaller increase, including some outside the control of the industry. The FDA warning regarding grain free dog food wreaked havoc in the second half and the new tariffs on supplies flattened spending during that period. Veterinary prices turned up again resulting in a net “no gain” in the amount purchased by consumers. There was also a human factor as a significant number of adult children living with their parents moved out and took their pets with them. The Services segment saved the year with a spectacular increase in spending as consumers finally responded to the convenience of significantly more outlets. Here are the $ changes:

• A -$2.27B (-7.3%) drop in Food
• A $1.22B (+6.6%) increase in Supplies
• A $0.56B (+2.7%) increase in Veterinary
• An unprecedented $1.95B (+28.9%) lift in Services

Let’s see how these numbers blend together at the household (CU) level. In any given week, 27.2 Million U.S. CU’s (1/5) spent money on their Pets – food, supplies, services, veterinary or any combination – down from 28.4M in 2017.

In 2018, the average U.S. CU (pet & non-pet) spent a total of $598.41 on their Pets. This was a small 0.8% increase from the $593.63 spent in 2017. However, this doesn’t “add up” to a 1.9% increase in Total Pet Spending. With additional data provided from the US BLS, here is what happened.

• 1.1% more CU’s
• Spent 6.4% more $
• 5.3% less often

If 67% of U.S. CU’s are pet parents, then their annual CU Total Pet Spending was $893.15. Now, let’s look at the recent history of Total Pet Spending. The rolling chart below provides a good overview. (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys – The 2016>2018 Totals include Veterinary Numbers from the Interview survey, rather than the Diary survey due to high variation)

• In 2015, the Food upgrade began, but early in the year consumers were trading $ in other segments to pay for it.
• In 2016, they were intensely value shopping for super premium foods. They started spending some of this saved money on Supplies and Veterinary Services, but not quite enough as spending fell slightly for the year.
• In 2017, spending took off in all but Services, especially in the 2nd half. Consumers found more $ for their Pets.
• In 2018 a spectacular lift in Services overcame the FDA issue in Food, tariffs on Supplies and inflation in Veterinary.

Now we’ll look at some Demographics. First, 2018 Total Pet Spending by Income Group

Only CU’s with an income over $100K increased Total Pet Spending and most of the increase came from $150K+.

Nationally: · Total Pet: ↑$1.47B   · Food: ↓$2.27B  · Supplies: ↑$1.22B  · Services: ↑$1.95B  · Veterinary: ↑$0.56B

• < $70K – (59.7% of U.S. CUs); CU Pet Spending: $383.10, -2.7%; Total $: $29.88B, ↓$1.49B (-4.8%) from …
  • Food ↓$1.53B
  • Supplies ↑$0.07B
  • Services ↑$0.47B
  • Vet ↓$0.50B

Money matters a lot to this group, especially to those on the low end. They were quick to dial back Food spending after the FDA warning. They also cut Veterinary spending and Supplies $ were essentially flat. However, the convenience of more readily available Services appealed to this group too.

• >$70K – (40.3% of U.S. CUs); CU Pet Spending: $914.90, +0.4%; Total $: $48.72B, ↑$2.96B (+6.5%) from…
  • Food ↓$0.74B
  • Supplies ↑$1.15B
  • Services ↑$1.49B
  • Vet ↑$1.05B

This group continues to grow, up 6.1% in 2018. This accounted for almost all of their spending increase. They also show that income remains the single biggest factor in Pet Spending. 40% of U.S. CUs spent 62% of Total Pet $. Although they too spent less on Food, without them, Total Pet $ would have been down $1.5B.

• < $30K – (28.7% of U.S. CUs); CU Pet Spending: $259.13, -9.5%; Total $: $9.47B, ↓$1.44B (-13.2%) from…
  • Food ↓$0.64B
  • Supplies ↓$0.05B
  • Services ↑$0.011B
  • Vet ↓$0.77B

This lowest income group demonstrated their price sensitivity in 2018. However, even they managed to eke out a small increase in Services spending.

• $30>$70K – (31.0% of CUs); CU Pet Spending: $493.91, +0.2%; Total $: $20.41B, ↓$0.06B (-0.3%) from…
  • Food ↓$0.89B
  • Supplies ↑$0.11B
  • Services ↑$0.46B
  • Vet ↑$0.27B

This low to middle income group is by necessity price sensitive, but is also committed to their pets. They  dialed back Food $. However, they had a strong increase in both Service Segments and a little in Supplies.

• $70>$99K – (14.5% of CUs); CU Pet Spending: $670.87, -3.9%; Tot $: $12.92B, ↓$0.49B (-3.6%) from…
  • Food ↓$0.69B
  • Supplies ↓$0.16B
  • Services ↑$0.13B
  • Vet ↑$0.24B

This upper middle income group reacted negatively to the situations in Food and Supplies. Pet Services saw a 13% increase and they did ramp up their Veterinary spending by 7%, but it was not enough to compensate.

• $100K>$149K– (13.1% of CUs); CU Pet Spend: $874.85, -2.9%; Tot $: $15.34B, ↑$0.32B (+2.2%) from…
  • Food ↓$0.80B
  • Supplies ↑$0.56B
  • Services ↑ $0.38B
  • Vet ↑$0.18B

They were the Star of the income groups in 2015 and 2017. In 2016, they had the worst performance with decreased spending in every segment. They are very responsive to industry trends, especially in Pet Food. They have the money to do what is needed or what they want, but are still very “value” conscious.

• $150K> – (12.7% of CUs); CU Pet Spending: $1238.40, +2.0%; Total $: $20.46B, ↑$3.12B (+18.0%) from…
  • Food ↑$0.75B
  • Supplies ↑$0.75B
  • Services ↑$0.99B
  • Vet ↑$0.6

Money Matters! They are the proof. They are the best performing income group in Total Pet Spending with 12.7% of U.S. Households generating 26.0% of all Pet $. They are also the only income group to increase annual Pet Spending every year since 2014. In fact they have furnished 55% of the Pet Industry’s $14.3B spending increase since 2014. There is more good news. This group is growing. They added 2.5 million CUs in 2018, a 17% increase. In fact their $3.12B was primarily fueled by additional CUs. It does demonstrate that pet spending grows with consumers’ income, especially once you reach the $150K+ level.

Income Recap –  The top 2 drivers in consumer spending behavior are value (quality + price) and convenience. That makes income , especially disposable income, very important. You see this in the huge difference in pet spending behavior at the opposite ends of the income spectrum and the increase/decrease spending dividing line of $100K. This line is somewhat deceptive as there were still values to be had in Veterinary and Supplies that appealed to most groups for much of the year. Plus, all groups responded to the increased convenience in Services. The biggest issue was in Food. The FDA warning about grain free elicited 2 different responses. Many in the <$150K groups dialed their spending back to more traditional foods, but the $150K+ group may have upgraded to even more expensive varieties. The trend to super premium has made income more important to this segment and more susceptible to big swings in spending.

Next let’s look at 2018 Total Pet Spending by Age Group

All groups but 55>64 yr olds spent more but the 35>44 yr olds led the way.

Nationally: · Total Pet: ↑$1.47B   · Food: ↓$2.27B  · Supplies: ↑$1.22B  · Services: ↑$1.95B  · Veterinary: ↑$0.56B

• <25 – (5.8% of U.S. CUs); CU Pet Spending: $355.36, +37.3%; Total $: $2.79B, ↑$0.81B (+41.0%) from…
  • Food ↑$0.50B
  • Supplies ↑$0.004B
  • Services ↑$0.18B
  • Vet ↑$0.13B

This youngest group stepped up in 2018, but they are the only group to increase Pet $ every year since 2014.

• 25-34 – (16.2% of U.S. CUs); CU Pet Spending: $489.10, +9.5%; Total $: $10.35B, ↑$0.79B (+8.3%) from…
  • Food ↑$0.20B
  • Supplies ↑$0.30B
  • Services ↑$0.31
  • Vet ↓$0.02B

These older Millennials are just starting their families and careers, so they are prone to trading $ between segments. However, they have shown slow, but steady total pet spending growth since 2015.

• 35-44 – (16.7% of CUs); CU Pet Spending: $659.61, +13.9%; Total $: $14.46B, ↑$2.31B (+19.0%) from…
  • Food ↓$0.05B
  • Supplies ↑$0.56B
  • Services ↑$0.96B
  • Vet ↑$0.84B

This group has the largest families and is in the middle of building their careers. This makes them very sensitive to value. However, they have a growing commitment to their pets. Their Food spending was basically unchanged, but they truly “stepped” up with big increases in the other segments, especially Services and Veterinary.

• 45-54 – (17.5% of U.S. CUs); CU Pet Spending: $769.35, +5.4%; Total $: $17.73B, ↑$0.56B (+3.3%) from…
  • Food ↓$0.32B
  • Supplies ↑$0.27B
  • Services ↑$0.43B
  • Vet ↑$0.19B

This group has the highest income and now occupies the top spot in Pet Spending. This was their second consecutive annual increase, which hasn’t happened since 2009, when the Boomers owned this group. They did this despite having 2% fewer CUs. Food spending dropped but all other segments were up, especially Services.

• 55-64 – (18.6% of U.S. CUs); CU Pet Spending: $709.69, -18,1%; Total $: $17.50B, ↓$3.95B (-18.4%) from…
  • Food ↓$3.51B
  • Supplies ↑$0.18B
  • Services ↑$0.03B
  • Vet ↓$0.64B

Here is the problem. These younger Baby Boomers had a huge drop in Food and Veterinary. They are committed to their Pets and react very strongly to changes in the market as is evident in the chart. Whether it is a hot new food trend, value shopping or an FDA warning, they get on board quickly and the “swing” can be $ Billions.

• 65-74 – (14.7% of U.S. CUs); CU Pet Spending: $587.88, +0.3%; Total $: $11.29B, ↑$0.42B (+3.9%) from…
  • Food ↑$0.75B
  • Supplies ↓$0.09B
  • Services ↑$0.006B
  • Vet ↓$0.24B

This group is growing, +4.2%. Many are retired and now 80% are Baby Boomers. They are careful with their money, but their commitment to their pets is very apparent as 1.05% of their total spending is on their companion animals. They didn’t follow the lead of the younger Boomers and cut back on Pet Food $. They spent 18% more, but they helped pay for it by reducing their CU spending in the Veterinary and Supplies segments.

• 75> – (10.4% of U.S. CUs); CU Pet Spending: $332.53, +9.5%; Total $: $4.48B, ↑$0.52B (+13.0%) from…
  • Food ↑$0.18B
  • Supplies ↔$0.00B
  • Services ↑$0.03B
  • Vet ↑$0.31B

Pet Parenting is more difficult, and money is tight for these oldest Pet Parents, but their commitment is still there. They increased spending in 3 of the 4 industry segments, with significant lifts in Food and Veterinary.

Age Group Recap: The age dividing lines in Total Pet Spending were very clear. The 55>64 year old Baby Boomers had a huge drop in spending which was driven by Food and Veterinary. However, the industry had a positive year due to increases by literally every other group. The younger groups, especially the 35>44 year olds had the biggest lift but the 65+ year olds also contributed a $0.94B increase.

Normally, we now look at the biggest winners and losers in each demographic category. However, this didn’t reflect the true situation in 2018. As we saw in the age group analysis, the “loser” was very defined. However, it took a group effort to produce a positive result. In our final graph, we’ll look at where these demographic spending lines were drawn.

Key Demographic “Dividing Lines” for 2018.

In 2018, 50 of 82 Demographic Segments (61%) spent more on their Pets. Usually, this would produce a strong increase, but the biggest single segment drops were so large that the overall increase was only 1.9%. Let’s look at the specifics:

Generations – Boomers have long been the biggest positive factor in the pet industry. In 2018, their influence turned negative as their spending fell -$6.48B. This affected a huge number of demographic categories. You see this over and over again in the downside entries on the chart. The younger generations led the way up, but in fact all other generations spent more on their pets in 2018 and ultimately overcame the “Boomer Bust”.

Age– The 55>64 yr olds are all Boomers. Every other group spent more, with the 35>44 yr olds leading the way, +$2.81B.

Education – As usual, higher education means higher income, better informed product decisions and more Pet $.

Housing – If you paid monthly for housing, you spent more on pets. 38% of Boomer CUs are homeowners w/no Mtge.

Area – This one goes against the norm. Lower population areas generally spend more on Pets. The 2018 situation reflects the continued urbanization of America, which is being driven both by the younger groups and downsizing older CUs.

Occupation – This demographic clearly reflects the importance of income in Pet spending.

CU Composition – We see the positive influence of both young and old groups here. Singles tend to be at either end of the age spectrum and Married, with children CUs are invariably younger. Married, w/no children CUs usually have “room” for more pet spending, but not in 2018.

CU Size – The usual phrase has been “It just takes 2” and 2 person CUs led the pack in spending. In 2018 it was “Any number but 2.”

Income – Income matters in Pet Spending with big disparities between high and low and a dividing line at $100K in 2018.

# of Earners – # of earners is not quite as important as total income, but it is definitely a factor. The “everyone works” CUs led the upside while 1 earner 2+ CUs, which generally have the greatest financial pressure, had the biggest decrease.

Racial/Ethnic – Hispanics and African Americans had a significantly greater increase in pet spending than the much larger White, not Hispanic group. This goes back to the generational differences, as these minorities are 33% of all Millennial and Gen Xer CUs, but only 22% of Baby Boomers.

Finally: The Pet Industry came out on top in 2018, but just barely. Besides normal concerns and trends, there were unusual outside issues like the FDA warning and tariffs. However, their impact was primarily on Baby Boomers, so the problem was simple. The solution, as we have seen, was not. Fortunately, virtually everyone else stepped up to produce a Pet Spending increase. I don’t know if this trend will continue but it is obviously time to take a deeper look at generational pet spending.